Fortifying the Fiscal Framework (Economic Affairs Committee Report)

Viscount Chandos Excerpts

Tuesday 3rd November 2026 Grand Committee

[Viscount Chandos (Lab)]

My Lords, I am grateful to my noble friend Lord Liddle for securing this debate and introducing it so cogently. I congratulate him on his appointment as chair of the committee.

The committee’s report, Fortifying the Fiscal Framework, could not be more timely or important. Today, the day of the US mid-term elections, might be a good time to remember that, in 2016, President Trump promised to eliminate US national debt, which was then around $17 trillion. In recent months, it broke through the $40 trillion level—around 130% of GDP. If the US had a fiscal framework, we can be confident that President Trump and Secretary Bessent would pay little or no attention to it. Even if there has been intermittent nervousness in the US Treasury market—arguably caused predominantly by other factors—the US continues to be able to finance itself on internationally competitive terms. So who needs a fiscal framework?

The US, fortunately or unfortunately, is not a representative model in the light of, inter alia, the dollar’s dominant position as the world’s reserve currency. Why do we attach so much importance to a stable fiscal framework? It is of course vital in maintaining confidence—international and domestic—to ensure that, whatever the national borrowing requirement is, the Exchequer pays the lowest possible interest rates. It is also a framework for promoting intergenerational fairness, which I acknowledge needs nuanced analysis but is an important and relevant consideration none the less.

One of the most striking parts of the report is contained in its final pages, in the form of Appendix 4. It shows over 20 changes in fiscal rules since the global financial crisis in 2008. The report correctly acknowledges that the rules should not be set in stone for many decades, but also argues that moving the goalposts this much and this often does not generally engender the very confidence that is the central purpose of the exercise.

I will not take much more time, as I unequivocally endorse the report’s conclusions and recommendations. The welcome reduction of the rolling forecast period from five years to three could, as the report recommends, usefully be amended further to include the requirement that debt at the end of the third year should be lower than in the first. I hope the Government will reflect on this beyond the initial dead bat that they have played.

I welcome the support given by the committee to the role and performance of the OBR, as well as the appointment of Jonathan Haskel as chair after, inter alia, his distinguished tenure on the Bank of England Monetary Policy Committee. I also endorse the support given for the new cycle of two forecasts and one fiscal event each year, whether or not the gap between the forecasts could be evened out to some extent.

I was struck by the evidence given by the economist and journalist Ben Zaranko advocating a broader assessment of financial resilience than the numerical level of headroom, as my noble friend Lord Liddle also argued in his introduction. The fiscal framework should not be overly mechanical in its interpretation and analysis, but the symbol of the financial responsibility and discipline pursued by the Government. If it is not too frivolous, I am reminded—for film buffs—of “Pirates of the Caribbean”, where the pirates’ code is argued to be not so much a code as a guideline.

The Government have made a strong start in stabilising the country’s fiscal position. I disagree with the noble Lord, Lord Redwood, that we are anywhere near the point of being unable to cover our financing needs, and this report can further strengthen that position.