Jan 06 - Government Defends Public Finance Act Amendment

Written by YGTV Team on 06 January 2016.

The Government says that the principal change which is provided for in the Bill for an Act to amend the Public Finance (Borrowing Powers) Act 2008 is the equalisation of the net debt provision to the manifesto commitment of reaching a net debt position of £300m.

Number Six says that this was one of the issues debated in the election and spelt out in the public finance pages of the GSLP-Liberals’ manifesto adding that the Bill “gives effect to the programme for Government chosen by 68% of the electorate.”

The Government explains that the practical effect is to keep the two criteria which are normally used to define debt levels in the rest of the world, namely the ratio of debt to GDP (which is also a criteria contained in the manifesto), and the cap, set at 8% of revenue, on the cost of servicing the debt.

A statement ended: “The ratio of 80% of revenue for limiting the size of the debt is removed because it has the effect of restricting the debt level, even when it is comfortably below the other two criteria, and exposes Government to unexpected fluctuations in income.

“The Government looks forward to setting out the detail of the proposal during the course of the Parliamentary debate on the Bill.”