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Labour proposes new ‘fiscal lock’ plans to give economic watchdog more power

The shadow chancellor, Rachel Reeves, has announced Labour would give more powers to the Office for Budget Responsibility (OBR) to improve economic stability if they win the next election.

The plans include allowing the OBR to publish forecasts and analysis for any government tax and spending changes.

Ms Reeves also told the BBC that Labour would only announce major tax and spending decisions in November to reduce uncertainty for businesses and families.

In an op-ed for the FT, Ms Reeves said: “These changes will be put to parliament as a new charter of Budget responsibility. This will introduce a new fiscal lock on Britain’s economic institutions to strengthen our financial stability and security”.

She also proposed the creation of a new set of fiscal rules designed to ensure the government will not borrow to fund day-to-day spending and will reduce national debt.

The shadow chancellor also pledged to invest more into British businesses that “strengthen our energy security, cut household bills and create better paid jobs”.

Commenting on Labour’s policy announcements, Andrew Griffith, the economic secretary to the Treasury, told the BBC: “The Conservatives created the OBR to curb Gordon Brown’s reckless spending binge.”

He added: “The current Labour Party is on the same, destructive path with their plan to borrow £28bn a year which would fuel inflation and push up interest rates even further.”

The announcements come almost a year after the former chancellor Kwasi Kwarteng delivered his mini-budget, which led to market instability and the fall in the value of the pound.

Some argue that the Conservatives’ decision not to ask the independent OBR to assess the feasibility of the mini-budget was a major reason for the instability it generated.

In the op-ed, Ms Reeves said: “I want to bring stability back to Britain’s economy because that is the only way we can bring back growth. That commitment starts today with a very simple promise: never again”.

She added: “With a Labour government, never will a prime minister or chancellor be allowed to repeat the mistakes of the “mini” Budget”.

Ms Reeves’ avid support for the OBR lies in stark contrast to Liz Truss’ views on the watchdog. In her speech this week for the Institute for Government, Ms Truss made repeated attacks on the OBR’s analysis when she was prime minister.

Ms Truss said: “The government needs to take on the OBR over the impact of tax policy, and we need to see much more sophisticated levels of analysis from the Treasury about long term economic growth”.