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Osborne to confirm Budget surplus law | |
(about 2 hours later) | |
The chancellor will attempt to bind future governments to maintaining a budget surplus when the economy is growing, he will announce later. | |
In his annual speech Mansion House speech on Wednesday George Osborne will outline his plan to limit governments to a balanced budget in "normal" times. | |
Mr Osborne first proposed the changes to fiscal policy in January. | Mr Osborne first proposed the changes to fiscal policy in January. |
The announcement comes amid concerns over the national debt, which has doubled since the financial crisis. | |
The plan would legally prevent future governments from spending more than they receive in tax revenue when the economy is growing. | |
'Sun shining' | 'Sun shining' |
"With our national debt unsustainably high, and with the uncertainty about what the world economy will throw at us in the coming years, we must now fix the roof while the sun is shining," he will say in the speech in London. | "With our national debt unsustainably high, and with the uncertainty about what the world economy will throw at us in the coming years, we must now fix the roof while the sun is shining," he will say in the speech in London. |
The Office for Budget Responsibility (OBR), an independent watchdog, will be responsible for policing the new rules. | The Office for Budget Responsibility (OBR), an independent watchdog, will be responsible for policing the new rules. |
The OBR is also expected to have the power to decide when the government should be able spend more than it is taking in revenue, for example when the country is in a recession. | The OBR is also expected to have the power to decide when the government should be able spend more than it is taking in revenue, for example when the country is in a recession. |
Currently, the government is committed to balancing day-to-day spending - the structural current deficit - by 2017-18. | Currently, the government is committed to balancing day-to-day spending - the structural current deficit - by 2017-18. |
But Mr Osborne is expected to argue that the Conservative party's recent election victory and the country's "comprehensive rejection of those who argued for more borrowing and more spending" means a change in approach is necessary. | But Mr Osborne is expected to argue that the Conservative party's recent election victory and the country's "comprehensive rejection of those who argued for more borrowing and more spending" means a change in approach is necessary. |
"In normal times, governments of the left as well as the right should run a budget surplus to bear down on debt and prepare for an uncertain future," he will say. | "In normal times, governments of the left as well as the right should run a budget surplus to bear down on debt and prepare for an uncertain future," he will say. |
Napoleonic wars | Napoleonic wars |
A House of Commons vote on Mr Osborne's proposal is expected to take place later this year. | A House of Commons vote on Mr Osborne's proposal is expected to take place later this year. |
The move by Mr Osborne will be viewed by many as an attempt to secure his legacy for balancing the books - a pledge he has made repeatedly since becoming chancellor in 2010. | The move by Mr Osborne will be viewed by many as an attempt to secure his legacy for balancing the books - a pledge he has made repeatedly since becoming chancellor in 2010. |
Mr Osborne will also announce that the Committee of the Commissioners for the Reduction of the National Debt - a group set up to repair the economic damage of the Napoleonic wars - will meet again for the first time in over 150 years. | Mr Osborne will also announce that the Committee of the Commissioners for the Reduction of the National Debt - a group set up to repair the economic damage of the Napoleonic wars - will meet again for the first time in over 150 years. |
The commissioners - which include the chancellor and the governor and deputy governors of the Bank of England - last met in October 1860. | The commissioners - which include the chancellor and the governor and deputy governors of the Bank of England - last met in October 1860. |