Chancellor of the Exchequer George Osborne will use a major speech in the City tonight to introduce a new law requiring future governments to run an overall budget surplus.
“The result of this recent British election, and the comprehensive rejection of those who argued for more borrowing and more spending, gives our nation the chance to entrench a new settlement,” the chancellor will say at a black-tie dinner at Mansion House.
“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 add, saying that the new “fiscal mandate” will require a vote in the House of Commons later this year.
A Treasury spokesperson would not say how the new fiscal mandate would be enforced, but said further details would be included in the summer Budget on 8 July. All final proposals would also be assessed by the Office for Budget Responsibility, the spokesperson said.
Osborne is expected to repeat his previous vow to “fix the roof while sun is shining” in the speech, to be delivered before an audience of City leaders including Bank of England governor Mark Carney.
“With our national debt unsustainably high, and with the uncertainly about what the world economy will throw at us in the coming years, we must now fix the roof while the sun is shining,” Osborne will say, adding: “We should now aim for a permanent change in our political debate and our approach to fiscal responsibility, just as they have done in recent years in countries like Sweden and Canada.”
In a rare move, the chancellor will also announce that he will convene the Committee of the Commissioners for the Reduction of the National Debt, a government body established by William Pitt the Younger that last met in October 1860. The modern commissioners will include Osborne and Carney, as well as deputy governors of the Bank of England, the lord chief justice and the speaker of the House of Commons, John Bercow.