Overview

The Public Debt Management Bill aims to control government borrowing and spending by introducing a budget surplus rule and annual expenditure limits. It strengthens the role of the Office for Budget Responsibility (OBR) in overseeing government finances and ensures parliamentary oversight of significant spending decisions.

Description

This bill establishes a Budget Surplus Rule mandating a budget surplus of at least 1% of GDP over each business cycle, determined by the OBR. Interest payments on the national debt are excluded.

Annual Expenditure Limits will be set annually by the Chancellor in the Autumn Statement, defining the maximum percentage of GDP the government can spend over three consecutive financial years. These limits apply to all public expenditure (excluding interest payments) and are subject to parliamentary approval in exceptional circumstances (e.g., war).

The OBR's responsibilities are expanded to include forecasting GDP, recommending expenditure limits, and publishing regular reports on the government’s fiscal performance and the sustainability of the proposed limits. The OBR must also advise on the fiscal impact of exceeding spending limits during emergencies.

If expenditure limits are breached (excluding exceptional circumstances), the Debt Management Office is prevented from issuing further public debt until a plan to restore fiscal sustainability is presented to and approved by Parliament.

Government Spending

The bill doesn't directly specify a figure for increased or decreased government spending. However, by implementing stricter limits on expenditure, it aims to reduce the national debt and ensure long-term fiscal sustainability. The cost of the OBR’s expanded responsibilities will be met through parliamentary funding.

Groups Affected

• Government Departments: Face stricter spending constraints, potentially requiring efficiency improvements and difficult choices in resource allocation.
• The Office for Budget Responsibility (OBR): Takes on expanded responsibilities and increased workload.
• Debt Management Office: Its ability to issue public debt is contingent on adherence to the expenditure limits.
• Parliament: Gains greater oversight of government spending through the increased scrutiny and approval processes.
• The Public: Potentially benefits from reduced national debt and improved long-term fiscal health, but may also experience limitations on public services if spending cuts become necessary.

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