Chancellor's statement shows greater scrutiny of fiscal policy needed - Vince Cable (Birmingham Liberal Democrats)

Birmingham Liberal Democrats <info@birminghamlibdems.org.uk>

Chancellor's statement shows greater scrutiny of fiscal policy needed - Vince Cable

July 19, 2005 4:00 PM

Commenting on the Chancellor's statement to change the definition of the economic cycle, Liberal Democrat Shadow Chancellor Vince Cable MP has said "This makes a mockery of the Golden Rule and shows again the need for independent scrutiny of fiscal policy. For too long the Chancellor has been setting his own tests and then taking credit for having passed. He should admit he has made a mistake this time."

Mr. Cable further said "Although the NAO will be allowed to audit the Chancellor's decision, it is simply not good enough. The NAO or a similar body should be handed the responsibility of deciding the start and end dates of the economic cycle, and should have access to the Treasury's economic data so that it can produce independent and transparent forecasts in the future."

Chancellor Gordon Brown is planning to change the definition of the economic cycle to ensure that he meets his own fiscal rule on balancing the budget. The Treasury now says that the budget gap should be measured over a nine-year period rather than over seven years. Meanwhile, the Chancellor is to postpone next year's planned review of public spending.