Starmer promises more powers for OBR so Truss budget ‘disaster’ never happens again

A Labor government would hand more powers to the budget watchdog so that the “disaster” of Liz Truss's mini-budget “can never be allowed to happen again”, Sir Keir Starmer said.

The Labor leader said on Friday the measure would bring “desperately needed stability” and prevent “enormous damage” being done to the economy again.

Ministers will be legally required to consult the Office for Budget Responsibility (OBR) on major tax and spending changes under the party's plans, which were backed by former Tory chancellor George Osborne.

Sir Keir said it was “necessary” to introduce legislation to ensure the OBR had the power to independently publish its own impact assessment.

Speaking at the London Stock Exchange alongside shadow chancellor Rachel Reeves, he said: “A year ago, our economy was massively damaged and we are still paying the price. This can never be allowed to happen again.”

The move would bring “stability to so many families that were affected by that budget debacle just a year ago,” he said.

Sir Keir and Ms Reeves announced the plan, should they win the general election, ahead of the first anniversary of Ms Truss and her chancellor Kwasi Kwarteng's £45bn of unfunded tax cuts.

A year ago, massive damage was done to our economy and we are still paying the price. This can never be allowed to happen again

Labor leader Sir Keir Starmer

One of the reasons markets were so spooked by their mini-budget was that the pair refused to publish the OBR's independent public finance forecasts alongside the plans.

Labor promised to amend the rules so the OBR would be able to independently publish the impact of any major fiscal event that causes permanent tax and spending changes.

The party said ministers would be forced to open their books to forecasters, although any government willing to ignore them could seek to overturn the legislation.

The plans would allow changes to be introduced without emergency provisions, but allow the OBR to set a date for publishing its work.

Ms Reeves said the changes would ensure the financial watchdog is not “silenced”.

Mr Osborne, who led the Treasury from 2010 to 2016, urged Prime Minister Rishi Sunak to adopt Labour's proposal.

“We set up the OBR 13 years ago so chancellors could no longer crunch the numbers,” he said.

“A year ago we saw the fiasco when someone tried to bypass it.

“These OBR reforms by (Rachel) Reeves are sensible, realistic improvements. If the Tories are smart, they will adopt them.”

Having a budget in the autumn rather than just a few days or weeks before the new financial year gives businesses, families, the opportunity to plan for any changes in taxation for example, so that's good international practice

Shadow Chancellor Rachel Reeves

Labor also said it would set a fixed timetable for autumn annual budgets, followed by a spring update in early March, to give families and businesses time to prepare for changes ahead of the new tax year.

Major tax and spending decisions will be reserved for November under the plans, while only minor policy changes will be allowed in a spring update.

Ms Reeves rejected the claim that this would make it harder for chancellors to respond to unforeseen events.

“This is good international practice, that you set a date for the budget and stick to it,” he said.

“And having a budget in the autumn rather than a few days or weeks before the new financial year gives businesses, families, the opportunity to plan any changes to taxation, for example, so that's good international practice.”

Responding to Labour's plans to give the OBR more power, former prime minister Ms Truss said: “It beggars belief that Labor believes Britain's problems will be solved by bigger government and even more powers for the quangos.

“Hard-working people and businesses – freed from excessive regulations, taxes and debt – will make Britain grow again, not more bureaucrats in London.”

Ms Reeves and Sir Keir's visit to the London Stock Exchange came at the end of a week in which Mr Sunak watered down a range of green policies, including delaying a ban on the sale of new petrol and diesel cars until 2035.

The move was criticized by car industry figures who wanted certainty about the shift to electric vehicles.

Ms Reeves denied Labor was “anti-car” because of its pledge to bring back the 2030 deadline.

He said motorists who wanted an internal combustion engine after 2030 would still be able to buy used.

“We are certainly not anti-motorists. The price of electric vehicles is going down all the time,” he said.

“But in the last 24 to 48 hours, I've had so many messages from business people saying ‘all we want is some stability and consistency and frankly some ambition from this government.'

“We want businesses to invest in the UK, in the industries of the future, from electric vehicles to carbon capture and green steel.

“And they will only do so if we have a government that is committed to those goals and those goals.”