The Fiscal Responsibility Bill 2009-10 is now an Act of Parliament (law). Following agreement by both Houses on the text of the Bill it received Royal Assent on 10 February.
The summary of the Bill imposes a statutory duty on the Treasury to meet specific targets for the reduction of government borrowing and debt. The Government believes that this legislation demonstrates its commitment to ensuring the sustainability of the public finances. The Bill gives the Westminster Parliament a greater role in fiscal policy.
The key areas are as follows:
The Bill requires the Treasury to make sure that:
- Government borrowing in each financial year between 2010/11 and 2015/16 is lower than the previous year, measured as a percentage of GDP
- Government borrowing in 2013/14 is no more than half its 2009/10 level. A draft statutory instrument made under the Bill requires borrowing to be no more than 5.5 per cent of GDP in 2013/14
- Government debt is lower in 2015/16 than in 2014/15, measured as a percentage of GDP
The final sentence is the cracker. All the Treasury has to do if it doesn't meet the targets is to provide an explanation to Parliament. I'm no economist but I do know numbers can be manipulated to suit any situation. Can't you hear the excuses already - wrapped in 'fiscal speak' to confuse the hoi polloi?