Clause 1

Budget Responsibility and National Audit Bill [Lords] – in a Public Bill Committee at 10:30 am on 1 March 2011.

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Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury) 10:30, 1 March 2011

I beg to move amendment 2, in clause 1, page 1, line 16, at end insert

‘within four weeks of this Act receiving Royal Assent’.

Photo of William McCrea William McCrea Shadow Spokesperson (Justice), Shadow DUP Spokesperson (Home Affairs), Shadow DUP Leader of the House of Commons

With this it will be convenient to discuss the following: amendment 3, in clause 1, page 1, line 16, at end insert—

Amendment 4, in clause 1, page 2, line 4, at end insert

‘and by the House of Commons Treasury Select Committee.’.

Amendment 5, in clause 1, page 2, line 6, at end add

‘and by the House of Commons Treasury Select Committee.’.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

As I mentioned during my remarks on the programme motion, we think that clause 1 is the Bill’s most important provision because it introduces the charter for budget responsibility, which deals with the Treasury’s substantive work over the coming years.

We accept that something such as the charter for budget responsibility, which is meant to be something of a movable feast—a document that can be amended, modified and reviewed from time to time—could not be prescribed in, say, a schedule to the Bill without necessitating the complicated process of bringing it before the House to be amended by statutory instrument.

I accept the charter’s being a separate document. But in some ways I think it is wrong that only a draft charter is in existence at the moment and the Government have not felt able to present something closer to a finalised version, so that we can consider it in the round alongside the Bill. We think it is important that the charter receives proper scrutiny, and that it receives the same level of scrutiny as the Bill itself. The charter sets out the Treasury’s objectives in fiscal policy and policy for the management of the national debt. It also sets out the means by which the Treasury’s fiscal policy objectives will be attained, the so-called fiscal mandate, and it also addresses matters to be included in the financial statement and budget report prepared under clause 2. Those are by no means inconsequential matters.

I had hoped, given the level of debate in the Treasury Committee, in the other place and on Second Reading, that the Government would update the draft charter so that we could discuss something closer to the finished article. It feels as though a substantial part of what we are discussing today is missing.

What efforts, if any, have been made to update the draft charter based on the debate and proceedings in the Lords? If there will be no attempt to present a revised charter before Report based on the debates in the Bill Committee, in the Lords and in the Treasury Committee, why can it not be done before the Bill goes through its final stages? Does the Minister think it  would be better if it was done at that stage? We already have a functioning non-statutory Office for Budget Responsibility, so would it be wrong to delay Report so that an updated charter can be prepared, laid before Parliament and then given the scrutiny it deserves before Third Reading? That is where my first amendment comes in.

Ideally, we would have liked to table an amendment providing that a revised version of the charter should be fully debated and approved by the Treasury Committee and by both Chambers of the House before the Bill receives Royal Assent, but we were advised by the Clerks in the Public Bill Office that it is not possible to put a binding provision in the Bill that something must be done before the Bill becomes law. Obviously, if the Bill has not received Royal Assent and become law, nothing in it is binding, so we could not table an amendment for what we really wanted, which would be more debate on the charter before the Bill becomes law. We have tabled what we consider to be the next best thing, which is that the charter should be laid before Parliament

“within four weeks of this Act receiving Royal Assent.”

That is not ideal, but at least it means there will be prompt scrutiny of what is in the charter while the debate on the Bill is still fresh in people’s minds.

We have also tabled an amendment that requires the Treasury Committee to approve the charter before the Bill receives Royal Assent. That Committee should also have a role in scrutinising the modified charter. I will come to that and a broader discussion of the role of the Treasury Committee in relation to the Bill in a moment.

The requirements for scrutiny by Parliament within four weeks of Royal Assent and for approval by the Select Committee are separate amendments. It would make sense for the Committee to look at the charter first, so that Parliament has the benefit of the Treasury Committee’s deliberations for its discussions. That is a matter for debate. It would also avoid a situation in which the charter was laid before Parliament and approved, but then went to the Treasury Committee, which might express major reservations about it. Then there is the issue of what happens to the Committee’s reservations: where do they actually go?

