Fiscal Responsibility Bill

I agree with my—I was about to say "my hon. Friend", but that would be to get ahead of ourselves, would it not? We are all being very nice to the Liberal Democrats these days. I agree with the hon. Lady. I take it from what she said that she will be joining us in the Division Lobby tonight; I certainly hope she will. Hon. Members might be hoping to find something a bit more impressive in clause 3 Bill, but in it we discover that the Treasury will be required to tell us whether it has met its borrowing forecasts. The last time I checked, I found that that happens in every single Budget statement and pre-Budget report. However, we now need legislation to turn what has been the standard practice of Chancellors, at least since the second world war, into the law of the land. And when will the Treasury be required by law to tell us whether it has succeeded in performing its duty to secure sound public finances? According to clause 3(5), this will have to happen""during the financial year ending with 31 March 2016."" We shall not have long to wait, then, for the Government's assessment of how well they are doing. They cannot get their borrowing forecasts right from one month to another, yet they now expect us to believe a commitment written in statute relating to 2016. They are living in a completely parallel universe. Let us look at clause 4, which relates to accountability. Let us see what terrible fate will await the Treasury if it fails to comply with the order imposed on it by the Treasury. Will the Chancellor be hauled off to the Tower? Will he be forced to hand in the great seals of his office? Will his pay be docked for poor performance? Will he at least have to apologise? No. Clause 4 states that the fact that any duty imposed as a result of the Bill""has not been, or will or may not be, complied with does not affect the lawfulness of anything done, or omitted to be done, by any person."" This is an absolutely ridiculous clause. There are no penalties. This must be the first law introduced in Parliament that contains absolutely no legal sanction whatever for those who break it. We have only two more clauses to consider. Clause 5 is about interpretation, and states that the Treasury will be required to "explain the meaning" of such terms as "public sector net borrowing" and "public sector net debt". It is a shame that the meaning of those terms was not explained to the previous Chancellor when he was in office. As far as I can see, the clause does not require a proper explanation of the state of the national accounts that takes into account the private finance initiative liabilities that are kept off-balance sheet, and public sector pension liabilities. Finally, clause 6 deals with the short title of the Bill, and tells us that the legislation will be known as the Fiscal Responsibility Act 2010. We will have to see whether it ever becomes an Act. This clause confirms a time-honoured principle in this place: the greater the claims that are made by a Bill's title, the less substance it usually contains. Of course we have to debate this vacuous and irrelevant legislation, but why did the Chancellor feel the compelling need to introduce it? Why is he the first Chancellor in history to feel that he needs an Act of Parliament on top of a Budget statement? There can be only two explanations: either he does not trust himself to secure sound public finances, or he knows that the public do not trust him to secure them. Neither is exactly a ringing endorsement; both are a reflection of the catastrophic, disastrous state to which this Government have reduced the finances of this country. I have searched far and wide to find another country that has introduced a fiscal responsibility Act, and I have found one. It is that shining example of fiscal rectitude, Nigeria. That is where the Chancellor appears to have got his inspiration from. It was no doubt sent to him in one of those e-mails that we all get from Nigeria. Perhaps it said, "Dear honoured sir, I am a former finance Minister of this country, and I have a plan to reduce your debts. Please send me your bank account details and I will forward the money by return." [Laughter.] Of course this would be funny, if this were not such a fundamentally dishonest piece of legislation, and if this were not such a fundamentally serious time, in which the credibility of our nation and its ability to pay its way in the world are being questioned by markets, investors and credit rating agencies around the world. A poll in yesterday's Financial Times found that a fiscal crisis was the biggest single risk facing the British economy at the moment. The managing director of Moody's Global Sovereign Risk group is now warning of the danger of""an abrupt increase in long term interest rates"" in the UK. The former Deputy Governor of the Bank of England, Sir Howard Davies, whom the Prime Minister appointed to be the first head of the FSA, said this week that "the major risk" to the British economy""is the loss of confidence in the government's ability to get the public finances back under control"." And today we hear that the world's biggest bond investor, Pimco, has announced that it will be selling off UK Government bonds this year. It says that this is a "significant policy statement" prompted by concerns about rising borrowing levels in this country. It has just issued a statement saying that the question is when, not if, Britain's credit rating will be downgraded.