Osborne reveals economic plan vote

Chancellor George Osborne set the scene for a major political battle by announcing that Parliament will vote next year on an updated charter committing the Government to economic policies stretching well beyond the general election.

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Chancellor of the Exchequer George Osborne delivers his Autumn Statement to MPs.

Chancellor George Osborne set the scene for a major political battle by announcing that Parliament will vote next year on an updated charter committing the Government to economic policies stretching well beyond the general election.

The original Charter for Budget Responsibility in 2011 enshrined the coalition's targets of eliminating the spending deficit and getting national debt on a downwards trajectory, and it was expected to be revisited by the new government after the 2015 poll.

By announcing that he will draw up a new Charter to be voted on at the time of the 2014 autumn statement, Mr Osborne has thrown down a gauntlet to Labour, effectively challenging Ed Miliband to say whether he backs plans to run a budget surplus once the deficit has been paid down.

Both Conservatives and Liberal Democrats are agreed that the Government should aim to run a surplus - by spending less than it takes in from taxes and other revenues - in the years after the deficit is eliminated, currently expected to happen in 2018. This would effectively extend austerity measures at least until 2020, in order to rein in an overall debt level currently expected to peak at almost £1.6 trillion.

In next year's vote, Mr Miliband will come under pressure from ministers to commit Labour to targets which Mr Osborne claims are required in the interests of "sound public finances". But the Labour leader will be wary of giving his backing to anything which will tie his hands if he wins power in the following year's general election.

Equally, Mr Miliband will not want to give voters the impression that Labour is ready to turn on the spending taps. He has already signed the party up to Mr Osborne's limits on day-to-day spending in 2015/16 in order to demonstrate that he would be responsible with the public finances in power.

An incoming government could tear up the plans and draw up its own charter following the election, but it would be vulnerable to accusations that by doing so it was abandoning the cause of budget responsibility.

The Charter to be published next year is expected to tie the Government to the programme of austerity cuts already sketched out for 2016/17 and 2017/18, and to establish the principle that the Government must ensure that debt falls as a percentage of GDP after 2018.

Breaching Charter promises is not illegal, but can be highly politically embarrassing, as the Chancellor found when he had to come to the House of Commons to explain that he would miss his target to have debt falling as a percentage of GDP by 2015 - something which is now not expected to happen until 2018 at the earliest.

Mr Osborne told MPs in his Autumn Statement: "W e will bring forward next year an updated Charter for Budget Responsibility and ask Parliament to support it.

"I can say today that both parties of the coalition have agreed that we must ensure that debt continues to fall as a percentage of GDP, including using surpluses in good years for this purpose.

"In other words this time we will fix the roof when the sun is shining."

The current Charter sets a rolling five-year deadline for the Chancellor to eliminate the deficit. Mr Osborne said that this "time horizon" will be reviewed, so that the new Charter could include a two or three year deadline for the Government's main fiscal target, imposing tighter discipline.

"W e will look to see whether the five-year time horizon of the fiscal mandate could be shorter and even more binding now that the public finances are closer to balance," said the Chancellor.

"And we will see how fiscal credibility could be further enhanced by a stronger parliamentary commitment to the path of consolidation already agreed for 2016-17 and 2017-18."

A senior Labour source said it was too early to say which way the party will vote next year.

"We will certainly have a look at it," said the source. "Anything which encourages fiscal responsibility has to be welcomed.

"But if they were serious about these sorts of measures, they would agree to the Office for Budget Responsibility checking the manifestos of each of the major parties, which we have suggested and up until now they have refused to do."