Fiscal Responsibility Bill

I think that that is the most unlikely thing in the world. The fact that the fiscal plans cannot be changed except with the approval of Parliament through new legislation also demonstrates the importance the Government place on action to ensure sound public finances in the medium term. The Bill makes the Government accountable to Parliament for meeting their fiscal plans and creates a new scrutinising role for Parliament in relation to both progress towards and compliance with them. That is a significant evolution of the extent to which the Government are held to account for their medium-term fiscal policy. Parliament is the right body to hold the Government to account for their plans for tax, spending and borrowing. The Government are required to account to Parliament through regular progress and compliance reports, which will be produced alongside Budgets and pre-Budget reports. Progress reports must set out the progress that has been made towards compliance with the plans. If targets are not met, the Treasury must set out for Parliament why not. The revised code for fiscal stability will set out that the Treasury must also report on what it will do to remedy the situation if targets are not met. These measures represent a significant evolution of the extent to which the Government are held to account for their medium-term fiscal policy. As the Chancellor noted, the Government do not consider that an office for budget responsibility—as proposed by the Opposition—is the right solution to the challenge we face. Establishing a new quango would not enhance the fiscal framework. Instead, it would risk undermining the role of Parliament in scrutinising the Government's fiscal plans. Introducing blurred lines of responsibility for forecast and policy-making functions risks damaging accountability: policy-makers would be acting on forecasts for which they were not fully responsible. It is Parliament and Parliament alone that is best placed to hold the Government to account for their plans. They should have ultimate say in matters of tax, spending and borrowing. Further, evidence does not suggest that outsourcing the forecast would improve its accuracy. The Treasury's fiscal forecasts since 1997 have been marginally more accurate than the forecasts for the UK made by many independent international organisations, such as the OECD, the IMF and the European Commission, and no more or less cautious than the range. Instead, the Government's approach is to strengthen the existing fiscal framework and enhance accountability to Parliament rather than outsource it to an external body. Parliamentary scrutiny has been bolstered by the steps the Government have taken since 1997 to improve fiscal transparency. In addition, the independent National Audit Office will retain its existing role in auditing key forecasting assumptions. Parliament should have the ultimate say in matters of tax, spending and borrowing. The Bill will give Parliament a new role in holding the Government to account for their medium-term fiscal policy and meeting the targets of the fiscal consolidation plan. The legislation includes clear targets, and will create a transparent reporting process for assessing progress and compliance against fiscal plans. If the Government are not on track it will be obvious, and if plans are not achieved the Government will have to set out why not. The Government have made it clear that reducing spending accounts for two thirds of the action the Government are taking to reduce the deficit following the crisis—measures that will reduce the deficit by £57 billion in 2013-14. This is shared between current and capital spending. Specific savings that we have already set out include £12 billion of savings from the smarter government reforms to the public sector; £4.5 billion from slowing increases in public sector pay and pensions; and £5 billion from cuts to lower priority programmes, as well other efficiencies across all Departments, where £10 billion value-for-money savings have been found already. The Government have already set out clear plans for fiscal consolidation. In April in the Budget, my right hon. Friend the Chancellor set out plans for consolidation and the recent pre-Budget report confirms these. These plans include more than halving the deficit in four years. The Bill enshrines these plans in law, through the Government's first fiscal plan, the fiscal consolidation plan. The Government are committed to sound public finances and have set out clear plans for consolidation. We will not withdraw support too quickly and jeopardise recovery. The annual pace of consolidation set out in the 2009 pre-Budget report is faster than the pace of deficit reduction forecast by the IMF for all other G7 economies in the period up to 2014. Further, the Government will return with legislative targets beyond 2015-16 at an appropriate time. The pre-Budget report projects that the deficit on the cyclically adjusted current budget will be eliminated by 2017-18. We are now at the turning point in the global recession and at a time when we need to start building and planning for the future. As growth picks up, we must ensure that we have sustainable public finances. Through enhancing the fiscal framework, the Fiscal Responsibility Bill will support that task. I commend the Bill to the House. Question put, That the amendment be made. The House divided: Ayes 182, Noes 280.