Brown to legislate on fresh code for fiscal stability
Saturday 15 November 1997
Proposals for a "fiscal stability code" will be one of the highlights of the pre-Budget consultative statement, or "green Budget", on 25 November. Mr Brown will extend his commitment to openness in economic policy to legislation on how tax and spending plans should be set.
The Chancellor sees this as the logical extension of increased openness in monetary policy, where the requirement for the Bank of England to meet an inflation target and account for its success or failure is in the course of being incorporated in the law.
In future, governments will be required to publish clear rules for public sector borrowing, provide full information on the public finances at least once a year, and account for their success or failure in meeting their borrowing targets. The proposed legislation would also enshrine an annual pre-Budget consultation exercise.
The plan is likely to please the financial markets, which have already broadly welcomed the new framework for setting interest rate policy. Mr Brown's reputation for austerity is reasonably well-established, but the City would regard self-imposed restrictions on government borrowing as an improvement.
It would put Britain in the vanguard in terms of the openness of setting government finances, as only New Zealand and Australia have similar legally binding restrictions on tax and spending policy.
Elsewhere, the "pre-Budget" is expected to confirm the Government's existing commitment to limit its borrowing to no more than its investment spending - the "golden rule" - and to keep the ratio of debt to national output stable.
It will, however, update the forecast for the public finances, which will look more favourable than at the time of the July Budget thanks to the strength of the economy. Most forecasters now expect the Public Sector Borrowing Requirement for this financial year to turn out lower than the Government's pounds 11bn target.
The document to be published by the Chancellor in 10 days' time will include, in addition, an analysis of the jobs market and the modernisation of the welfare state; a chapter on Britain's competitiveness; an assessment of fairness and tax, which will include progress reports of a few of the special reviews; and an updated economic forecast.
It will not cover public spending, as the commitment to hold to the planning total set by the Conservative government still stands. The comprehensive review of public spending will be completed by next summer, for the subsequent Budget.
A main document will be accompanied by background papers, and other announcements will follow the Chancellor's Commons statement.
Although the Treasury is trying to stop calling it the "Green Budget" - because this misled people into thinking it was about environmental measures only - the document will be a shade of green, in contrast to the red hue of the actual Budget report.
- 1 Malaysian cyclist could face disciplinary action after 'Save Gaza' gloves protest
- 2 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 3 Fifty Shades of Grey trailer provokes moral outrage from US parenting groups
- 4 McDonald’s removes chicken nuggets from the menu in Hong Kong amid major food scare
- 5 Students offered grants if they tweet pro-Israeli propaganda
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
John Barrowman praised for Commonwealth Games opening ceremony gay kiss
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...