Chairman Sir Alan Budd to leave OBR

The head of the Government's newly-created fiscal watchdog will not stay on after his three-month contract expires, it was confirmed today.

Sir Alan Budd, chairman of the Office for Budget Responsibility (OBR), is expected to quit at the end of the month in a blow to the Chancellor, who set up the body as one of his first moves after taking up office.

While the 73-year-old's appointment was on an interim basis, he had widely been expected to stay on until the OBR was set up on a permanent basis.

He is yet to report back to the Treasury on his recommendations for future of the OBR and his departure comes just months before the body is due to scrutinise the Government spending review in the autumn.

A Treasury spokesman said it had "always been the case that Sir Alan planned to leave in the summer", although it has not yet begun the search for his replacement.

The spokesman added: "He was appointed to provide forecasts for the emergency Budget and to advise on the establishment of a permanent OBR.

"He has established the OBR as a credible, independent body and the Chancellor is incredibly grateful for his important work on this issue.

"The Government will seek to ensure continuity for the OBR in recruiting Sir Alan's successor."

The launch of the OBR was one of the first acts of the new coalition Government, to scrutinise fiscal policy and provide independent growth and borrowing forecasts.

It was launched on an interim basis before the emergency Budget and does not become permanent until it is enshrined in law, with a legal mandate.

The OBR is led by a three-strong committee, with Sir Alan aided by former Royal Bank of Scotland chief economist Geoffrey Dicks and Graham Parker, who used to head up the Treasury's public finances team.

They are also on three-month contracts, but are expected to remain on the permanent committee.

Andrew Tyrie, the elected chairman of the cross-party Treasury Select Committee, said Sir Alan's departure would "be a great loss" at a time when the OBR is still in its infancy.

"The OBR's credibility for quality and independence of judgment is still to be fully established. Its degree of independence is already a matter of concern to some.

"Sir Alan's departure means that getting the structure of the OBR right, and placing it on an effective statutory basis with a proper system of parliamentary accountability in place, is particularly important."

House of Commons Treasury Committee chairman Andrew Tyrie said: "Sir Alan Budd is leaving the OBR whilst it is still in its infancy. His departure will undoubtedly be a great loss. He is one of the country's finest and most experienced economists and a man of considerable integrity.

"The OBR's credibility for quality and independence of judgment is still to be fully established. Its degree of independence is already a matter of concern to some.

"Sir Alan's departure means that getting the structure of the OBR right, and placing it on an effective statutory basis with a proper system of parliamentary accountability in place, is particularly important. No doubt the Treasury Committee will play a role in ensuring this."