Conservatives lay amendment to stop Labour fiddling the fiscal rules

Today, as Labour's Budget Responsibility Bill returns to the House of Commons for Committee of the Whole House and Remaining Stages, the Shadow Chancellor has laid an amendment to challenge Labour on their plans to change the fiscal rules to allow significantly more borrowing. 

The Bill introduces a ‘fiscal lock' - which mandates the Office for Budget Responsibility to produce a report on government measures that have a cost of at least 1% of GDP – the Conservatives' amendment demands that any changes to the fiscal rules are also included within the ‘fiscal lock'.  

The amendment would therefore require the OBR to produce a report on the impact on the public finances of any changes to the fiscal rules. This is essential given the significant fiscal impact that fiscal rules changes can have.   

This amendment comes as a result of Chancellor Rachel Reeves repeatedly refusing to rule out changing the definition of debt in her fiscal rules from that of the previous Conservative government.  

This potential change comes despite Reeves previously stating she was “not going to fiddle the figures or make something to get different results” and explicitly committed to using the same debt metrics as the last Conservative government only last year.  

Changing the definition of debt would act as a tool to allow Labour to borrow significantly more money and increase debt via the back door – with estimations suggesting that a change could allow Labour to borrow anything between £10bn to £16bn. This would be enough to cover their inflation-busting pay rises for the unions.  

Labour failing to back this amendment will be an admission that they are planning fiddle their fiscal rules at the Budget leading to higher borrowing and higher debt, whilst hiding their intentions from independent scrutiny by the OBR.  

Jeremy Hunt MP, Shadow Chancellor of the Exchequer, said: 

“If Labour fails to back this amendment it will confirm that the Chancellor is planning to fiddle the fiscal rules leading to a massive increase in borrowing and debt with hard working taxpayers left to pick up the tab. 

“As with their plans to raise taxes, these are changes they planned right from the beginning, but simply did not have the courage to tell the British public about during the election”. 

ENDS 

Notes to Editors 

The full amendment text is as follows: 

Jeremy Hunt                                                                                                                        A 

Clause 1, page 1, line 14, at end insert— 

“(c) or any changes to the government's fiscal targets” 

Member's explanatory statement  

This amendment requires the OBR to produce and publish a section 4(3) report at the time new fiscal rules are announced by the Treasury.  

Jeremy Hunt                                                                                                                     B 

Title, after “measures” insert “and of any changes to the government's fiscal targets” 

Member's explanatory statement  

This amendment is consequential to amendment A. It would amend the long title of the Bill. 

• Rachel Reeves has refused to rule out changing her fiscal rules and the definition of debt to allow for more government borrowing (Bloomberg, 3^rd August 2024, link)  

• Rachel Reeves previously said she was “not going to fiddle the figures or make something to get different results”(Bloomberg, 13^th November 2023, link

• Changing the definition of debt could allow the Chancellor to borrow between £10bn - £16bn (Bloomberg, 3^rd August 2024,link) 

• This additional borrowing could be used to cover Labour's inflation busting pay settlements for the unions (Mail on Sunday, 18^th August 2024, link)