I want to press the Minister to explain how the provision regarding laying the charter before Parliament, as set out in clause 1, would work. Are we talking about a motion tabled by the Government for the charter to be approved? How much time, if any, would be allowed for debate? In the first instance, there could be major revisions to the charter. It could be a significantly different document from the one that is currently circulating in draft, but there could be minor changes in future. Does the Minister envisage that the process for laying the charter before Parliament would always be the same?

The Chairman is getting slightly nervous as to whether that question relates to the amendment. My point is that our amendment proposes that the Treasury Committee should have a role in considering any modifications to the charter. I am simply trying to tease out from the Minister whether she would envisage that role being the same. There may need to be little tweaks to the charter, such as technical amendments. If she accepts that the Treasury Committee should have a role, would it play  the same role in every instance? On laying the charter before Parliament, would there be instances when it was simply something in the remaining Orders of the Day, going through on the nod, or would there always be a process for full and thorough debate? Who would adjudicate on that matter?

Our amendments would give additional responsibilities to the Treasury Committee. The Bill already imposes extra responsibilities on the Committee, and I appreciate that we are now adding to them, but it is important that the Treasury Committee has a watchdog role overseeing the legislation for the Office for Budget Responsibility. As a former member of the Treasury Committee, I know that it has a wide remit. I was a member during its quiet days between 2005 and 2007 when things ticked along quite nicely. I came off the Committee weeks before everything exploded; the banking crisis happened and things got a lot more exciting. I am sure that its work became far more time-consuming and, to an extent, onerous during those days. It is an important Committee, and it has an awful lot to deal with at the moment. If we are suggesting that it takes on additional responsibilities, which the amendments do, we need to be sure that it is properly resourced and that it has the right expert advice to be able to do its job properly. Otherwise, it becomes something of a tick-box exercise, and the Committee will not feel that it can do the proper job the Bill requires of it.

The final amendment in this group is about public consultation. I appreciate that that does not sit entirely well with the amendments that require the draft charter to be laid before Parliament within four weeks of Royal Assent, and the Treasury Committee to approve it. It is important, however, that there is proper public discussion of not only the existing draft charter, but the charter that will be in effect under clause 1. We need public debate and widespread consultation. Can the Minister suggest how that could happen? We can then ensure that Parliament has a role in considering the results of that consultation and whether the charter is adequate to fulfil the role that is envisaged for it.

The underlying principle of the Bill should be that we are setting up an independent Office for Budget Responsibility, but there need to be parliamentary checks and balances on it, and, although independent in the forecasts and decisions that it makes, it needs to be accountable to Parliament in the way that it works. My concern is that, at the moment, the Bill does not quite achieve that accountability. I am interested in what the Minister has to say on how we can ensure that that happens.

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury 10:45, 1 March 2011

Broadly, in response to the amendments, I can assure the hon. Lady that there will be proper parliamentary accountability. She is aware that the charter effectively replaces the previous Government’s code for fiscal stability, which is out of date and obviously needed significant reform. It breaks new ground in transparently setting out for Parliament and the public not only the Government’s fiscal policy objectives, but the fiscal mandate for how we are going to get there.

Under the code for fiscal stability, which ran from 1998, the previous Government could set their fiscal policy objectives and rules from Budget to Budget. There was no requirement to explain any changes to Parliament. To provide the hon. Lady with some reassurance, clause 1 corrects that lack of accountability by setting strict minimum requirements for the contents of the charter. Clause 1 also establishes the mechanism whereby the charter should be published by the Treasury, and that the charter and any subsequent amendments, which she asked about, will not come into force until they have been approved by a resolution of the House. There is far more accountability than we had under the code for fiscal stability.

I understand what the hon. Lady is seeking to achieve with the amendments. Obviously, amendments 2 and 3 would provide for the charter to be laid before Parliament within four weeks of Royal Assent and then to be consulted on for 12 weeks. The amendments are, however, ultimately unnecessary, because we published the draft charter for budget responsibility in November 2010, and, by the time the Bill achieves Royal Assent, the draft charter will have had at least four months for proper public and parliamentary consultation. The whole point of this Committee is to provide further scrutiny and to debate further changes, and, of course, we have also had a helpful debate in the other place.

