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?
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15 comments:
This is rhetorical window dressing.
Unless it means the party in power has to stand down if the target isn't met then it has less effect than a placebo.
The deficit has been created by the banks and it should be up to them to service it.
How much can we expect back from them in 2010 Mr Darling?
SR,
Apologies in advance as it is your blog, but really CRAP is talking **** in the third para.
The deficit was not solely caused by the banks, it was mainly caused by the govt living beyond its means.
As you say SR, the excuse will be 'fixed' and supplied in 'politicspeak'.
A useless piece of legislation from a useless government headed by a useless chancellor and equally useless prime minister, attempting to create a useless piece of political subterfuge.
I could go on - but what’s the use?
That's why I thought it was useless RA and just another piece of law which can be fudged. Legislation costs money. Wonder how much was spent getting this particular piece through?
I would agree with you WFW, it wasn't all caused by banks. The country was in a pretty bad state financially before the banking business. Just we weren't told.
Hello John. Doesn't it go to show we have far too many people in Westminster with little to do? Oh, mustn't miss out the Lords too.
Would we notice if they were reduced by 50%? I doubt it.
I'm not sure it's a good thing to make laws that hold a government to a particular course of action like this.
What will happen if, as some suggest, this is a double dip recession? What will happen if in 3 months another massive bank crisis occurs?
It's rather like Cameron saying "we will NEVER join the Euro while I'm PM"... maybe he hopes we wont, but who knows what might happen.
Iceland thought they would never join the Euro!
I'm not suggesting that any of this will happen, but governments shouldn't hidebind themselves.
All it needs is for the wrong kind of snow to fall.
Very true Tris. It's all smoke and mirrors.
Or the wrong kind of leaves on the line Demetrius.
I'll just say this in response to Wittering, Rosa.
Certainly the government was complicit in its failure to evaluate and regulate - mainly because the money was from nothing and promised an everlasting everything.
But the banks knew this and used and exploited it to gear and expose themselves well beyond the bounds of probity.
They were the cause, the £1.3 trillion required in indemnities, the £850bn of that in direct loans, the subsequent world wide recession, the quantitative easing and devaluation of currency; the bankruptcies and unemployment followed by the raising of taxes and cuts in public spending are all the effects.
And the effects are far greater in the sum and distribution of their parts than ever the benefits would have been. So why exonerate the prime mover?
Today Barclay's have announced profits of $12bn - wouldn't it give you some small satisfaction if they paid £6bn of that in atonement tax?
Even if they repaid the same amount as they are paying in bonus, basically to themselves, that would be something, but don't hold yer breath! None of them have any sense of responsibility for the mess, their only responsibility is to themselves and a bigger bonus. The new untouchables.
D.
The new untouchables right enough Apogee. No wonder there's a rammy to be a candidate for Westminster.
Why did the SNP oppose this Bill? Seriously, I know numbers can be massaged and fiddled, but it seems to me that in the light of Labour's insane over-spending of the last decade, any attempt to induce probity in Government would be a good thing.
What was the SNP's argument in voting against this?
Hi Alan. I've no idea. Think perhaps Calum Cashley would be a good person to ask.
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