Jeremy Hunt’s Treasury may have broken the law by hiding Budget black hole, says OBR

£9.5bn spending gap wasn’t disclosed, ‘which under the law ... they should have done’, says fiscal watchdog

Treasury officials under Jeremy Hunt “broke the law” by failing to report a black hole in the public finances to the Office of Budget Responsibility (OBR), MPs have been told.

Richard Hughes, chair of the watchdog, made the accusation to the Commons Treasury select committee during a hearing on the Budget.

It comes amid a row over claims made by Rachel Reeves that Mr Hunt failed to disclose a £22bn spending gap ahead of the election. The OBR has since suggested that the real figure was £9.5bn – but that it nevertheless made a difference to its own calculations.

Jeremy Hunt has been criticised over the state of the public finances (PA Wire)

Mr Hunt has denied the existence of a black hole in the public finances, but the OBR’s position raises questions about his actions, and those of permanent secretary to the Treasury James Bowler.

Mr Hughes suggested to MPs on the Treasury Committee on Tuesday that there may have been a “misunderstanding” about the law that governs disclosures.

Last week, the OBR confirmed that the previous government “did not provide” all available information at Mr Hunt’s last Budget in March.

It said it had uncovered £9.5bn in spending pressures that it was not made aware of ahead of that fiscal statement, and that its judgement on spending would have been “materially different” had it had access to that information.

Mr Hughes told the committee that he had asked the Treasury what spending pressures it was aware of at the time of the March Budget.

Chancellor Rachel Reeves announced £40 billion of additional taxes in her Budget (PA Wire)

“The short answer was there was about £9.5bn worth of net pressure on departments’ budgets, which they did not disclose to us ... which under the law, and under the act, they should have done,” he said.

Asked later in the session if he thought the Treasury had broken the law, Mr Hughes said: “They didn’t provide all of the information that we required to do our forecast.

“Now, there is always information that is relevant to the work that we do, which we would like to have. In this case, this was a material amount of information, which would have led to a materially different forecast had we had it.”

He said that there had been a “systemic failure” in the last forecast, and that 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.

Asked if Downing Street thought Tory ministers had withheld information, Sir Keir Starmer’s spokesperson said: “At the Budget last week, the OBR published a review of the issues surrounding the £22bn black hole and how it came about, and the government has accepted all the recommendations made by the OBR, including recommendations around the previous processes being too informal.

“Now, obviously I can’t speak to previous administrations. But the general principle is that officials’ engagement with institutions like the OBR is obviously on the basis of ministerial policy positions. And you’ve got the chancellor’s previous words that, in the end, civil servants advise, and ministers decide.”