Charter for Budget Responsibility

Andrew Gwynne Excerpts

Tuesday 13th January 2015 Commons Chamber

[Ed Balls]

I will explain that in my speech. What we have before us—this so-called trap—is not a trap at all, as I will explain. I will discuss the new fiscal charter in detail in a moment, but let us first be clear about the background to today’s motion and the new charter before us. This is not the first fiscal charter before us in this Parliament, but the second. The first was presented at the beginning of the current Parliament when the Chancellor lay before the House a charter committing the coalition to balance the books in this Parliament, to get the cyclically-adjusted current budget back into balance and the national debt falling by the coming financial year 2015-16.

As I reminded the House on the day of the autumn statement, the Prime Minister actually went further in 2010. He said that he would balance the Budget in 2015. However, just a few weeks ago, in the autumn statement, independent forecasts from the Office for Budget Responsibility confirmed that this Chancellor was not going to balance the books in 2015, or in 2015-16. In fact, public sector net borrowing in 2015-16 is now forecast to be £76 billion, £7.7 billion higher than was forecast even as recently as the Budget.

The figures on page 15 of the OBR’s “Economic and fiscal outlook” show that this Chancellor, in this Parliament, is borrowing—staggeringly—over £200 billion more than he proposed to spend in the 2010 plans. As a consequence, the national debt, compared to the 2010 forecasts, will be much higher in 2015-16 than he suggested. Back in 2010, he said that in 2015-16 the national debt would be 67.2% of GDP. According to the latest figures, it is now forecast to be not 67.2% but 81.1% of GDP, 14 percentage points higher than the Chancellor’s 2010 figure. Worse than that, according to the 2010 fiscal mandate the national debt would be falling, but the OBR figures show that in 2015-16 it will be rising again, from 80.4% to 81.1%. On the deficit, on the current deficit and on the national debt, the Chancellor made promises in 2010, in a clear fiscal charter, and he has broken every one of them.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Was my right hon. Friend as surprised as I was that, in all his political bluster, the Chancellor of the Exchequer did not mention once that, while he used to say that he wanted to balance the overall budget, he now wants to commit himself to Labour’s policy of balancing the current budget, excluding capital investment? Moreover, he did not mention the fact that the fiscal mandate had been downgraded from a target to an aim.

[Ed Balls]

I shall provide an analysis of the new charter and why it is different from the old charter in a moment, but my hon. Friend is quite right. The Chancellor did not explain either that he had failed to meet the requirements of his charter in the current Parliament, or that he has now changed it for the next Parliament for reasons that are surprising and a bit confusing.