The Chancellor loves to set traps for Ed Balls. Some he hopes that his opponent will tread on, to be left squealing in the undergrowth. The rest he hopes will slow the Shadow Chancellor down, making him jumpy and overly cautious.
Today we hear of another mantrap set in Labour’s path – Osborne intends to present a law requiring the next government to eliminate what is catchily termed the ‘cyclically adjusted current deficit’ by the 2017/18 financial year.
In doing so, he is punching a bruise. The Opposition could oppose the measure (indeed, they may well be forced to do so for fear of annoying their fiscally unhinged MPs and donors), in which case they will be confirming their poor reputation on managing the public finances. Or they could support it, in which case they will bind themselves from promising the inevitable spending and debt binges that form a key part of their purpose in life.
By telling us all beforehand, he is seeking to maximise Labour’s discomfort – you can be sure shadow ministers will be asked about the matter regularly over the next week.
But is this really the best approach?
It’s a primarily political move, as Allister Heath points out in the Telegraph. It’s tied only to the here and now, to this specific set of spending plans, and targeted purely at this Shadow Chancellor going into this election.
It would be preferable to make the bind both tighter and longer lasting. The ConservativeHome Manifesto laid out a system of permanent restraints on irresponsible government borrowing:
- A Balanced Budget Plus rule – requiring budgets to be balanced over each economic cycle, with an additional sum equal to at least one per cent of GDP in that period used to pay down Britain’s national debt.
- The Office of Budget Responsibility would be given the right and duty to block any budget that failed to meet the Balanced Budget Plus rule.
- In addition, a debt ceiling would be defined in law, which public borrowing would not be allowed to exceed – furthermore the ceiling would come down in line with diminishing public debt.
- To provide a third line of defence against fiscal irresponsibility there should be a permanent cap on public sector headcount and payrolls.
We’re pleased that the Chancellor is adopting some of our thinking but it’s important to plan for the long-term as well as the next election. Battering Balls on his lack of credibility is a good thing, as is emphasising that a Conservative government would be far more responsible. But even better than that would be embedded reforms which don’t just stop this Shadow Chancellor wrecking the economy but also make it far harder for any of his successors to do so, too.