The Lords want a tougher rule that sets a debt target for every year and monitors adherence to that over time. The ultimate goal should be to build a buffer so Britain is safe from wobbles in financial markets and has space to act in any future crises, the Lords says, even if it means cutting back those services the Government provides.
Lord Burns, another member of the Committee, says it would be a politically painful move for the Chancellor, but one which would ultimately benefit the nation.
“If debt rules are going to be effective, they have to be inconvenient for governments at various moments – by their very nature, these things are constraints,” he says.
Seemingly easy and painless solutions to the financial woes are hard to come by. Increasing migration, for instance, has done little to fill the fiscal hole in the state budget, despite its apparent usefulness as a way to fight the ageing of the population.
“While high net migration has previously boosted GDP growth, it has made little impression on GDP per head: high net migration cannot be the solution to debt sustainability,” the peers said.
Darren Jones, chief secretary to the Treasury, says the debts are indeed unsustainable.
“The Lords could not have been clearer about the dire state of the country’s finances. We have inherited a decade of lost economic growth, an economy that isn’t working, a £22bn black hole in our public finances and unsustainable long-term debt,” he says.
“That is why we have to take tough decisions now to fix the foundations of our economy, so we can rebuild Britain and make every part of the country better off. To make sure this reckless overspending does not happen again we are strengthening the OBR and will confirm our robust fiscal rules at Budget.”
Ultimately, the Lords believe even more radical change may be required.
“During this Parliament we really need to have a plan to tackle those challenges so that we can put debt on a sustainable path downwards,” says Lord Bridges.
“That means we need to have a debate about what the state is going to do in light of these challenges – what it does and what the individual is going to do. We cannot keep muddling through.”