Charter for Budget Responsibility

I beg to move,

That the Charter for Budget Responsibility: Autumn 2025, which was laid before this House on 23 February, be approved.

The motion relates to the UK’s fiscal framework. It is a framework that matters: it guides fiscal policy and provides both transparency and accountability. Since coming into office, this Government have reformed the fiscal framework and, more broadly, set the public finances on a sustainable footing. At the autumn Budget, that included doubling the buffer against our fiscal rules, providing more certainty and stability for taxpayers and businesses. This is a core part of a wider economic strategy that includes Budget measures to reduce inflation, pushing down on the cost of living. All this helps to push down on interest rates and give businesses the confidence to invest. This is the right plan, and things are moving in the right direction. Just last week, we learned that January saw a £30.4 billion public finance surplus, the highest monthly surplus on record.

This is all supported by our reforms to the fiscal framework. We have reset the fiscal rules to reprioritise public investment and introduced a fiscal lock to ensure that Governments cannot sideline the Office for Budget Responsibility, as we sadly saw in the last Parliament. We are also committed to delivering one fiscal event a year, delivering on our manifesto and bringing the UK in line with the vast majority of advanced economies. At the Budget, the Chancellor announced plans to strengthen that commitment. We are doing so by drawing on recommendations from the International Monetary Fund’s article IV report last summer. The IMF made the case that fiscal policy stability would be aided by ensuring that the fiscal rules would only be assessed once a year. We agree, so this Government are legislating to ensure that this is the case.

To deliver this change, we are updating the two core parts of the fiscal framework. First, we are updating the primary legislation, the Budget Responsibility and National Audit Act 2011, via the Finance (No. 2) Bill. Clause 251 of that Bill provides for one fiscal rules assessment per financial year. We are also updating the secondary legislation, the charter for Budget responsibility, which is the subject of today’s debate. The updated charter reinforces the change in the Finance (No. 2) Bill. It makes no changes to the fiscal rules, but ensures that those rules should only be assessed once per financial year. Specifically, it removes the requirement in chapter 4 of the charter for the OBR to conduct a fiscal rules assessment alongside any forecast. This will ensure that we can reduce the number of fiscal rules assessments per year without any reduction in fiscal transparency.

This Government are absolutely committed to the OBR’s independence, and to its vital role in providing regular assessments of the economy and the public finances. The OBR will continue to publish a second five-year forecast in the spring, which will aid transparency and inform the Debt Management Office’s financing remit, but the Government will not normally respond with fiscal policy. I look forward to seeing a few more Members of this House at the next of these forecasts, the spring forecast, a week today. I recommend that this House approves the updated charter, and I commend the motion to the House.

I call the shadow Chief Secretary to the Treasury.

I thank the Minister for a succinct opening speech.

The charter for Budget responsibility seeks to confer the important attributes of stability and credibility on a Government’s management of the public finances and the wider economy. “Stability” and “credibility” are not exactly the first two words that spring to mind to describe the current Government’s management of the economy. Through their own incompetence, they have presided over a chaotic year that has shredded any remaining confidence in the Chancellor and her team and—more important—has done lasting damage to the life chances of so many young people who now cannot find work.

As the Chancellor prepares her spring statement, we have a Prime Minister living on borrowed time. This Government are painfully lacking in real-world economic experience, and they desperately need help. We will not be opposing the measure this evening.

Does the shadow Minister share the concerns that many, probably all, MPs from Northern Ireland have—although I welcome the good news in relation to the tax surplus; who would be churlish and not welcome something that is to the benefit of us all—about the Northern Ireland Executive finding it incredibly difficult to make ends meet and make the books balance? One thing we look back on is the Barnett consequentials. We have heard promises many times over a number of years that the Barnett consequentials would be addressed, but that has not happened. The Northern Ireland Affairs Committee has raised it, and individual MPs have raised it too. The Conservative Government and this Government said that they would look at it, but nothing has happened. Does the shadow Minister believe that it is now time to get things right for Northern Ireland, with a budget to help us to govern and deliver the goods, as the Government are doing here?

I thank the hon. Member for his intervention. I think his issue with the Barnett consequentials is one for the Minister to reply to, but the Conservative and Unionist party, as he knows, has very strong support for and kinship with our citizens in Northern Ireland. On his comment about the revenues that the Government received in January, I would just point out that that in large part was due to self-assessment returns and capital gains returns filed in that year. When we tease through the data, we will see that a lot of that came from people making economic decisions that, in the long run, were not in their interest, because of the uncertainty brought into the economy by the Chancellor, who has confused people for an entire year.

