Jacob Rees-Mogg blasts 'useless' OBR economists and laments Hunt’s ‘tinkering Budget'

Sir Jacob Rees-Mogg has launched a scathing attack on the Office of Budget Responsibility – as well as bemoaning what he called Jeremy Hunt’s “endless tinkering” in Wednesday’s Budget.

The Tory MP for North Somerset and former Business Secretary also suggested Chancellor’s eagerly awaited financial statement was identical to the one opposite number Rachel Reeves would have delivered – with one key exception.

Speaking on GB News, he suggested the UK was spending more beyond its means, arguing that Mr Hunt should have been bolder with his cuts to capital gains tax and increases in the VAT threshold.

Sir Jacob said: “My test for today’s budget was could it have been delivered by Rachel Reeves? Was there really going to be an important difference between what a brave, bold conservative Chancellor would do and what a cautious, Brownite socialist Chancellor would do?

“And yes, there was one important difference; that was the cut in national insurance, the two percent off, reducing it to eight percent and with the implication that it may be abolished altogether, which is a really very important implication and would be a fundamental change and improvement in our tax system.

“But overall, the budget was constrained by the way we now construct economic policy.”

Referring to the Treasury-funded NGO tasked with providing the Government with independent economic forecasts, he continued: “We have deified the OBR, the Office of Budget Responsibility, which is unfortunately, useless. It gets all its forecasts wrong, as indeed the Chancellor pointed out in his budget statement.

“That means that you’re making these decisions on forecasts that will turn out not to be true. And you end up making little decisions, thinking the forecasts are right, when actually, the little decisions don’t really matter.”

Sir Jacob said he was “very much in favour” of the VAT threshold being increased to enable small businesses to have a chance to grow.

He explained: “Businesses up and down the country turn away opportunities when it gets to February and March because they don’t want to go over the VAT threshold.

“Taking it up to £90,000 was a good start. It cost £150million But that over £1.21 6 trillion expenditure budget is a rounding error. It’s 0.01 percent: it doesn’t matter.

“And the idea that you can make these very precise forecasts and add up little bits here and little bits there and then say ‘we are meeting our rules’, actually doesn’t work doesn’t make any sense.”

Instead, it was necessary to “look at the big picture” and push for “fundamental reform, taking into account where you’re starting from”.

Sir Jacob stressed: “And where you’re starting from is that we are spending too much: 44.5 percent of GDP for 2023/24.

“It’s more than the country can sensibly afford, and it’s why we’ve got taxation at the highest level since 1948.

“It isn’t going to exceed it so we won’t be able to say it’s the highest taxation level in the post-war period, but it’s not much below. And until we look at fundamental reform, what we do nickel and diming won’t make a lot of difference.”

Economic growth was needed in order to generate more cash to spend on public services while simultaneously reducing the tax burden, Sir Jacob said.

He added: “Now, the tax burden is best applied if it’s applied sensibly and uniformly and what I don’t like about this budget is the endless tinkering: the little bit here and a little bit.

”So yes, I was pleased that capital gains tax on property, from which I may marginally benefit myself just so that you know, went down and that the Treasury and the OBR had agreed that there was a Laffer effect and that it would raise more money.

“But why not take it down to 20 percent so you only have one rate of CGT? Why carry on with this muddling?”

Highlighting what he called the “silliness” over the status of Non Doms, Sir Jacob emphasised: “Non Doms contribute to the economy; they should be welcomed.

“When we’ve got the OBR forecasting 350,000 immigrants coming in every year, many of whom make a negligible economic contribution, making it harder for Non-Doms who, in very small numbers make a very big contribution, is really bad policy.

“We need to have a pro-growth economic policy that has simple, straightforward taxation that people can understand.

“We need to have cheap energy, we need to control government expenditure, we must get more productivity out of the public sector, which is lower now than it was pre the pandemic and has not increased since 1997.

“Until we get all this right, the budgets will essentially be tinkering. And yes, there was one thing that Rachel Reeves wouldn’t have done, but only the one thing.”