Osborne names Chote as new budget watchdog head

Robert Chote, currently director of the Institute for Fiscal Studies, has agreed to replace Sir Alan Budd as the head of the Office for Budget Responsibility, adding to hopes that the newly formed body will be able to produce truly independent forecasts for the UK.

The OBR was established just weeks after the new coalition government was formed but the organisation was soon mired in controversy after its first two growth forecasts were judged to be overly optimistic and after reports that prime minister David Cameron leaned on the office to produce more politically palatable job loss forecasts ahead of Prime Ministers' Question Time.

Just weeks later Sir Alan Budd announced plans to step down, adding to worries that the office would struggle to find a leader who could ensure the independence of the watchdog.

But the appointment of Robert Chote - who has already criticised the government's spending cuts and said they will hit the poor hardest - may help to lay those fears to rest.

Chancellor George Osborne said Chote has been: 'one of the most credible independent voices on the public finances, taxation and public spending.'

And Howard Archer, chief UK economist at IHS Global Insight, said Chote's appointment 'will add much-needed credibility to the OBR'.

He said Chote is an acknowledged expert in fiscal matters and 'has a reputation for saying things as he really sees them.

But David Blanchflower, a former member of the Bank of England's monetary policy committee and a lecturer in economics at Dartmouth University in the US, said those characteristics could mean trouble ahead for chancellor George Osborne.

'This is dangerous for Osborne as Chote may say stuff he doesn't want to hear,' said Blanchflower, pointing out Chote inherits Budd's overly optimistic forecasts which he won’t be able to justify and which he has already said are unfair.

'If he is truly independent is he prepared to say that the chancellor's policy will drive us to double-dip or lower growth?' asked Blanchflower.

The answer to that will be known by the end of the year as Osborne has asked Chote to update the OBR's forecasts taking account of the chancellor's October spending review before then.

And Chote said that he will ensure make its judgements without 'fear or favour', if his appointment wins the aopproval of the Treasury select Committee.

He said: 'The creation of the OBR is a great opportunity to ensure that the tax and spending decisions of this and future governments are informed by demonstrably rigorous and independent analysis of the outlook for the public finances and the economy.'