NI rise hits workers harder than employers, says OBR

The Treasury should have disclosed a £9.5bn overspend in the public finances in the run-up to the previous government's Budget "under the law", the head of the UK's official spending watchdog has said.

Richard Hughes, chair of the Office for Budget Responsibility (OBR), told a committee of MPs that the Treasury had questions to answer over why such information was "not provided to us".

His comments prompted the committee's chair, Meg Hillier, who is also a Labour MP, to suggest that the Treasury "may have broken the law".

The 9.5bn overspend formed the basis of Chancellor Rachel Reeves’ claim in her first Budget last week that the Conservatives left Labour with a £22bn "hole" in the public finances.

The Treasury and the Conservative Party have been contacted for comment.

Last week the OBR said the last government "did not provide" them with all available information at former chancellor Jeremy Hunt's last Budget in March, prompting a further political row over the true state of the public finances Labour inherited in July.

Asked by the committee how a £9.5bn shortfall could have happened, the OBR's Mr Hughes said "the system very clearly broke down", but insisted "that kind of failure will not happen again" because of processes put in place since.

The OBR works closely with the Treasury. Its role is to assess the government's tax and spending plans and produce reports on whether the chancellors' plans are sound. Its judgements and forecasts are closely watched by financial markets to determine if the UK's economic plans are credible.

Pushed on whether the Treasury broke the law over not disclosing an overspend, Mr Hughes said there may "have been a misunderstanding of how the law ought to be interpreted".

"There is no doubt in our minds that had that information been provided we would have had a materially different judgement," he added.

He said it "was a question for the Treasury to ask: why was information available within the Treasury and not provided to us?"

In summarising Mr Hughes' comments, Hillier said: "The Treasury may have even broken the law in the run-up to the Spring Budget in not disclosing all the spending information."

Shadow chancellor Hunt has previously accused the OBR of failing to act in a "politically impartial manner" by releasing its findings about the overspend on the day of the Budget last week, arguing it would help make the case for Labour's big tax rises.

Hunt said it was "impossible to know" how much of the £9.5bn would have been compensated for by savings elsewhere.