Thoughts on politics and life from a liberal perspective

Thursday, 19 November 2009

Fiscal Responsibility Bill is a landmine for the Tories

The more I think about it, the more I am coming to the conclusion that the Fiscal Responsibility Bill that was outlined in Labour's Queen's Speech yesterday is actually a landmine set to go off under a potential future Tory government. The bill will say that the deficit must be halved in the next four years, by law.

Yesterday I was saying it seemed bizarre that the government would feel the need to try and put a legislative lock on itself like this and that it would appear to be more to do with sending a signal to the markets because Labour knows that it cannot be trusted and has moved the goalposts before.

However I think there is more to it than that. Brown is nothing if not a political calculation machine. Ask yourself why the timeframe is 4 years. That would coincide roughly with when a first term Conservative government (were they to win the next election) would be getting into gear for a general election. If there is a law in place that forces them to have halved the deficit within 4 years then it will be difficult for them to get around this. I suspect they would want to try and do this anyway but Brown is trying to bind the hands of a successor parliament by passing this law and forcing this timeframe upon them. It would be politically very difficult for Cameron to rescind the law if he became PM. With the law in place, a Labour opposition would then be able to attack a Tory government for cutting spending and raising taxes, even though they would have had to do exactly the same. The political capital they probably reckon they could make out of this could be considerable even if the Tories were to hit the target in that scenario. If they don't hit it the Labour could use that against them too insisting that they would have done "look, we even legislated for it - of course we would have done it" - I can hear Labour spokespeople now.

In my view there is no more eloquent statement that Labour think they will lose the next election than this bill.

Brown's ministers looked silly yesterday trying to defend it. It does not serve any real purpose other than as a political landmine for a future government. This is Brown at his worst. Calculating, scheming, using legislation as a trap for his political opponents. He has learnt nothing from his failed previous attempts to do things like this (e.g. 10p tax rate abolition).

Although I suspect some of yesterday's bills will not make it onto the statute books you can bet your bottom dollar that the Fiscal Responsibility Bill 2010 definitely will.


Anonymous said...

I was under the impression that Governments cannot bind the next Government to anything. This legal obligation is absolutely worthless.

It's not a legal trap, it's a campaigning trap.

Mark Thompson said...

Indeed, that's what I am saying. It is not a legal trap as there is no sanction, it's a political trap.

Governments can't bind their successors but Brown is banking on Cameron not daring to rescind. That's part of the trap.

I wonder if he got the idea from Cameron's plan to ensure no further powers could go to the EU without a referendum. He himself said that no future government would dare rescind that...

Nick Drew said...
This comment has been removed by the author.
Nick Drew said...

Let's see what the Bill says in detail

because (for example) the much-lauded 'legally binding' CO2 reduction targets are empty - here's what the legislation says

"The Secretary of State may by order amend the percentage [i.e. target] specified in section 1(1) …if it appears to the Secretary of State that there have been significant developments in— (i) scientific knowledge about climate change, or (ii) European or international law or policy"
(Climate Change Act 2008 Part 1, Sect 2)

- i.e. can be changed at will: completely devoid of any force whatever

"and there's a legal limit to the snow here - in Camelot!"

patently said...

Of course it is, Mark. Labour have never been able to tell the differences between a statement of intent by a Government, a new Law requiring something to happen, and something actually happening.

The trouble for them is, they have been pulling the same con trick for too long. People notice it now. People don't seem to be regarding this as actual evidence that Labour will/would halve the deficit in 4 years. Everyone just says either "How?" or "OK, get on with it".

Lord Blagger said...

All the Tories have to do is produce a doomsday book of government debt. All of. The full 7-8 trillion of it.

Then you need to hypothecate tax to paying it. Something that appears like VAT on every receipt and on every payslip.

It needs a snazzy name, something like a Labour tax. Yes, that's a good name. After its a tax on your labour.


Any coincidence with a political party is entirely coincidental.

sobers said...

Its a typical Brownian gimmick thats looks superficially clever but on further examination proves to be useless, if not actively detrimental to the Labour Party.

Firstly how can Labour oppose the tax rises/spending cuts that must come if they have passed a law dictating that this must happen? Everytime a Labour leader attacks 'Tory cuts' DC can just point to Gordon's Fiscal responsibility rule and say 'We're just doing what your law says we should' There's no asnswer to that.

Secondly once in power such rule can be altered with little effect outside the Westminster Village. Floating voters don't care about fiscal rules, they care about taxes and spending etc. It may prove 'embarassing' to a Tory govt to repeal/change such a law - the electoral effect would be minimal.

Thirdly, by introducing such rules, Gordon is making a rod for his successors own back. If the Tories stick by such a plan (which they probably want to anyway, and this will give them cover) they could then pass a new law in 4 years time saying the deficit should be reduced to zero over the next 5 years, and challange a Labour govt to repeal that.

Its a dangerous precident to start - as the Tories are generally the party of lower govt spending and lower taxes they are always going to find it easier to maintain such rules, whereas Labour will always want to spend money they don't neccessarily have and run into trouble. A future Labour PM (hopefully a very long time in the future!) may curse GB for starting such a practice in the UK.

Willsteed said...

I agree with sobers analysis.

It is one of those oh-so-clever Labour traps that is going to turn around and bite them.

I wonder how long before Brown realises this, and tries to do a U-turn on it?

I also wonder who is dreaming up these completely unattainable policies that make Brown look like such an utter twit?

[Is that the hand of Mandy in the shadows? ;)]