“As the economic recovery is established, my Government will reduce the budget deficit and ensure that national debt is on a sustainable path. Legislation will be brought forward to halve the deficit.”
The Government will therefore bring forward legislation in the Queen’s Speech to require reductions in the deficit, with the aim of ensuring the national debt returns to a sustainable path in the medium term.
The purpose of the Bill is to:
Put the Government’s deficit reduction plan on a statutory footing, in order to halve the deficit over four years and put debt on a sustainable path in the medium term.
The main benefits of the Bill would be:
• This legislation and the detailed provisions of the bill will be set out in the Pre-Budget report alongside the Chancellor’s fiscal forecast.
• The new legislation would provide a firm and binding statutory basis for the Government’s consolidation plans, creating a duty to meet them. It constitutes a major change to the structure of fiscal policy, especially through giving Parliament power to approve multi-year fiscal plans. Accountability and scrutiny is through Parliament rather than in any new external body.
• Legislating now demonstrates our commitment to sustainability and adds focus to our plans. It is important that businesses and investors have certainty about the Government’s fiscal plans, in order that they can make long-term plans and decisions with confidence. The Fiscal Responsibility Bill provides this.
The main elements of the Bill are:
The Chancellor will set out full details in the Pre-Budget Report, alongside his fiscal forecast.
Related documents:
None as yet - full details will be published in the 2009 Pre-Budget Report.
Existing legislation in this area is:
Sections 155 and 156 of Finance Act 1998
Devolution:
The Bill applies to the United Kingdom.
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