OBR needs to be at arm's length

CENTRAL to the establishment of the Office of Budget Responsibility was the need to restore public confidence.

Too often UK economic forecasts of the UK economy - on which budget borrowing and debt projections were based - appeared to have been drawn with the help of rose-tinted spectacles.

Both Conservative and Labour were guilty of excessive optimism, but under Labour it was developed into a fine art of "golden rules" and "borrowing only to invest over the cycle".

It was thus a disappointment that within weeks of its establishment the OBR gave the appearance of having been nobbled by the Treasury machine. It quickly came under suspicion of not being as independent as its coalition parents made out, and of revising unemployment projections that, to put it no stronger, made the effect of the Budget measures seem less severe than they would otherwise have been.

Yesterday, Sir Alan Budd, its temporary and soon-to-depart chief, was grilled by MPs and found himself accused of "navety". That is not a charge that befits him; there is no doubting his credentials. But there has been an uneasy sense that the OBR has been operating too closely to government.

The idea of an independent data unit is excellent - however, it must not only be independent, but also be seen to be independent. That means moving out of the Treasury and drawing its top staff from outwith the government. The sooner this is done, the better.