The UK Treasury may have broken the law by withholding £9.5 billion in spending ahead of Jeremy Hunt’s final budget in March, according to Richard Hughes, head of the Office for Budget Responsibility (OBR).
Hughes suggested that key financial data on departmental budgets, required by the OBR under the Budget Responsibility and National Audit Act 2011, was not being shared, leading to a “materially different” view of public finances.
Hughes told MPs that this classified information affected the OBR’s ability to make an accurate forecast, describing this as a “systematic failure” within the Treasury. While Hughes does not suspect malicious intent, he noted that the lapse has eroded trust, shifting their relationship with the Treasury Department from “trust” to “trust but verify.”
The revelation follows Chancellor Rachel Reeves’ claim that she has inherited a £22 billion “black hole”, a figure questioned by the OBR but partly substantiated by the £9.5 billion in hidden costs. However, former Chancellor Jeremy Hunt has criticized the timing of the report, suggesting it risks being used as a ‘political weapon’.
Adding to the controversy, Hughes warned that the government’s shift to electric vehicles, which will see fuel duty revenues fall as petrol and diesel cars are phased out, could leave a significant hole in public finances, similar to recent tax increases. Fuel duty, expected to raise £27.2 billion this parliament, will fall steadily as Britain approaches its 2035 ban on the sale of new petrol and diesel cars.