London: Should the Finance Minister face a personal financial penalty for failing to balance the budget?
A leading think-tank has suggested the introduction of a 'debt brake' to ensure that the person responsible for the budget balances the books, and force 'reckless' politicians to act in the long-term interest of the country.
In its latest report, 'Binding the Hands of Government - A Credible Fiscal Rule for the UK', the Institute of Economic Affairs (IEA) has suggested that Chancellor George Osborne should face a 20 percent pay cut if he fails to balance the budget.
Looking at evidence from Switzerland and Germany, the research shows that 'debt brakes' are effective at limiting government spending, while the fiscal rules Britain has followed in the past have not prevented governments from running up huge debts.
The authors - Kwasi Kwarteng and Jonathan Dupont - propose that if the Chancellor fails to observe the debt brake, there should be a public exchange of letters between him and the Office of Budget Responsibility, explaining why and what action is being taken to rectify the situation.
The Chancellor could also face a personal financial penalty of up to 20 percent of his salary, they suggest. The IEA recommended a return to 'Victorian' prudence, with the government spending only what it receives in each tax year.
"For too long governments have treated their responsibilities too lightly, spending recklessly and amassing high debt. Fiscal prudence is the very least we should expect from a Chancellor. Debt brakes have been shown to work overseas and would be a great asset to the democratic system here in Britain," Kwarteng said.
"It is time we learnt the lessons of the past and stopped using recessions as an excuse for irresponsible spending. In the past we have had complex rules that gave Chancellors too much leeway; we need something simple that governments can be held to account for," Dupont said.
PTI