Taken in turn, those steps mean that we will not need another public consultation on the charter after Royal Assent. That would merely delay our putting on a statutory footing the Office for Budget Responsibility, which we all want to see happen as fast as possible. We would not derive a lot of additional benefit from a consultation, because the Bill will have been through the parliamentary process and the public will have been able to scrutinise the draft charter. That will allow us to create a charter that we think will work, taking on board the comments that have been made during that time. The final charter will contain some small alterations in response to comments that have been made during the debate on the Bill, and they are set out in the fact sheet.

The hon. Lady has recognised, in terms of the technicalities behind amendment 3, that it is not possible to lay a document and subsequently consult on it. It is probably a probing amendment, but we cannot act in that way. We have taken a better approach, which is to publish the draft charter and have it in place for people to respond to and, once we have been through the Committee process, to lay it before Parliament swiftly after Royal Assent.

Amendments 4 and 5 seek to impose a form of double lock that requires both the House of Commons and the Treasury Committee to approve the charter for Budget responsibility. Those amendments are ultimately unnecessary, because the Treasury Committee is a Committee of the House of Commons. Members are aware that Select Committees fall under the auspices of the House of Commons, so anything that is approved by the whole House does not need to be approved by the relevant departmental Select Committee. I would argue that it is wrong for something to be approved by a subset of Members, when we have stipulated that it must approved by all Members in the House.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

The Bill gives a lot of duties to the Treasury Committee regarding things such as the approval of appointments. One could say that in terms of what we are doing today, the Committee is a subset of the House of Commons that is approving things that will go to the full Parliament to be debated. I do not know why the Minister says that that is not appropriate. My point is that the Treasury Committee has a clear remit and a specific role in relation to the Bill, and it is being given onerous additional duties. Because the charter is such a substantial element of the Bill, although it is not contained in its wording, it is important that the Treasury Committee has a role in that respect as well.

Photo of Thomas Docherty Thomas Docherty Labour, Dunfermline and West Fife

It is a privilege to serve under your chairmanship for the first time, Dr McCrea. I rise to speak in support of the amendments tabled by my hon. Friend the Member for Bristol East.

It is probably fair to say that when the OBR was first established it found itself, unfortunately, off to a bad start when it was perceived to have behaved in a partisan manner. You will recall, Dr McCrea, the particular incident involving the release of figures right before Prime Minister’s Question Time. There was an understandable perception on our side of the House that that was not the best way for the OBR to begin its life. The Minister will recall that the Treasury Committee undertook a short inquiry into the activities around that unfortunate event and I think that the OBR benefited from the work of that Committee. My hon. Friend’s amendments seek to ensure that we never again have that unfortunate circumstance, but also that the Treasury Committee has clear responsibility and a clear mandate to scrutinise the work of the OBR on an ongoing basis.

I have not been in the House very long. I certainly do not have your many years of wisdom and experience, Dr McCrea. I have noticed, however, that we hear a lot about the new politics. I know that the hon. Members for Bristol West and for Chippenham, in particular, tell us that we have a new politics and that, “A new dawn has broken, has it not?”, as a former Prime Minister once said. I look forward with some interest to seeing how those colleagues, who clearly believe in the new politics, the new public scrutiny and the new parliamentary scrutiny process, speak in this debate, and, of course, how they vote. I am sure that they, in particular, would welcome moves that enhance the role of Parliament in holding both the Executive and the Executive’s agencies to account for their actions.

Having been a Member for a few months, I have been deeply impressed by the Minister. She has a fine technical mind and certainly puts me to shame whenever we get on to the finer points of Treasury business. I have to say that she did a handsome job of taking me apart during the passage of an earlier Bill on the Floor of the House, when I was trying to construct an argument. The only Members who might be her equal on the Back Benches are colleagues from all parties who are members of the Treasury Committee. I am sure that they will not mind my saying that they are quite nerdy and have fine technical minds. I would feel much more comfortable if there were a fine august body of Members who could make a decent fist of the scrutiny of this process, rather than leaving it to the whole House.

