Back to the drawing board, boys!

Monday, 29th September 2008

I’m scratching my head over George Osborne’s proposed Office for Budget Responsibility. It'ssupposed to give us confidence that a new regulator will mean that future governments will never again be able to live above their means. This tells us that no Chancellor of the Exchequer can ever again be trusted to look after the nation’s finances. George Osborne is the Shadow Chancellor of the Exchequer. So he is in effect telling the British public: ‘Trust me, I can’t be trusted.’

That’s a great way of restoring trust in the political class.

Next, the Tories intend to strengthen the Bank of England’s role in keeping the country out of debt by getting the Bank to oversee a new Debt Responsibility Mechanism, which will allow it to issue a public warning when private sector debt is running too high. Which institution presided over the catastrophic escalation of debt? Why, the Bank of England. Who is going to oversee the new system of warnings when private sector debt runs too high? Why, the Bank of England!

I think this is what’s called the cutting edge of the new politics.

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Nick Kaplan

September 29th, 2008 1:49pm

Melanie; I’m afraid you are not correct here. It is about time some mechanism was put in place to ensure governments don’t borrow too much and cripple future tax payers with massive debts. This proposal may not create a body with any de jure power but it will be able to put significant political pressure on chancellors that do over spend, it will have influence and de facto power.

You are also mistaken to imply that the BoE has been overseeing banks and the huge debt bubble for the last 10 years. In fact one of the key problems with Brown’s regulatory system was that it stripped the BoE of its supervisory role, something John Redwood has consistently and correctly condemned.

Instead the bank was given the sole task of preventing inflation and therefore has had no duty to predict or help prevent the current crisis. More powers must be put in the hands of experts (like the supremely skilled Mervyn King) and taken out of the hands of electioneering politicians of both the left and the right. Surely any conservative should support such a move.

Osborne’s proposals are sensible in that they show the Tories are prepared to act reasonably (unlike Labour who are reverting to socialist type and condemning the free market) and that they do in part understand what has gone wrong here, in that it is as much the fault of poor governance as irresponsible banking.

maas101

September 29th, 2008 3:21pm

The Bank of England was given sole responsibility for the setting of interest rates. The escalation in public debt was down to the chancellor and the BoE had no say in the matter.

Public trust in the political class is at rock bottom. It cannot be won back with pretty speeches, it has to be earned. If the new office (and it's a big if) is shown to be independant and have teeth it will go some way to restoring confidence that the budget rules won't be torn up every time a by-election looms.

Is this the cutting edge of journalism?

Fabio P.Barbieri

September 29th, 2008 5:56pm

Such a mechanism as Cameron and Osborne propose already exists in the EU and many European countries. It is called the Court of Accounts (Court des Comptes, Corte dei Conti) and it is an assessing body with all the trappings of a court of justice, with the power to assess and, if necessary, reject the state budgets and all laws involving spending. The trouble is that politicians have discovered that it can safely be ignored. The European Court of Accounts has refused to certify the European budget for some eleven or twelve years now, I believe; and the corrupt filth at the top simply ignore it and go on wasting money.

Gareth

September 29th, 2008 7:12pm

Over at the EU referendum blog,(eureferendum.blogspot.com) they claim that financial regulation is now an EU "competency" and the Tories are simply posturing because they can't change anything.

Cllr Chris Cooke

October 1st, 2008 12:31am

Frankly, for all Melanie's disgust at the BNP, I really can't see the difference between the BNP today and the Labour/Tory concensus from 50 years ago - when people were less greedy, kinder and much more helpful to each other. Now we have a three party system in which each party vies for the position of being most authoritarian Communist. Yes - all things considered - I think a BNP government would be provide a much needed breath of freedom and fresh air to this very sick country of ours.

Archie

October 1st, 2008 5:06am

Cllr. Cooke: you might be astonished at how many people agree with you!

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Melanie Phillips is a Daily Mail columnist. She also writes for the Jewish Chronicle and is a panellist on BBC Radio Four's Moral Maze. Her most recent book is 'Londonistan', published by Encounter and Gibson Square.

For a complete set of Melanie's articles click here