Fiscal Responsibility Bill

This is what the Governor of the Bank of England said when asked—[Interruption.] I know that it comes as a complete surprise to Labour Members that the Conservative party agrees with the Governor of the Bank of England and the Chancellor of the day does not seem to agree with him. When asked to comment on the plan that the Chancellor had set out, the Governor said this, and I have it before me:""I think"" the plan""has to be something where a really significant reduction in the deficit, the elimination of a large part of the structural deficit, takes place over the lifetime of a parliament, which is the period for which a government is elected. Beyond that"—" commenting on the Chancellor's plan—"is a statement of intent and hope rather than a plan for which someone can be held accountable."" That is what he said in evidence to the Treasury Select Committee on 24 November 2009. I agree with the Governor of the Bank of England and that is our policy. It is increasingly clear, by the way, that virtually every independent and respected opinion in this country agrees with us rather than with the Government of the day. Such opinion is also in agreement with our approach towards creating a fiscal framework in which we can be held accountable. What we are going to do if we are elected to power in the next few months is create a proper and independent office for budget responsibility. Indeed, we publish today draft legislation—[Interruption.] Well, I am not sure what Liberal Democrat policy is on independent fiscal accountability—although, of course, I must be careful. Let me explain the very significant difference between what we are proposing and will implement and what the Government are presenting to Parliament today. The first striking difference is that while this Bill leaves the Treasury in charge of forecasts and gives the Chancellor the room to fix the forecasts in order to fit the Budget policy—as we know, a practice that has developed in recent years—our Bill would for the first time ever put the forecasts of the nation's finances in independent hands. In other words, it would not be the Chancellor of the Exchequer of the day who published the borrowing and debt forecasts; it would be an independent office for budget responsibility, properly resourced and accountable to Parliament. Secondly, while this Bill leaves the Chancellor as judge and jury on whether he is sticking to his fiscal strategy, our Bill would subject the Chancellor to the independent verdict of an independent panel of experts in the office for budget responsibility. While this Bill tells us nothing about the true state of the nation's finances, our Bill would give the country a statutory independent audit of the true cost of public sector pension liabilities and the dodgy off-sheet accounting of PFI contracts, and give us a proper national audit of the nation's finances.