The Minister mentioned public scrutiny and referred to the Public Bill Committee. I hate to point out that, as I look around the packed public gallery and the vast number of journalists and experts from outside, I fear  they must have gone to the wrong room. I cannot think why the public would not want to be here. However, that demonstrates that the Public Bill Committee does not always provide a suitable public consultation process. My hon. Friend is seeking to provide a safety valve so that over a short period—three months—we can receive some outside input. I have many local companies that would take a close interest in the work of the OBR, as that is what they specialise in.

The Bill is consensual, and the Minister will recall that we did not seek to divide the House on Second Reading. I hope that she will accept that my hon. Friend the Member for Bristol East has tabled these minor technical amendments in the spirit of that bipartisanship, and that she will take on board the issues raised.

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury 11:00, 1 March 2011

In response to the hon. Member for Dunfermline and West Fife, I think he was describing a different Treasury Minister. I can assure him, having been on the Back Benches and in the Opposition team, and now being a Minister, that the only way that the Government can slip through an order at the end of the day is if the Opposition are asleep on their feet. As a Back-Bench MP, I discovered that Back-Bench MPs are more than capable of holding Government to account. I have no doubt the hon. Member for Dunfermline and West Fife will do that over the coming years.

I go back to my original comment: I would never try to slip through changes and I do not think that my successors would. I do not think that the way in which the House works enables that to happen. It is the responsibility of us all, as Minister, shadow Front-Bench team and Members of Parliament, to represent our constituents. I hope that, over the past few months when the draft charter has been available, there has been adequate time for not only the Treasury Committee but MPs, constituents, companies and other institutions interested in ensuring that the charter works well, to have the chance to scrutinise it.

I can reassure the hon. Member for Dunfermline and West Fife that the Bill strikes the right balance, by going far further than the previous code for fiscal stability and making sure that Parliament approves the first charter and then any revised charter. He should bear in mind that the previous Government introduced some golden rules and then reinterpreted how they would work. Other than the normal debating process and the provision of an Opposition day debate through the ordinary channels, there was no way for the House to debate that mandate. We are for the first time putting in place not just the OBR but the charter, which will be debated and have a resolution of the House of Commons. The debating question will happen through the normal channels. We expect that it will be handled as a statutory instrument. It will go through that process of scrutiny and debate in a way that the previous code for fiscal stability did not.

Photo of Thomas Docherty Thomas Docherty Labour, Dunfermline and West Fife

I am grateful to the Minister. I do not have her experience in the House, but I have observed from time to time a slightly injudicious use of programme motions. I accept that the previous Government suffered from the tendency as well, on occasion. However, does she not accept that, if we have a 90-minute debate on a SI, or the injudicious use of a programme motion, the debate would be curtailed? That, at least, would be avoided if the Treasury Committee, which does not have such constraints, debated the matter.

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

By going down that route, we would have the dangerous precedent of Ministers starting to tell Select Committees what they would spend their time considering. The great thing about Select Committees is that they get to choose subjects themselves. We must be careful not to start mandating what inquiries Select Committees will and will not do.

I have no doubt that, because the charter is fundamental to setting out our fiscal objective and mandate, the Treasury Committee will take a close interest. I hope that its members would also participate—as they already do, as I am sure that the hon. Gentleman sees—in relevant debates on the Floor of the House. Now we have the Backbench Business Committee, which can initiate its own debates, as well as the existing Opposition day debates, to ensure that such issues can be debated. I have no doubt that we have struck the right balance between ensuring that Parliament gets to approve the charter and any future changes to it and the Treasury Committee retaining some freedom about its work.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

I was about to intervene on the Minister, but she sensibly sat down before I could do so. I have a number of questions arising from her response to my hon. Friend the Member for Dunfermline and West Fife. I will press her on a number of points and hope that she can intervene with the answers.

