Another unwelcome Americanism: The Fiscal Responsibility Bill

One of the most annoying things about American politics, particularly under the last Bush administration, was the tendency to give legislation titles like House Resolution 2173: The Motherhood and Apple Pie Act. You could then browbeat your opponents with the line, "You're against motherhood and apple pie. You must be crazy/stupid/delete as appropriate."

And now, New Labour have brought this to the United Kingdom, in the form of the Fiscal Responsibility Bill. Call me old-fashioned (and I am, I suppose), but legislation should give you idea of what it covers, not what it will do. So, the Energy Bill, for example, indicates that it is about energy policy, and the Kent County Council (Filming on Highways) Bill is about filming on the M2 near Maidstone, I presume.

Fiscal responsibility, I suggest, is a state of mind and not a policy. Governments do not announce their intention to be fiscally irresponsible, even if that is exactly what they then proceed to be. However, let's see what the purpose of the Bill is...

"The Bill imposes a statutory duty on the Treasury to meet specific targets for the reduction of government borrowing and debt. The Government believes that this legislation demonstrates its commitment to ensuring the sustainability of the public finances.  The Bill gives Parliament a greater role in fiscal policy."

This is, without doubt, a phenomenally stupid concept. There can surely be nobody who thinks that debt is a good thing. It can, if used for investment purposes, be useful, as a counter-cyclical tool of economic policy. However, adherence to the supposed 'Golden Rule' implies that, over the course of an economic cycle, expenditure should broadly balance income.

The Bill requires the Treasury to make sure that:

• Government borrowing in each financial year between 2010/11 and 2015/16 is lower than the previous year, measured as a percentage of GDP
• Government borrowing in 2013/14 is no more than half its 2009/10 level. A draft statutory instrument made under the Bill requires borrowing to be no more than 5.5 per cent of GDP in 2013/14
• Government debt is lower in 2015/16 than in 2014/15, measured as a percentage of GDP

Given that the level of Government borrowing is, in the view of all sensible political parties, extremely high and utterly unsustainable even in the medium term, these aims are mere common sense. However, it doesn't require legislation to allow a Government to do what it intends to do, indeed should do, anyway.

The big question, and one that first Lorely Burt and then George Osborne asked, is, if the Government do not achieve the targets laid down by proposed statute, what happens? What sanctions are there for failure? The answer came back - none. So why bother? Unless, of course, the Government plan to use opposition votes against this sorry piece of gimmickry to lay charges of fiscal irresponsibility against them.

"The Bill also requires the Treasury to report to Parliament in the Budget and in Pre-Budget Reports and provide an explanation if the targets are missed."

That's nice. No, really it is. Pardon me, though, aren't you obliged to do that anyway? Don't the Budget and the Pre-Budget Reports include indications as to levels of future borrowing? I thought so. In other words, this is a piece of legislation designed to oblige you to do what you must do anyway.