The OBR is an independent body, which takes full responsibility for the content of all its publications and other pronouncements.
To fulfil our remit of analysing and reporting on the sustainability of the public finances, we need to work closely with the many government departments that are responsible for forecasting the different revenues, spending streams and financial transactions that affect the public finances. We also have an executive responsibility to the Chancellor of the Exchequer to deliver the fiscal and economic forecasts he needs to take tax and spending decisions.
To ensure that our independence is not called into question, we believe that it is important to be transparent about the way in which we interact with government.
The Memorandum of Understanding sets out the agreed working relationship between the OBR, HM Revenue and Customs, the Department for Work and Pensions, and HM Treasury. It sets out the arrangements needed for effective working, covering each institution’s key responsibilities, coordination of the forecast process, and the process for information sharing.
Producing our forecasts
Our briefing paper describes how we work with departments to produce the different elements of our fiscal forecasts.
The OBR uses a large-scale macroeconomic model for the production of the economic forecast, which is jointly maintained and developed by the Treasury and the OBR. A framework for the joint governance, management and development of the macroeconomic model is set out in a Memorandum of Understanding – the macroeconomic model.
We agreed a four-year funding allocation from the Treasury starting from 2014-15. The budget is £2.08 million in 2014-15 rising to £2.19 million in 2017-18. This is set out in a letter from HM Treasury Permanent Secretary to Chair of the OBR regarding the OBR funding allocation.
The OBR buys some administrative support services from the Treasury, for example human resources and finance. These arrangements are set out in a Service level agreement.
The OBR shares its accommodation at 20 Victoria Street, and buys some services (such as IT support), from the Attorney General’s Office. These arrangements are set out in an agreement between the OBR and the AGO.
Bank of England
The OBR has no formal relationship with the Bank of England, although we meet regularly with its staff to discuss forecasting issues of mutual interest.