larus
Well-known member
Dear 'Prudence' 
, please do us all a favour and just resign. All those years of high governments revenues have ben wasted and we start to go into a downturn and immediately need to rewrite the 'golden rule' on borrowing. This is the rule where they changed the definition a about a year ago to make it more flexible. Sounds like a childs game, "I'm losing, so I'm going to change the rules until I win".
OK, a lot of money has been spent, but how much benefit has been achieved from it, and how much has been wasted.
The good government finances were forcast by Kenneth Clarke while he was chancellor, so were nothing to do with Gordon 'lucky' Brown.
They now need to rewrite the rules because we need to borrow more than is allowed by the existing rules. Oh, and this doesn't include the debts which are owed by this government which aren't classed as part of the national debt, such as all the PFI.
From the FT.
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Treasury officials are working privately on plans to reform Gordon’s Brown’s fiscal rules on spending and debt with a new framework that would initially allow for increased borrowing.
Details will not be finalised until the Treasury knows the outcome of the huge revisions to the national accounts, planned by the Office for National Statistics for the end of September, but the autumn pre-Budget report is seen as the right time to announce the change.
With the government on course to break the rule limiting net public sector debt to 40 per cent of national income, a new framework would initially be looser. A consequence will be to make it easier to borrow more in the coming downturn, although the principle reason for the change is to restore confidence in the rules, so the medium-term budgetary position might be tighter than currently planned.
The work to redraw the rules on spending and taxation comes as the public finances face severe strain even though oil prices will boost North Sea revenues.
Public sector borrowing was 50 per cent higher in the first two months of the financial year and taxes as diverse as value added tax and stamp duty will be hit by rising inflation and falling housing transactions respectively.
The Treasury said on Thursday night it had long made it clear that when it declared the end of the cycle, that would be the right time to reassess the fiscal framework and the pre-Budget report was when it would be able to give its view on the economic cycle.
Dave Ramsden, the Treasury’s chief economic adviser, gave a hint along these lines to parliament in March, saying that the Treasury was “very much looking forward to when the ONS produce their Blue Book national accounts figures, as they are planning to this summer”.
Treasury officials expect the ONS revisions will enable Alistair Darling, the chancellor, to declare the cycle, which the Treasury believes started in 1997, to have finished and two rules to have been passed.
If it kept the same rules, only to borrow to invest over the cycle and to keep net public sector debt at a low level, it is likely to face unpalatable choices.
With net debt likely to exceed 40 per cent of gross domestic product, ministers would have to publicly break the rule or raise taxes in a downturn.
This, the officials believe, would conflict with their desire to see fiscal policy supporting monetary policy and it would be better to bite the bullet and redraw the fiscal rules instead.
They have sought outside advice from fiscal policy experts in their quest for new rules that have a wider acceptance and following than those at present.
Robert Chote, director of the Institute for Fiscal Studies, said the “existing rules are not seen as a credible constraint on public policy” and supported a new framework. Many experts say the rules are so discredited there is little to lose by replacing them and introducing some independent, external monitoring.
, please do us all a favour and just resign. All those years of high governments revenues have ben wasted and we start to go into a downturn and immediately need to rewrite the 'golden rule' on borrowing. This is the rule where they changed the definition a about a year ago to make it more flexible. Sounds like a childs game, "I'm losing, so I'm going to change the rules until I win".OK, a lot of money has been spent, but how much benefit has been achieved from it, and how much has been wasted.
The good government finances were forcast by Kenneth Clarke while he was chancellor, so were nothing to do with Gordon 'lucky' Brown.
They now need to rewrite the rules because we need to borrow more than is allowed by the existing rules. Oh, and this doesn't include the debts which are owed by this government which aren't classed as part of the national debt, such as all the PFI.
From the FT.
-----------------------------------------------------------------------------------------
Treasury officials are working privately on plans to reform Gordon’s Brown’s fiscal rules on spending and debt with a new framework that would initially allow for increased borrowing.
Details will not be finalised until the Treasury knows the outcome of the huge revisions to the national accounts, planned by the Office for National Statistics for the end of September, but the autumn pre-Budget report is seen as the right time to announce the change.
With the government on course to break the rule limiting net public sector debt to 40 per cent of national income, a new framework would initially be looser. A consequence will be to make it easier to borrow more in the coming downturn, although the principle reason for the change is to restore confidence in the rules, so the medium-term budgetary position might be tighter than currently planned.
The work to redraw the rules on spending and taxation comes as the public finances face severe strain even though oil prices will boost North Sea revenues.
Public sector borrowing was 50 per cent higher in the first two months of the financial year and taxes as diverse as value added tax and stamp duty will be hit by rising inflation and falling housing transactions respectively.
The Treasury said on Thursday night it had long made it clear that when it declared the end of the cycle, that would be the right time to reassess the fiscal framework and the pre-Budget report was when it would be able to give its view on the economic cycle.
Dave Ramsden, the Treasury’s chief economic adviser, gave a hint along these lines to parliament in March, saying that the Treasury was “very much looking forward to when the ONS produce their Blue Book national accounts figures, as they are planning to this summer”.
Treasury officials expect the ONS revisions will enable Alistair Darling, the chancellor, to declare the cycle, which the Treasury believes started in 1997, to have finished and two rules to have been passed.
If it kept the same rules, only to borrow to invest over the cycle and to keep net public sector debt at a low level, it is likely to face unpalatable choices.
With net debt likely to exceed 40 per cent of gross domestic product, ministers would have to publicly break the rule or raise taxes in a downturn.
This, the officials believe, would conflict with their desire to see fiscal policy supporting monetary policy and it would be better to bite the bullet and redraw the fiscal rules instead.
They have sought outside advice from fiscal policy experts in their quest for new rules that have a wider acceptance and following than those at present.
Robert Chote, director of the Institute for Fiscal Studies, said the “existing rules are not seen as a credible constraint on public policy” and supported a new framework. Many experts say the rules are so discredited there is little to lose by replacing them and introducing some independent, external monitoring.
