George Osborne announces Emergency Budget for June 22 as he creates the Office of Budget Responsibility

Speaking at the Treasury this morning, flanked by Chief Secretary David Laws, the new Chancellor has this morning set in train two pledges from the Conservative manifesto.

The first was to announce that he will deliver an Emergency Budget on June 22nd - within fifty days of taking office, as promised.

The second was to announce the creation of an Office for Budget Responsibility, which the party had also committed to in opposition.

Mr Osborne trailed this announcement through an interview with today's FT, in which he explains how the OBR will be set up:

"Alan Budd will be acting as the interim chair of that until we put it on a statutory footing. And he will produce, before the first budget, a proper set of borrowing forecasts, growth forecasts and he will also be given the job of producing a proper set of national accounts which takes into account such things as PFI liabilities which are currently off balance sheet."

He explains why he thinks it was wrong for Chancellors themselves to make economic forecasts:

"In a nutshell, they fixed the figures to fit the Budget, when they should have fixed the Budget to fit the figures. Forecasts were fiddled in order to help the government to present the sort of Budget it wanted to present, while I take a different view which is that you should start with the facts on the ground – the realities about revenues and debt – and then deliver a Budget that is appropriate to those truths."

In the spirit of the new government's wish to decentralise power, he emphasises:

"The first thing I have done as chancellor is to give up the power, something chancellors have done for hundreds of years, to make forecasts. And I will leave the forecasting now to an independent body and I think it will revolutionise the way forecasting is done and will rebuild confidence in the official figures that government produces."

He makes a number of other points in the interview :

• The public finances are in a "very poor state" and the "absolute central task for the running economic policy now is to show the world we can live within our means and get this budget deficit down";
• He emphasises the Coalition's intention to accelerate the reduction in the structural deficit staring this year;
• Dealing with Britain's economic problems and indeed banking policy will be the collective responsibility of the entire Cabinet;
• An independent Banking Commission will consider what to do about breaking up the banks;
• He repeats that there are "no plans to increase VAT" but will not start speculating about individual taxes;
• Only 25% of senior civil servants will be eligible for performance bonuses (it is currently 65%);
• On the EU directive on hedge funds, he says he has been handed "a hospital pass" by the Labour Government;
• Treasury ministers will regularly be in Europe to shape arguments, with Osborne himself due to be spending two days in Europe this week.

> Elsewhere today, the Daily Mail reports former Cabinet Minister Lord Forsyth warning against putting an excessive tax burden on "the hard-working classes, and those in the middle who generate the wealth".

Jonathan Isaby