Good Idea or Moving The Goalposts?
When the Conservative Party announced the creation of the Office for Budget Responsibility at it's 2008 Party Conference it went largely unnoticed beyond the general reporting of that Conference. I think this was because at the time the Conservative lead in most of the opinion polls was such that it was regarded as that parties, "Bank of England" moment, a reference to the Labour party's actions when they took power back in 1997.
Now with this years budget day confirmed (24th March) and the General Election being pencilled in for 6th May, the Conservative promise of establishing the OBR within 50 days of taking power seems to be gathering some momentum. On the face of it the idea seems sound, yes I really did type that, you give an independent body the power to oversee the role of the Chancellor of the Exchequer and question any decisions he makes in the House of Commons. George Osborne said at the time of its 'launch' that it would "hold a Conservative Government accountable to the British people and avoid the soaring taxes and high interest rates that a devt crisis would lead to."
Now I don't want to be seen as a flag waver for the blue party, but just in case you were asleep during the Conference season here are the main points of what the OBR would do and I have to say that with one exception they are all good:
The Bank of England would take a broader responsibility for debt. The bank would write a write a regular, open letter to the FSA setting out its assessment of the extent of risk in the market.
The FSA would have to take this into account when regulating individual banks. The Tories believe that, if the FSA were to take the wider "market context" into account, it would impose tougher capital rules.
The government would still have to balance the budget over the economic cycle (Brown's "golden rule"). But the rule would be forward-looking, rather than backward-looking, and it would be policed by a new, independent office for budget responsibility.
The Tories would also scrap Brown's "sustainable investment rule" that says public sector debt should be below 40% of GDP. Instead there would be a new rule saying debt should fall over the economic cycle.
Under the new arrangement, the office for budget responsibility would publish a fiscal forecast before each budget. If the chancellor did not accept its assessment, he or she would have to explain why to parliament.
The office for budget responsibility would also carry out a full audit of the nation's debts, including liabilities currently kept "off balance sheet" under Labour.
A fair fuel stabiliser, which would allow fuel duty to be cut when oil prices were rising.
American-style bankruptcy laws that would allow more time for failing companies to be rescued.
Abolition of stamp duty for first-time buyers buying property worth up to £250,000.
Abolition of home information packs.
Specialist help for job seekers
Now given the fluid nature of politics I'm sure that some of the above will be changed. I strongly disagree with the proposal to adopt an American-style approach to failing companies, I actually believe that failed business people in this country are helped too much as it is, the fact that a company can go into receivership on a Friday and begin again on a Monday with the same board but without any debts is something the current Government has tried to outlaw with stricter rules on so-called 'pre-packs.' Leaving party politics aside for a moment it's a concept that stinks and leaves no protection for those suppliers of companies that are badly managed and who receive little or no compensation when a company goes under.
2 comments:
I agree with re bankrupcies. In the Us (where I will be for the next 3 weeks!) seems to think it is a normal activity with company and personal bankrupcy being just another step (albeit it is still seen as wrong there are many thousands with multiple bankrupcies to their name)
Re the OBR well, we'll have to wait and see: I thought Brown in 1997 had done the right thing re the BoE but he managed to make sure the Chancellor (himself in this case1) kept enough control via the Debt mangement Office etc and selecting committee members and in the end it all failed as nobody could see the whole picture and as you so rightly say nobody was taking care!
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