King’s Speech: Labour to legislate OBR fiscal lock to boost ‘market credibility’
Labour will legislate for a fiscal lock to require the Office for Budget Responsibility (OBR) to provide an independent assessment of any major tax and spending plans.
Sir Keir Starmer opened his first King’s Speech with the Budget Responsibility Bill, which is intended to prevent future government’s repeating the mistakes of Liz Truss’ mini-budget, which plunged markets into turmoil and sent the pound tumbling.
It will ensure any government making significant and permanent tax and spending changes will be subject to an independent OBR assessment and give the OBR the power to produce an assessment at the time of its choosing.
The address – the first Speech from the throne under a Labour government for 14 years – contains a raft of some 35 bills legislating across planning, workers rights, devolution and transport, as Labour sets out its agenda for government.
Delivering the King’s Speech, from the House of Lords, King Charles III said: “My government will govern in service to the country. My government’s legislative programme will be mission-led and based upon the principles of security, fairness and opportunity for all.”
He continued: “Stability will be the cornerstone of my government’s economic policy and every decision will be consistent with its fiscal rules.
“It will legislate to ensure that all significant tax and spending changes are subject to an independent assessment by the Office for Budget Responsibility [Budget Responsibility Bill].”
Starmer said: “This King’s Speech sets out a clear destination for the country. Our plan starts, as it must, with our economy.”
He added: “The economic chaos working people have endured since the mini budget will never happen again with my Labour government.
“We are introducing a Budget Responsibility Bill to protect taxpayers’ money and people’s living standards. From that foundation of economic stability, we will generate higher economic growth in every community.”
The government is also legislating a National Wealth Fund bill, to align the UK Infrastructure Bank and the British Business Bank, in a bid to grow the economy with a focus on private sector investment in the clean energy transition as the UK moves towards net zero by 2030.
While bills on pensions, bank resolutions and draft audit reform and corporate governance aim to support savers, deliver growth and ensure value for money; give the Bank of England more flexibility to respond to the failure of small banks; and replace the Financial Reporting Council (FRC) with a new regulator – the Audit, Reporting and Governance Authority.