The Minister said that it would be wrong to prescribe the role of the Treasury Committee too closely or to dictate its inquiries. She also said that that Committee not wanting to look at something as important as the charter or its modifications was inconceivable. I accept that that Committee is more than capable of deciding to look at the charter, and it will almost certainly do so, trying to fit that inquiry into its packed work programme. However, that is not entirely consistent with other provisions in the Bill, which give additional responsibilities to the Treasury Committee—for example, in relation to appointments. We have tabled other amendments to propose an enhanced role for that Committee, so it would be useful to clear up the issue now, before we get on to the other amendments and before deciding whether to press to a vote the amendments in this group that call for additional responsibilities for the Treasury Committee.

Has the Minister or her officials had discussions with the Treasury Committee—in particular, its Chair—about the new role for the Select Committee under the Bill, how it would work and whether it thinks that it would be appropriate to take on such new responsibilities? I mean not the responsibilities set out in the amendments but those laid out in the Bill. That is important. I have already made the point that the Treasury Committee is busy—one could almost say overstretched. Would it feel capable of fulfilling the role? I am interested in what discussions the Minister has had with the Chair of the Select Committee, the Clerks or the people responsible for ensuring that it can carry out the role effectively. It is important to establish that before deciding whether the Treasury Committee ought to have an enhanced role. Can the Minister answer that?

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

The hon. Lady should be aware that the exceptional responsibility of agreeing appointments has been discussed with the Treasury Committee before being included in the Bill. The process has worked well for the current Budget Responsibility Committee, as  she knows. Interestingly, the Treasury Committee’s approval of appointments will include an intensive pre-appointment hearing, which I hope will ensure that the Treasury Committee gets a good chance to grill potential Budget Responsibility Committee members and, indeed, future chairmen before agreeing whether they should be appointed. Of course, as I have said, there is nothing to stop the Treasury Committee looking at the provisions of the charter either.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

I thank the Minister for that response. We have some additional questions, but perhaps they will be raised when we consider the provisions on appointments, particularly the appointment of non-executive members of the office.

I shall turn to the question of public consultation. The Minister makes a reasonable point that the draft charter has been in circulation since November, but we are not in a position to judge what resemblance that draft charter will bear to the charter that is laid before Parliament. I accept that Parliament will then have a role in deciding whether the changes that have been made reflect the discussions held over the past few months.

Will the Minister elaborate on what sort of response the Government have had to the consultation? I accept that the Treasury Committee has already had an inquiry, but has there been widespread interest, for example, from economists, think-tanks and people who are involved in the financial and economic sector? Have their views been taken on board in making amendments to the charter and is that reflected in the note that she mentioned—the seventh note?

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

As the hon. Lady is aware, we have had substantial interest in the Office for Budget Responsibility. We have taken on board many of those comments. When we announced that we would set up the OBR, there was significant comment from the media, as well as from MPs. Organisations such as the International Monetary Fund have warmly welcomed the establishment of the OBR. We have not received any external comment per se as a result of the consultation—the draft charter—being out in the public domain. However, there has been an awful lot of debate about the OBR’s role and how it will work. Of course, such debate comes on the back of the first part of the process of the Bill passing through Parliament in the other place. That resulted in some amendments to the Bill and to some areas of the charter, to which I have drawn attention. We will now consider those areas, and we have set them out in a factsheet that is available from the Library.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

Again, I thank the Minister for that response.

Finally, I shall turn to the point about laying before Parliament. As I said in my introductory remarks to the amendments, I need to get a firm assurance from the Minister about how that will work. Some hon. Members—my hon. Friend the Member for Rhondda (Chris Bryant) comes to mind—are absolute experts on parliamentary procedure and can cite chapter and verse of Erskine May, what has happened in the past and precedents. I am sure that Dr McCrea is also an expert on such things, which is why he is chairing the Committee today.

