Today (Wednesday 29 January) the House of Commons voted to
enshrine the Charter for Budget Responsibility and the new fiscal
rules into law.
These fiscal rules provide the stability which underpins the Plan
for Change and the Government's number one priority to kickstart
economic growth.
There are two new non-negotiable fiscal rules. The first is the
stability rule which ensures that day to day spending is matched
by tax revenues, so the Government is only borrowing to
invest.
The second is the investment rule which requires the government
to reduce net financial debt as a share of the economy, keeping
debt on a sustainable path while allowing much needed investment
to grow the economy.
Chancellor of the Exchequer, said:
In our Plan for Change we were clear that our top priority is
growth built on stability. Today I have announced how I will go
further and faster on growth and our fiscal rules, which have
been enshrined in law, are now non-negotiable and the bedrock of
that stability.
Through the Charter, fiscal and economic stability will be
enhanced by confirming the government's intention to move to one
major fiscal event per year, giving families and businesses
certainty of tax and spending plans.
Stability is also reinforced by confirmation that the Treasury
will conduct Spending Reviews every two years, setting spending
plans for at least three, to ensure public services have
certainty on their funding.
Fiscal transparency and accountability will also be strengthened
as the Chancellor has accepted all of the recommendations of the
OBR's review of the March 2024 forecast for Departmental
Expenditure Limits, including to improve the spending information
that the Treasury shares with the OBR.
In addition, the Charter now requires the OBR to report on the
long-term impacts of capital investment and other policies at
fiscal events, showing how economic growth and the health of the
public balance sheet is bolstered by good investment
decisions.
The Charter also outlines the detail of the fiscal lock – the
first legislation passed by this government – so that no
government can announce fiscally-significant measures without
being subject to an independent assessment by the OBR, ensuring
they can never again be sidelined.
The legislation in full can be found on the Houses
of Parliament website.
The approved OBR Charter can be found on
GOV.UK.
