📈 Charter for Budget Responsibility

• The Chief Secretary to the Treasury, Darren Jones, introduced the debate on the Charter for Budget Responsibility: Autumn 2024, emphasizing the importance of sustained economic growth supported by sound investment as the key to improving national prosperity and living standards.

• The Chancellor had recently given a speech on growth, highlighting the need for a stable economy to attract investment and the necessity of new fiscal rules to ensure economic stability.

• A significant policy mentioned was the potential third runway at Heathrow airport, which, according to a study by Frontier Economics, could boost GDP by 4.3% over the next 25 years and benefit regions outside London significantly.

• The Government plans to reform the planning system to boost investor confidence, aiming to stabilize and grow the economy.

• Jones criticized the previous 14 years of economic management, pointing out low productivity, rising debt, and declining public services performance, including a £22 billion black hole in in-year spending pressures not disclosed by the previous government.

• The new fiscal rules include a stability rule, aiming to balance the current budget by 2029-30 so that day-to-day spending is met by revenues, and an investment rule, targeting a reduction in net financial debt as a share of the economy.

• A zero-based review of all public spending was announced, marking the first such review in 17 years, to assess and allocate resources more efficiently.

• The government committed to increased public investment, projecting an additional £100 billion over the forecast period compared to previous plans.

• A new escape clause was introduced in the fiscal rules, allowing for temporary suspension under specific conditions, monitored by the Office for Budget Responsibility (OBR).

• The Budget Responsibility Act 2024 established a fiscal lock, ensuring that fiscally significant changes to tax and spending are scrutinized by the OBR, enhancing transparency and economic stability.

• The government plans to limit fiscal events to once a year, conduct spending reviews every two years, and ensure three-year rolling budgets for the OBR to enhance economic planning and stability.

• On the welfare cap, the government plans to reset it based on the latest OBR forecast, aiming to control welfare spending and help people return to work, following a significant breach of the previous cap.

• Backbench MP Matt Rodda praised the Chancellor’s commitment to growth and infrastructure, and requested further investments in local transport projects like the western rail link to Heathrow.

• Liberal Democrat spokesperson Daisy Cooper stressed the importance of the OBR and fiscal rules, supporting productive public investment but calling for a more pragmatic and less politically influenced approach to economic management.

• Jones refuted accusations of ‘fiddling figures’ by clarifying the government’s commitment to two fiscal rules and the rationale behind choosing public sector net financial liabilities as a measure of debt to enable responsible borrowing for investment.

• The government’s infrastructure strategy was outlined, aiming to integrate economic, housing, and social infrastructure plans to drive regional growth, with a 10-year strategy and longer-term capital budgets.

• The Chief Secretary concluded by reinforcing the importance of fiscal rules for economic stability and their direct impact on family finances, contrasting current policies with the previous government’s economic mismanagement.

The disagreement displayed in the session can be described as moderate. While there was substantive debate and certain points of contention, the disagreements were often framed in a relatively civil manner and focused more on policy critique rather than personal attacks. Here is a detailed breakdown of the observed disagreements:

• Fiscal Responsibility and Rule Changes: There was significant disagreement on the change of fiscal rules and definitions of debt. The Chief Secretary to the Treasury, Darren Jones, defended the switch to public sector net financial liabilities (PSNFL) as a means to enable responsible borrowing for investment, whereas Richard Fuller vehemently accused the government of ‘fiddling the figures’ to justify more borrowing. This debate escalated into a somewhat heated exchange, with accusations of untruthfulness, though it did not result in outbursts or interruptions that halted proceedings.

• Welfare Cap: The welfare cap introduced a point of contention between the parties. Richard Fuller criticized the Labour government for allowing a projected 42% increase in the welfare cap, referencing a lower increase under previous Conservative rule. Darren Jones responded by explaining the necessity due to increased costs in health and support services, suggesting a difference in approach rather than an outright attack.

• Economic Management: There was also disagreement on the current government’s economic management and its impact on public life. Richard Fuller accused the Labour government of causing economic instability with its policies, while Darren Jones pointed out the turbulence caused by the previous Conservative government, including its impact on mortgages and household finances. This back-and-forth was robust but did not degrade into disorderly conduct.

• Infrastructure Investments: While infrastructure plans like the Oxford-Cambridge growth corridor and the Western rail link to Heathrow were viewed positively, there was some contention over their economic viability and the government’s approach to prioritizing these projects. Richard Fuller questioned the benefit-cost ratio of the East West Rail project, challenging the Chief Secretary to justify it within the new fiscal framework. This was a policy disagreement but handled within the norms of parliamentary debate.

Overall, while the tone was occasionally sharp, especially in the fiscal rules disagreement, the session remained relatively within parliamentary norms. The debate did not descend into personal insults or extreme disarray, keeping it at a moderate level of disagreement.