My understanding of the phrase “laid before Parliament” is that it could mean anything. I understand that written  ministerial statements and the remaining Orders of the Day, which often go though on the nod or unremarked upon, are laid before Parliament. In addition, statutory instruments considered in Committee are laid before Parliament. I am not necessarily concerned about future versions of the charter, to which there might be technical modifications or small tweaks, but about the first version of the charter that has been out in draft form since November. As the Minister has said, there has been considerable comment on and interest in that. Can she assure me that, when that charter is laid before Parliament, it will be in the form of a motion tabled by the Government that is then allocated time for debate? Or will Opposition Whips have to keep an eye on what is in the remaining Orders of the Day and shout “Object.”? As a former Whip, my understanding is that the Government would eventually table the charter for debate, to avoid a situation where it was always objected to and to get it through Parliament. Usually, there would be a 90-minute debate, or so.

Photo of Thomas Docherty Thomas Docherty Labour, Dunfermline and West Fife 11:15, 1 March 2011

My hon. Friend will recall that the Minister mentioned the Backbench Business Committee as one avenue for laying such provisions before Parliament. Does she agree that the problem with using that avenue is that there would be a non-binding vote, which the Government would be free simply to bypass?

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

I agree entirely with my hon. Friend. It slightly rang alarm bells when the Minister referred to the Backbench Business Committee. I welcome the innovation of having the Backbench Business Committee—it is an important avenue for putting items on the agenda for debate that would not otherwise be there—but it should not be a substitute for the Government doing what is required of them under Government legislation. Surely, it is the Government’s responsibility to ensure that the charter is properly debated, and the idea that the Backbench Business Committee would have to identify the fact that that was not being done by the Government and that this issue had slipped through the net, when only a certain amount of time is allocated to Backbench Business Committee debates anyway, is wrong. The fact that the Backbench Business Committee would have to use that time to do something that the Government ought to do in Government time is wrong.

I suspect that that was not really what the Minister was suggesting and that it was just something that she was throwing into the mix. However, I would be very concerned if the Backbench Business Committee had some sort of responsibility to lay the charter before Parliament and if that was the only way that we could guarantee that it would be thoroughly debated. I want to push her on this point, as it is crucial to our decision about whether to press the amendment to a vote. What do the Government mean when they say that the charter will be laid before Parliament?

The Minister said during her response that the charter will be laid before Parliament very promptly after the Bill receives Royal Assent. Our amendment proposes that it should be laid before Parliament within four weeks of the Bill receiving Royal Assent. I would have thought that “very promptly” and “four weeks” are within the same ballpark at least and therefore that this is a reasonable amendment for the Government to  accept, because we all know that timetables slip. Although there might be the desire, the good will and the intention on the part of the Government and the Treasury to lay the charter before Parliament very quickly after Royal Assent, such timetables do slip. The amendment would put in the Bill a requirement that the charter be laid before Parliament within four weeks of the Bill receiving Royal Assent. Given the projected timetable, we can therefore assume that the charter would be discussed thoroughly and definitely approved by Parliament before the summer recess. That is very important, as all the mechanisms would be in place for the Office for Budget Responsibility to run properly on a statutory basis.

I think that I am making the final remarks on this issue—I do not know whether the Minister wants to put my mind at rest by intervening. What is the crux of laying this charter before Parliament? What type of debate would be allowed? I appreciate that that might partly be in the hands of Government business managers and the Whips Office. Nevertheless, can she give some assurances that there will be a proper debate on the charter? Also, can she say why there is a problem with the requirement that the charter should be laid before Parliament within four weeks of Royal Assent, because she seems to suggest that that will happen anyway?

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

It is absolutely our intention to ensure that we lay a final version of the charter before Parliament within four weeks of the Bill receiving Royal Assent. I do not think that that requirement needs to be in the Bill itself. However, just to give the hon. Lady some reassurance, the charter will be approved in exactly the same way as the previous code for fiscal responsibility, which was established by the previous Government. Of course, as she has pointed out, the procedure will be agreed by the usual channels, but we would expect there to be a debate on the charter before a vote. I should also point out to her that this process will work like an affirmative resolution, not a negative one, so there will be ample time for debate.

