OBR warns fiscal rules 'never require the chancellor to get debt falling'
Debt would have been £85bn in five years’ time if the chancellor had not taken any action at the Autumn Statement, OBR chair Richard Hughes said.
Speaking before the Treasury Select Committee today (28 November), OBR chair Richard Hughes explained the current set of fiscal rules implemented by the government target debt to fall over the next five years.
However, Hughes noted «that deadline shifts», allowing the government to push up debt in the four years leading up to the target.
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He evidenced this by pointing to the OBR's latest forecast, which showed Chancellor Jeremy Hunt had taken «full advantage» of this fact and had «reduced his margin against getting debt falling» in 2027/2028.
This has created a «wafer thin» margin for debt to have fallen in that financial year, he said.
Debt would have been £85bn in five years' time if the chancellor had not taken any action at the Autumn Statement, Hughes added — about 3% of GDP.
The chair pushed back against Hunt's claim the Autumn Statement had been the largest tax cut since the 1980s, stating it was «not a figure we have used».
Instead, he noted this was the «third largest» discretionary fiscal loosening since the OBR was founded in 2010, after March 2022 and the furlough scheme.
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While the OBR members speaking before the committee praised the cuts to National Insurance, they noted the negative effects that frozen tax thresholds were having, pushing the tax burden to a post-war high of 38% of GDP.
«In five years' time, the average worker, based on current policies, is going to be paying more in tax because the thresholds are frozen,»
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