Len Shackleton, professor of economics at the University of Buckingham, and economics fellow at the Institute of Economic Affairs, says Yes
Fiscal rules have a poor record: think Gordon Brown’s Golden Rule, or the EU’s Stability and Growth Pact. Of course, the fiscal charter will be different – but don’t they all say that? Passing a law tightens things up a notch, but no law is forever.
George Osborne wants to commit governments to running a surplus in “normal” times, with the OBR being the judge of when times are sufficiently “abnormal” to allow the rule to be relaxed. Bizarre.
Why should the boss of a statistical outfit, chosen for number-crunching ability rather than political nous, be allowed to overrule Parliament? The Queen should do it herself, if it’s arbitrary judgments we want. This whole charade is just a silly trap set for the Labour Party.
Osborne should stop playing games and get on with his day job. On this issue, I’m with John McDonnell – though instead of having to make an embarrassing U-turn, he should have said this weeks ago.
Ben Southwood, head of research at the Adam Smith Institute, says No
Dropping the fiscal charter just after he signed up to it could prove costly to John McDonnell even if it resolves a contradiction in his position.
Labour had seemed to accept that George Osborne won the political debate around austerity, by signing up to the chancellor’s fiscal charter and planning to close the deficit gap.
But at the same time, they were perceived, and attempted to position themselves, as an “anti-austerity” party – inconsistent with their plan to tighten policy with tax hikes.
Even in a political climate where “austerity” often refers simply to spending cuts, rather than the government’s budget balance overall, there was a tension here. But McDonnell may have gone the wrong way to resolve the contradiction.
Signing up to the chancellor’s charter made it look non-partisan. Backing down now looks indecisive, incompetent, and has drawn heavy criticism from his own side.