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Fiscal Responsibility Bill

My Lords, at first sight the Bill appears to infringe one of the fundamental principles of welfare economics; namely, that reducing the size of the choice set available to a decision-maker cannot improve the outcome of the decision he has to take. That is taught in first-year economics—or what the Americans call Economics 101. In so far as noble Lords opposite have any knowledge of economics at all, which I am now beginning to doubt, that limit must be Economics 101. But there is a vast amount more economics to be learnt than that. Research and behavioural economics, together with the theory of games, show that the simple proposition that I have just mentioned is not always valid. The best analogy for our purposes today—albeit, like all analogies, it is imperfect—is addictive behaviour. A smoker would find it easier to give up the habit if severe limitations to the purchase of cigarettes were put in his way. If he were also able to take out a contract which penalised him significantly if he puffed on a cigarette again, that would, a fortiori, help him even more. What concerns us here is the bad habit or, dare I say, the addiction to excessive public expenditure. The Government are committed to reducing public expenditure to a level and rate of growth that is sustainable in the long run. The Bill rightly seeks to reinforce that commitment by placing it on the statute book. That is an exactly correct move on the part of the Government. I am horrified that noble Lords opposite do not seem to have any glimmering of understanding, for obvious party political reasons, of what the Government are seeking to achieve.