Budget Responsibility Bill Committee Stage and Third Reading debate

Before its unopposed third reading, the Bill’s full committee stage was taken in Committee of the whole House. The nine amendments selected for debate were debated together in a single group along with both clauses of the Bill itself.

The debate was opened by Conservative shadow minister Nigel Huddleston, who spoke to the two amendments his party had tabled. These, he said, “effectively seek to ensure that the fiscal lock proposed in the Bill should also include any changes to the fiscal rules and would require the Office for Budget Responsibility to produce a report on their effect on public finances”.

The Government have said that they have an “ironclad” commitment to reduce government debt, Huddleston explained, so it is “critical” what definition of debt is used for the fiscal rules. “Clearly, any changes to the fiscal rules are financially significant decisions because they affect how much the Government can borrow and spend.” Why has the Chancellor repeatedly failed to rule out changing the definition of debt, he asked.

Liberal Democrat shadow minister Sarah Olney was broadly supportive of the Bill but spoke to four amendments tabled by her party. The first of these was a response to the risk that a Government might circumvent the proposed fiscal lock by announcing major changes that fall just below the threshold for fiscally significant measures, which will be set at 1% of GDP or approximately £30 billion. It would broaden the definition of fiscally significant measures to include those that fall below the costing threshold but could have wider fiscal and economic effects. “The amendment would ensure that the OBR was able to produce a report when it judged that proposed measures were likely to affect interest rates, the cost of government borrowing, or economic growth,” she explained.

The second Lib Dem amendment would enable the OBR to notify the independent adviser on ministers’ interests if they think a failure to request a report ahead of a fiscal event might constitute a breach of the ministerial code. The third and fourth would collectively “strengthen scrutiny of any changes to the charter for budget responsibility, so that provisions of the Bill cannot be circumvented simply by revising the threshold set out in that charter”. A full consultation, along with an extended period of scrutiny, would be required.

Conservative MP Andrew Griffith disliked the Bill, calling it “disreputable” and “a piece of political theatre”. “At a time when there is low trust in politics, did our constituents… seriously expect that our role would be to give away even more of our responsibilities? Can any of us, hand on heart, say that our constituents know what and who the OBR is?” He dismissed OBR forecasts as less reliable than the hands of a stopped clock.

Griffith claimed the Bill “has more holes than a Swiss cheese”. As an example he noted that proposed new section 4A exempts any measure that is intended, at the time of its introduction, to be temporary. He recalled that income tax was introduced by Pitt the Younger in 1799 as a temporary measure: “Well, here we are, 225 years later, and that temporary measure is still going extremely strong.”

Graham Stringer (Labour) had some sympathy with Griffith’s point, suggesting that “we cannot make a Government behave better or govern more effectively by quango”. He continued: “This quango was set up by George Osborne to trap an incoming Labour Government and restrict and slow them down, and it is an odd thing that we see this quango being gilded.”

Stella Creasy (Labour) supported the legislation “because frankly anybody who has had to renegotiate a mortgage since the Liz Truss Budget knows exactly why it is needed”. However she had tabled amendments seeking to extend the definition of fiscally significant measures in the Bill to include measures with a cumulative impact on public sector net debt or contingent liabilities when taken together with other measures in the same category, such as public projects with private sector partners. This, she explained, was being done with cumulative spending on PFI (private finance initiative) projects in mind. She intended to probe “what we can do in the future to make sure that if we work with the private sector… we make better decisions.”

Dave Doogan (SNP) focused his remarks on the Government’s broader economic strategy, accusing them of planning “austerity”. “The Chancellor claimed that the SNP should raise income taxes to pay for her cut to the winter fuel allowance in Scotland. The cheek of it! I remind those on the Treasury Front Bench that 70% of taxes raised in Scotland go directly to the Treasury. We have paid our dues, and shame on the Chancellor for trying to get Scottish taxpayers to pay twice to compensate for her axe wielding.” He called on the Chancellor to “mirror the Scottish Government’s progressive income tax regime to increase taxes slightly on those of us who are better off, and reduce taxes slightly for those on the lowest incomes”.

Ellie Chowns (Green Party) proposed an amendment to require the OBR to report on the impact of fiscally significant measures announced by the Government on the UK’s statutory net zero target. “To deliver the green economic transformation that we so urgently need… every single policy must be aligned with the UK’s net zero target and every Government spending decision should be as well,” she argued.

A number of MPs made their maiden speeches during the debates and used the leeway this provides to talk about their constituencies and their own backgrounds. But some also addressed the contents of the Bill. Lauren Edwards (Labour), who worked at the Bank of England as a regulator and at HM Treasury, said that: “Political parties, whatever their colour, can have the best policies in the world, but if they are not backed with economic competence and market confidence in those who are holding the purse strings, no one will be better off for them.”

Responding to the debate for the Government, Darren Jones, Chief Secretary to the Treasury, said the Bill would “reinforce credibility and trust by preventing large-scale unfunded commitments that are not subject to an independent fiscal assessment, and proves that we are a responsible Government who will not play fast and loose with the public finances as the previous Government did.”

The minister then responded to the various amendments that had been tabled. To the Conservatives he said that the Government’s fiscal rules “will support economic stability, but do not change tax and spending.” In response to an intervention he said MPs would have to wait for the Budget to find out whether the Government would change the fiscal rules.

He praised Stella Creasy for highlighting issues around private finance. “It is difficult to set and interpret a threshold consistently for contingent liabilities as they can often be large in maximum exposure, but low in expected or reasonable worst-case losses”, he explained. However he acknowledged that effective management of contingent liabilities is important and said that the Government plan to announce new significant contingent liabilities at fiscal events to make sure there is transparency with Parliament. Additionally he could confirm that the Government will publish a report on their contingent liabilities. This is expected to be in early 2025.

Moving on to the Liberal Democrat amendments, the minister said that preventing “irresponsible large-scale fiscal announcements” requires “clear and robust legal frameworks” with “precise definitions”. “It would therefore not be helpful, in the Government’s view, to have a broader, vaguer definition that might repeatedly trigger the fiscal lock under many different circumstances.”

He thought a notification to the independent adviser on Ministers’ interests if the fiscal lock was triggered was not necessary as the OBR is already empowered to independently notify the Treasury Committee and to produce its own report, which would enable Parliament “to hold Ministers to account in the normal way”. Meanwhile, the suggested consultation requirement is not needed in primary legislation, he continued, because the Bill already requires that any changes to the charter for budget responsibility are published in draft at least 28 days before they are laid in the Commons.

Finally, on the Green amendment, the minister said strong legal frameworks are already in place, with legislation for interim five-year carbon budgets, which the Government have to report on periodically. The OBR “is equipped to do the job it is supposed to do, alongside the other regulatory body that holds the Government to account, the Committee on Climate Change”.

Conservative shadow minister Nigel Huddleston was unpersuaded and pressed his amendment to a vote, being defeated by 109 votes to 366. The House also divided on the Lib Dem amendment relating to notification to the adviser on Ministers’ interests, with this defeated 73-375.

Following a brief third reading debate the Bill was passed without a vote and has now moved to the Lords.

Read the debate in full here.