The UK Treasury implemented the Budget Responsibility Act 2024 on 15 October 2024, ensuring that when they announce “fiscally significant” measures, they are subject to an independent assessment by the Office for Budget Responsibility (OBR).

The government calls this a fiscal lock.

A measure or a set of measures is considered “fiscally significant” if their cost reaches a minimum of 1.0% of Gross Domestic Product (GDP) during any financial year within the forecast period (approximately GDP 30 billion).

An assessment by the Office for Budget Responsibility (OBR) will not be necessary if the measures are both temporary (i.e., expected to conclude within two years) and implemented in response to an emergency situation.

Should the OBR reasonably contest the Treasury’s evaluation that these criteria are satisfied, it retains the authority to activate the fiscal lock and produce a report.

The Budget Responsibility Bill was introduced to Parliament on 18 July 2024. The bill was due to have its second reading on 30 July 2024. This legislation amends the existing 2011 Budget Responsibility and National Audit Act, which required the OBR to produce two economic forecasts each year.

Now, any major fiscal announcement made by the government must be assessed by the OBR to prevent potential disruptions to financial markets.

The new regulations, formalised on 14 October 2024, bring section 1 of the Budget Responsibility Act into effect and enhance the OBR’s oversight capabilities, while section 2 has been operational since 10 September 2024.

The Act, which received Royal Assent on 10 September 2024, applies to England, Wales, Scotland and Northern Ireland.