Fiscal Responsibility Bill

I beg to move an amendment, to leave out from "That" to the end of the Question and add:""this House declines to give a Second Reading to the Fiscal Responsibility Bill because it does not establish an independent mechanism for ensuring the publication of credible fiscal forecasts and assessing the effectiveness of Government fiscal policies in achieving stated fiscal objectives; because the duties imposed by the Bill are not accompanied by any corresponding sanctions; because in the absence of spending plans which set out a credible means by which public sector net borrowing is to be reduced, legislating to secure sound public finances is irrelevant and a distraction; and, consequently, considers that the Bill is inadequate in achieving the objective of securing sound public finances."" Although this piece of legislation consists of only six short clauses, it must be the biggest load of nonsense that this Government have had the audacity to present to Parliament in this Session. Quite frankly, I do not think the Bill is the idea of the Chancellor of the Exchequer or any of his Treasury Ministers, or indeed of any official in the Treasury. It was dreamt up by the Schools Secretary and the Prime Minister when they were trying to think of something to say on the "Andrew Marr Show" on the eve of the Labour conference, so now we all have to go through the rigmarole of debating it in Parliament. The Bill was a completely feeble stunt, a fact that is revealed when we look at the clauses. Let us remember what one of the economists whom the Prime Minister himself appointed to the Monetary Policy Committee has said about the Bill. Willem Buiter has said:""Fiscal responsibility acts are instruments of the fiscally irresponsible to con the public."" That was the man whose economic judgment the Prime Minister trusted so much that he put him on the Monetary Policy Committee of the Bank of England, but no one is conned. If the Bill was supposed to reassure the markets, it has failed. This is what one of the City's leading economists, Michael Saunders of Citibank, says:""the government's plans for legislation to cut the deficit are not convincing and are probably just camouflage—a sort of 'fiscal figleaf'—for the lack of genuine action"." If the Bill was supposed to con the business community, it has completely failed in that task too. Richard Lambert, the head of the CBI, was on the radio just two or three days ago saying:""I'm certainly not satisfied with the government's plans. It's going to be publishing in the next few days legislation which says it is going to halve the deficit within the next four years, but it's a bit like me saying I'm going to join the gym and that means I'm fit already."" The Bill was also supposed to convince the independent economic commentators, but this is what the Institute for Fiscal Studies says about the legislation that the Chancellor has brought to the House today:""it is far from clear why investors and voters should be any more impressed by this"—" the Bill—""than they were by the Code for Fiscal Stability, which was enshrined in statute with much fanfare in 1998."" The Bill has failed to con even the Labour party. This is what the right hon. Member for Norwich, South (Mr. Clarke) says—[Interruption.] The Chief Secretary to the Treasury laughs, but I seem to remember that the right hon. Gentleman is the former Home Secretary—not the former Home Secretary who says that the Labour party has a big charisma problem; I am talking about the other former Home Secretary, who says that this piece of legislation is "vacuous and irrelevant". As with so much that the right hon. Gentleman says about the leadership of the Labour party at the moment, he is absolutely right, because when we go through the Bill clause by clause, we see what complete nonsense it is. Let us start with clause 1, which deals with the duties on the Treasury. Here we read:""The Treasury must ensure that…public sector net borrowing expressed as a percentage of gross domestic product is less than it was for the preceding…year."" We are also told that the law will require net debt to be falling by the end of five years. Saying these things, and putting them into statute, will not actually make them happen, however. Every Budget and pre-Budget report produced by this Chancellor and his predecessor since 2003 has promised falling net debt at the end of a five-year horizon, and every one of those borrowing forecasts has been wrong, in times of boom and of bust. The present Chancellor has got his total borrowing forecasts wrong to the tune of £560 billion since he entered No. 11. It is now four times higher than when he announced his forecasts for the PBR in 2007, after the credit crunch had begun. So why would anyone believe his latest forecast, just because he writes it into the clause of a Bill instead of publishing it in the Budget Red Book? Does the fact that it is printed on green paper, given a solemn title and passed through Parliament after being looked at by a Committee of the House make it any more likely to happen, or any more real, than when he stood at the Dispatch Box on Budget day and told us that these things were going to happen? Clause 2 relates to "Further duties for securing sound public finances". In it, we find a stunning extension of state power. We discover that""The Treasury may make an order imposing…a duty or duties"" and that these duties are""imposed for the purpose of securing sound public finances."" We also find that these duties""must be consistent with the key principles as applied by the code for fiscal stability."" This is the same code for fiscal stability, by the way, that allowed the Prime Minister to run massive deficits in the middle of a boom, but never mind that. We shall have an order that will impose a duty to secure sound public finances, and it will have to be laid before Parliament and approved by resolution of the House of Commons. Who is to be on the receiving end of this great order that will descend from on high, from Her Majesty's Treasury, to use the full authority of Parliament to impose a duty to secure sound public finances? Which public body will be quivering in fear, wondering whether it is to be the Treasury's chosen victim? Well, it turns out that that public body is the Treasury itself. Under clause 2, the Treasury will have the power to make an order that imposes a duty on the Treasury. That will make it sit up and take notice, will it not?