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| Version 1 | Version 2 |
|---|---|
| Darling set to relax fiscal rules | Darling set to relax fiscal rules |
| (about 1 hour later) | |
| Alistair Darling has signalled a new approach to fiscal policy, saying his "core objective" must be to help the UK through a likely recession. | Alistair Darling has signalled a new approach to fiscal policy, saying his "core objective" must be to help the UK through a likely recession. |
| The chancellor paved the way for the government to relax its fiscal rules by stating it would be "perverse" to apply them rigidly at the moment. | The chancellor paved the way for the government to relax its fiscal rules by stating it would be "perverse" to apply them rigidly at the moment. |
| In a speech in London, Mr Darling said it was "sensible" to raise borrowing to maintain investment in key areas. | In a speech in London, Mr Darling said it was "sensible" to raise borrowing to maintain investment in key areas. |
| Opposition parties have warned ministers against a "spending splurge". | Opposition parties have warned ministers against a "spending splurge". |
| 'Position of strength' | 'Position of strength' |
| Earlier on Wednesday, David Cameron accused Gordon Brown of "irresponsibility" for appearing to suggest that the government could spend its way out of its current economic problems. | Earlier on Wednesday, David Cameron accused Gordon Brown of "irresponsibility" for appearing to suggest that the government could spend its way out of its current economic problems. |
| He also pressed Prime Minister Gordon Brown to admit his "golden rule" governing borrowing and debt levels - one of the cornerstones of Labour's economic policy since coming to power - had "collapsed completely". | He also pressed Prime Minister Gordon Brown to admit his "golden rule" governing borrowing and debt levels - one of the cornerstones of Labour's economic policy since coming to power - had "collapsed completely". |
| To apply these rules rigidly in today's changed conditions would be perverse Alistair Darling | To apply these rules rigidly in today's changed conditions would be perverse Alistair Darling |
| Mr Darling used a speech in the City of London to signal a revision of the fiscal rules established by Mr Brown in 1997. | Mr Darling used a speech in the City of London to signal a revision of the fiscal rules established by Mr Brown in 1997. |
| He argued that the rules had enabled the government to triple public investment over the past 11 years, while leaving the public finances in a "position of strength" with debt lower than in other major economies. | He argued that the rules had enabled the government to triple public investment over the past 11 years, while leaving the public finances in a "position of strength" with debt lower than in other major economies. |
| But he indicated the existing rules were now longer appropriate at a time when the UK was "moving into recession". | But he indicated the existing rules were now longer appropriate at a time when the UK was "moving into recession". |
| "To apply these rules rigidly in today's changed conditions would be perverse," he said. | "To apply these rules rigidly in today's changed conditions would be perverse," he said. |
| "We must respond to the challenges we face today, supporting the economy now and maintaining public investment - while at the same time ensuring we live within our means in the medium term." | "We must respond to the challenges we face today, supporting the economy now and maintaining public investment - while at the same time ensuring we live within our means in the medium term." |
| The chancellor added that the fiscal rules "provide a discipline on government - they are a means to an end. | The chancellor added that the fiscal rules "provide a discipline on government - they are a means to an end. |
| "And our core objective right now is to get the economy through these difficult times". | "And our core objective right now is to get the economy through these difficult times". |
| Commenting on the move, BBC Business Editor Robert Peston said: "There can be no doubt that he will have to reform the fiscal rules in a matter of weeks, and come up with a convincing plan to reduce the national debt as and when economic growth resumes." | Commenting on the move, BBC Business Editor Robert Peston said: "There can be no doubt that he will have to reform the fiscal rules in a matter of weeks, and come up with a convincing plan to reduce the national debt as and when economic growth resumes." |
| And Robert Choate, director of the Institute for Fiscal Studies, said: "Alistair Darling has sensibly accepted the inevitable: that there is no realistic chance of sticking to Gordon Brown's fiscal rules over the next few years. " | |
| 'Out of control' | 'Out of control' |
| The Conservatives have accused the government of letting borrowing spiral "out of control" while the Lib Dems have called for targeted tax cuts rather than a big increase in public spending. | The Conservatives have accused the government of letting borrowing spiral "out of control" while the Lib Dems have called for targeted tax cuts rather than a big increase in public spending. |
| Shadow chancellor George Osborne said: "There's only one thing that is perverse: the government now has no plan to bring the public finances under control, just a mounting overdraft that will have to be paid off by taxpayers." | Shadow chancellor George Osborne said: "There's only one thing that is perverse: the government now has no plan to bring the public finances under control, just a mounting overdraft that will have to be paid off by taxpayers." |
| Liberal Democrat Treasury spokesman Vince Cable said: "He's acknowledging the inevitable. | Liberal Democrat Treasury spokesman Vince Cable said: "He's acknowledging the inevitable. |
| "He hasn't explained why, all of a sudden, the rules have had to be relaxed, when there's clearly been a deterioration in the position, particularly in relation to public debt, for some time." | "He hasn't explained why, all of a sudden, the rules have had to be relaxed, when there's clearly been a deterioration in the position, particularly in relation to public debt, for some time." |
| Borrowing between April and September totalled £37.6bn, not far off the government's projected figure for the whole year. | Borrowing between April and September totalled £37.6bn, not far off the government's projected figure for the whole year. |
| Mr Darling said the fiscal rules must adapt in light of the "extraordinary pressure" on government tax revenues caused by the banking crisis and the economic downturn. | Mr Darling said the fiscal rules must adapt in light of the "extraordinary pressure" on government tax revenues caused by the banking crisis and the economic downturn. |
| But he stressed that the principles underlying the government's policy, namely its emphasis on credibility, flexibility and transparency, would remain in place. | But he stressed that the principles underlying the government's policy, namely its emphasis on credibility, flexibility and transparency, would remain in place. |
| "People may should be in no doubt that government will take the decisions necessary to ensure sustainability in the medium term," he said. | "People may should be in no doubt that government will take the decisions necessary to ensure sustainability in the medium term," he said. |
| "To return borrowing and debt to a sustainable level once these shocks have worked through." | "To return borrowing and debt to a sustainable level once these shocks have worked through." |