Budget Responsibility Bill
“Stability will be the cornerstone of my Government's
economic policy and every decision will be consistent with its
fiscal rules. It will legislate to ensure that all significant
tax and spending changes are subject to an independent assessment
by the Office for Budget Responsibility”
- Economic stability is the foundation of the Government's
growth mission. This Bill delivers on the manifesto commitment to
introduce a ‘fiscal lock' – to ensure that the mistakes of
‘mini budget' cannot be
repeated by requiring every fiscal event which makes
significant and permanent changes to taxation or spending to be
subject to an independent assessment by the Office for Budget
Responsibility. This will ensure there will always be scrutiny
of the Government's fiscal plans.
What does the Bill do?
- The Bill will introduce a ‘fiscal lock' which will:
-
ensure any Government making significant and
permanent tax and spending changes will be subject to an
independent assessment by the Office for Budget
Responsibility (OBR), giving them the power to
produce an assessment at a time of its choosing.
-
reinforce market credibility and public
trust by preventing large-scale unfunded commitments
that are not subject to an OBR fiscal assessment.
Territorial extent and application
- The Bill will extend and apply UK-wide.
Key facts
- This Bill will prevent significant uncosted measures from
being announced without sufficient scrutiny to mitigate the
impact on the public finances.
- The ‘fiscal lock' is intended to capture and prevent those
announcements that could resemble the disastrous ‘mini budget', announced on 23
September 2022, which would have cost £48 billion per year by
2027/28, and was not subject to an OBR forecast and damaged
Britain's credibility with international lenders.
- The Institute for Government have said that “Rachel
Reeves has made welcome moves to improve fiscal policy making;
Liz Truss's autumn mini budget is a lesson in how not to do
fiscal policy.”
