Speech – Fiscal Framework Amendment

SPEECHES

Fiscal Framework Amendment

Sir

This amendment replaces Amendment Five, which I was due to propose and Deputy Langlois to second, and which we have withdrawn. We have agreed the revised wording in this amendment with the Policy & Resources Committee, and I’d like to record my thanks to them for working openly with us to find an alternative we are all comfortable with.

I pulled the original amendment together quickly following the Budget debate a fortnight ago, to try and capture some of the spirit of that debate. Almost every Member spoke in that debate about the need to think differently about how government raises and spends its finances. But despite the fiery speeches, only two members had enough of the courage of their convictions to try and amend the Budget, and only one of those amendments was laid. I felt strongly that we needed to keep the flame of that debate alive – it’s not enough just to speak fine words in this Chamber, and to nod along as others do so – if there’s a strength of feeling in this Assembly that we must start acting differently, then we’ve got to let that strength of feeling flow through into everything we do.
We have become realistic about the deficit. We’ve acknowledged that it is the result of a persistent mismatch between government income and government spending over the best part of the last decade. We’re not pretending it’s a string of unfortunate events – of one-offs that just happen to knock the books out of balance each year. And so we’re admitting that we need to do more than just pray for good fortune next year, if we really want the books to balance.

But what must we do? The answer is – as it always is – in some combination of revenue-raising measures and expenditure restraint. This year’s Budget was based on one-third income increases and two-thirds spending cuts. That might be the right ratio, or it might be half and half, or none of one and all of the other. Policy and Resources will propose their preferred solution for the next four years in June, when they present the Fiscal Strategy, which will shape every subsequent Budget. And we will have the opportunity to debate it further then.

In the meanwhile, the Fiscal Framework says “we must address the deficit.” If this amendment is approved, it will say “we must address the deficit using some combination of revenue-raising measures and reductions in spend.” The amendment doesn’t attempt to prescribe the right combination. If Members approve this, they will not be saying “we must raise taxes” or “we must cut spending.” But it’s an important change to the Framework, nonetheless, because it changes the wording to talk about the tools we have to solve the problem, not just the problem itself. That’s far more optimistic and can-do, and that’s how the States should be thinking.

The second part of the amendment tweaks the fiscal rule about public expenditure. Right now, no real-terms growth in public spending is permitted if the States is in deficit. That’s to try and stop the size of the deficit growing, which is a perfectly sensible aim. Again, the amendment doesn’t change that fundamental principle. But it rewrites the rule to say that public spending cannot grow “unless measures to address the deficit have been agreed and are being implemented.”

Again, the original rule tells us that if we have a problem, we must sit tight and wait for the storm to pass. Not bad advice, but the storm is of our own making. The revised rule reminds us that we can and must fix the problem and, when we do, we will have the opportunity to make progress in pursuit of legitimate policy objectives, should we wish to do so.

P&R added the wording about the implementation of measures to address the deficit, not simply their approval, for the absolute avoidance of doubt. In theory, they said, one could agree measures to address the deficit ten years from now – and then, that agreement in place, could allow public spending to grow like topsy in between. I think, in the last debate, on Deputy Roffey’s motor tax amendment, the majority of the Assembly gave such legalistic interpretations short shrift – so I don’t think there would really be anything to worry about. But I was happy to accept the revised wording put forward by P&R, because it does not change the spirit of the original amendment.

These are, in effect, technical changes to the rules, in an attempt to capture some of the can-do spirit of last fortnight’s Budget debate, and keep that flame burning as P&R develop their Fiscal Strategy for Phase Two, next June. That will be the time for a real meaty debate about government spending and prioritisation.

In the meanwhile, I am grateful to Policy & Resources for supporting this change and working with us to find a form of words which we could all be comfortable with. And, that being done, I hope other Members will also feel able to extend their support to this amendment.

Sign up to receive email updates from the blog


Sorry but there is some error in adding your email to our subscriber list. Please try again
Thank you for subscribing

By clicking subscribe you acknowledge that you have read the Data Protection statement and that you are happy to receive email updates.

Menu