Source · Select Committees · Treasury Committee
Recommendation 3
3
Paragraph: 18
By setting himself rolling targets the Chancellor has given himself the flexibility to respond to...
Conclusion
By setting himself rolling targets the Chancellor has given himself the flexibility to respond to any deteriorations in the forecast at future fiscal events. However, the Chancellor should not use a rolling target as a mechanism to allow himself to present a series of future Budgets that promise fiscal sustainability three years into the future, but are never fiscally sustainable in the near term.
Paragraph Reference:
18
Government Response
Acknowledged
HM Government
Acknowledged
I thank the Committee for their conclusions on the government’s fiscal strategy. The Treasury continues to monitor the risks of higher inflation and interest rates closely, and the Charter for Budget Responsibility now contains a new focus on assessing the affordability of public debt. As the Committee notes, the UK’s high level of debt means we are vulnerable to changes in macroeconomic conditions such as interest rates and inflation, which would increase the amount we spend on debt interest rather than public services. That is why the government has introduced new fiscal rules to help ensure the public finances return to a sustainable footing. Rolling fiscal rules means we can absorb some shocks and adjust fiscal policy as needed, but the government has already made tough decisions which demonstrate our commitment to keep debt under control, such as delivering a long-term, sustainable funding solution for the NHS and reform of the adult social care system.