The hon. Lady mentioned my reference to the Backbench Business Committee. I believe she understood the point I was making: between this Parliament and the last one, Back Benchers, Whips and Select Committees are now even more able to propose debates. The House is more able than ever to debate what it believes is important. That is the overall approach. I hope that that provides her with some reassurance. We will have a similar process to that for statutory instruments—the same model that her Government used for the code of fiscal responsibility—and no doubt the usual channels, or Whips discussions, will ensure appropriate timetabling.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

I thank the Minister for that response. We continue to have some reservations, although I am pleased with the assurances that she has given. It is important that the charter is properly scrutinised. I submit that the Treasury Committee should play a role in that, and there is certainly a role for Parliament in ensuring that the charter is approved. Given her response, we shall not press the amendment to a vote today, but we reserve the right to return to the issue later. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

We have discussed in some detail the substantial measures in clause 1. As the Minister said, there has already been significant discussion of what will be in the charter. Clause 1 states that the charter

“must in particular set out…the Treasury’s objectives in relation to fiscal policy and policy for the management of the National Debt…the means by which the Treasury’s objectives in relation to fiscal policy will be attained (“the fiscal mandate”), and…matters to be included in a Financial Statement and Budget Report”,

and

“such other material as the Treasury considers appropriate”.

We will suggest through amendments certain things that it would be appropriate for the OBR to do. In particular, we have tabled amendments saying that its role should include looking at child poverty targets and the local government finance settlement. We could have included other issues, such as the 0.7% of gross domestic product target and various other targets that the Government have set for themselves in legislation. Perhaps, over time, the OBR’s role will expand to include such things, but we shall reserve debate on that until we actually get to those provisions.

I have already dealt with laying the charter before Parliament and modifying it. I want to stress that it is important that the charter receives scrutiny. We are concerned that there is no such parliamentary mechanism. There is discussion about what will be in the charter, but the very fact that it is not part of the Bill means that we cannot treat it in the way that we would treat legislation and amend it through formal processes. That is slightly of concern when it is such a substantial part of what the Bill sets out. That is my main concern with clause 1.

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

To sum up the debate on clause 1, it is fair to say that we are introducing the Bill that sets up the OBR at a time when fiscal policy is probably the single most important priority for the coalition Government. Given the fiscal situation that we inherited, the Government’s approach to fiscal policy should be presented to the public in a transparent manner. The charter for budget responsibility, which is established under the clause, is a key statutory document for achieving and maintaining that transparency. As we have discussed today, we have aided scrutiny during the consideration of the Bill by publishing a draft charter for budget responsibility on Monday 22 November 2010.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

Perhaps I should have brought up the matter earlier, but I understand that the amendment that we drafted on the 12-week public consultation relates to a Cabinet Office requirement to hold formal 12-week consultations. Does the Minister regard what seems an informal consultation process since the draft charter was published at the end of November as meeting the Cabinet Office requirements?

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

Ultimately, the effective consultation process that we have had will have run on for longer than three months. It will probably be about four months by the time that the Bill receives Royal Assent, so there has been ample time to scrutinise matters. As we have already discussed today, the progress of the Bill through Parliament began in the other place, where the debate not only on the Bill but the charter went on for several days. There has been significant chance for both the Bill and the charter to be debated.

The hon. Lady’s point about the importance of the charter is right. There is a need to find a way for the Bill to place both the Office for Budget Responsibility and the charter on a statutory footing, but with the flexibility to respond to the desires of future Governments perhaps to change their fiscal policy objectives and their fiscal mandate. In drafting the Bill as we have, we will build in flexibility in the right way, while giving some accountability by having the charter go through an approval process in the House of Commons.

Although the charter replaces the previous Government’s code for fiscal stability, it makes a minimum provision for the Government’s fiscal and debt management objectives and the targets for fiscal policy that deliver the fiscal objectives. Moreover, the fact that it establishes a mechanism by which the charter gets published by the Treasury but then has to wait to come into force until it has been approved by a resolution of the House of Commons will be a key safeguard in accountability. It will become a vital part of the new fiscal policy framework that we are putting in place. It will feature not only transparency, but more accountability to Parliament over time. I hope that I have dealt with many of the issues raised by the hon. Lady and therefore that the clause will stand part of the Bill.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.