22 September 2023 , 11:03
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Labour has pledged to bring in a 'Liz Truss law' to stop a repeat of last year's mini-Budget carnage.
Shadow Chancellor Rachel Reeves has pledged that a Labour government would ensure the budget watchdog is not "gagged" by chancellors and prime ministers. The promise comes ahead of tomorrow's one year anniversary since ex-PM Ms Truss and ex-Chancellor Kwasi Kwarteng unleashed an economic wrecking ball on the country.
Ms Reeves has set out a proposal for ministers to be legally bound to consult the Office for Budget Responsibility (OBR) on major tax and spending changes under plans to prevent a recurrence Ms Liz Truss's ill-fated mini-budget.
Ms Reeves told BBC Radio 4's Today programme: "I'm saying that we won't allow that to happen again because the OBR will not be gagged. We will bring forward this charter in legislation, and MPs will vote on it and then we will ensure that, in the future, when budgets happen there will always be a forecast."
Ms Truss announced a barrel of unfunded tax cuts last year, which caused markets to collapse and the pound to spiral. She was forced to sack her Chancellor Mr Kwarteng in a bid to cling onto power but in the end had no choice but to stand down, making her the shortest PM in history, with a stint of just 49 days.
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One of the reasons the markets were so spooked by their mini-budget was that they refused to publish the OBR's independent forecasts for the public finances alongside the plans. Labour promised to amend the rules so the OBR would be able to independently publish the impact of any major fiscal event making permanent tax and spending changes.
Boris Johnson also considered not going to the OBR before his first budget as PM, but this was rejected by his then-chancellor Sajid Javid, according to a book by the Telegraph's political editor, Ben Riley-Smith.
Labour also said it would set out a fixed timetable for annual autumn budgets, followed by a spring update in early March, to give families and businesses time to prepare for changes ahead of the new tax year, which starts in April. Major tax and spending decisions would be reserved for November under the plans, while only minor policy changes would be allowed in a spring update.
Ms Reeves defended the proposal, rejecting the assertion that it would make it harder for chancellors to respond to unpredictable events. "This is good international practice, that you set a date for the budget and you stick with it," she said.
"And to have a budget in the autumn rather than just a few days or weeks before the new financial year gives businesses, gives families, a chance to plan for any changes in taxation, for example, so that's good international practice."
Ms Reeves and Mr Starmer will face more questions about the plans during a visit to the London Stock Exchange today.
Ms Truss said: “It beggars belief that Labour think Britain’s problems will be solved by bigger government and even more powers for quangos."
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