Magazine article Public Finance

Osborne 'Fixes Roof While Sun Shines'

Magazine article Public Finance

Osborne 'Fixes Roof While Sun Shines'

Article excerpt

George Osborne has proposed committing future governments to running a spending surplus when the economy grows as part of a 'new settlement' for the public finances.

The chancellor set out a new fiscal mandate in his Mansion House speech on 10 June that will require the Treasury to balance its books unless the Office for Budget Responsibility rules that the economy faces abnormal pressures.

Once the Conservative government has reached its target to close the annual spending deficit in 2018/19, Osborne said the rule would be required to repair the public finances in the face of uncertainty about the world economy.

Although no parliament can bind its successor, a future government would likely need to overturn the plan in the House of Commons.

"With our national debt unsustainably high, and with the uncertainly about what the world economy will throw at us in the coming years, we must now fix the roof while the sun is shining," he stated.

"Indeed we should now aim for a permanent change in our political debate and our approach to fiscal responsibility."

The chancellor has also set out details of in-year cuts that will be imposed on government departments as part of the deficit reduction drive.

Ahead of a post-election Budget on 8 July ministers were told to identify savings for 2015/16, and £3bn has been found across Whitehall.

The biggest reduction was the £500m saving identified by the Ministry of Defence, with £450m cut from the Department for Business, Innovation and Skills and £450m from the Department for Education's non-school spending. …

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