To illustrate the chaos of the last year, let me remind the House what the then Chief Secretary to the Treasury, the right hon. Member for Bristol North West (Darren Jones), said in the equivalent debate on the charter last year:

“Growth is the primary mission of this Government.”—[Official Report, 29 January 2025; Vol. 761, c. 344.]

But since then, comparing the OBR forecast from 2024 and 2025, growth is down in each year of the forecast period. In 2026, it is down to 1.3% from 1.8%. It is down in 2027, 2028 and 2029.

The then Chief Secretary also said that the autumn 2024 Budget

“put the public finances back on track, and we will keep them there.” —[Official Report, 29 January 2025; Vol. 761, c. 345.]

But since that statement the Chancellor has brought forward proposals to cut £5 billion from welfare. Then she reversed them. She said that she would stick to the two-child benefit cap, but then she caved in to Labour Back Benchers. The Chancellor has been forced to U-turn on her removal of winter fuel payments to pensioners. She has U-turned on her plans to tax our pubs out of existence, and she has U-turned on her damaging plans on the family farm tax and family business tax. After having said that she would not be coming back for more taxes, she did indeed come back to whack the British people again with tax increases amounting to over £26 billion.

I call the Liberal Democrats spokesperson.

Thank you, Madam Deputy Speaker, and I will not burden the House with too long a speech.

There are a lot of issues with the Government’s and the country’s economic policymaking process, but there are good arguments for reducing the number of fiscal events, which create artificial cliff edges. However, I note the concerns, including from the IFS, that this looks like a way to reduce scrutiny of the Government’s economic record.

Fundamentally, if we are serious about the responsible management of the public finances, tackling our high levels of debt and getting our economy growing again, I am most interested in how we scrutinise our Government’s tax and spending plans. The current situation, in which we have months and months of speculation and then approve hundreds of billions of pounds of Government tax and spending with just a few hours of debate, with no one permitted to see what the Chancellor is proposing in the Budget until it is announced as a fait accompli in Parliament, is exceptional by international standards and a key source of uncertainty and instability.

If the Government truly want to improve market confidence, this is where they should be looking to make reforms. For example, we could look at Sweden, which, following a budget crisis in the early 1990s and soaring debt, introduced proper parliamentary debate of the Government’s budget, with alternatives offered and amendments made before it is finalised, before getting a subsequent period of scrutiny and accountability. The fact that Sweden has seen years of strong growth and high living standards, and that its debt has now dropped from 80% to 30% of GDP, is a positive endorsement of this approach.

The reality is that incredibly important choices are made as part of the Budget process. These choices impact the day-to-day life of each of our constituents, whether in Witney or any of the constituencies that the Members here all represent. The people have a right to have the fullest possible picture of how the Government are going about setting their taxes, spending their money and managing the economic picture, and this step will not achieve that alone.

I thank the two Front-Bench spokespeople, one of whom spoke admirably briefly. I will not repeat the case for these changes, given that we have heard that both opposition parties are happy to support the Government’s changes to the charter, so I will just respond directly to the questions.

I say to the Lib Dems spokesperson that it is always good to hear anybody praising Sweden in any debate. On the questions about scrutiny, I do not think he gives enough credit to his hon. Friends on the Finance Bill, who have spent many hours scrutinising the policies, and I am sure they would be upset to hear his lack of faith in them today. Directly on his question about transparency, I think that is important, and that is why we are maintaining the two forecasts a year, despite there being only one fiscal event.

The Opposition spokesperson asked why we are making these changes now, and the answer is that in our manifesto we committed to one fiscal event a year. The IMF has come forward with sensible recommendations to reinforce that, and we are just responding to the IMF’s recommendations. He asked a question about the range contained in the previous charter, and that has been removed because it applied only at the spring forecast, and we are no longer carrying out a fiscal assessment at the spring forecasts. He asked about the IFS report suggesting a dashboard rather than fiscal rules. I can tell him that there will be no change to the fiscal rules, although I obviously always enjoy reading any think-tank’s reports, and I would point out that we have already doubled the headroom against the fiscal rules.

More importantly, I was sad to hear the Opposition spokesperson’s remarks more generally, because I always enjoy his normal perkiness, at least outside this Chamber, but he has turned into a gloomster.

No, never!

He is a total gloomster. He has totally ignored the record monthly surplus for the public finances. He has ignored the fact that wages are up, business investment is up and GDP has grown the fastest of any European G7 economy. He has ignored the fact that GDP per capita grew in 2025, after flatlining in the last year of the Tory Government and falling during the previous Parliament. He has ignored inflation falling and interest rates falling. I think it is right for the gloomster to be gloomy about his party’s prospects, but not to be gloomy about the UK economy. On that basis, I commend this motion to the House.