Outlook: Brown's hair shirt will not suit all occasions

One of the great spectator sports for observers of Ken Clarke's Budgets was guessing how many years he would put off his promise of a balanced budget. It turned out that the Clarkeian "medium term", when spending and revenues would balance, was a rolling concept. It was always four years from the instant he stood up in the House of Commons, whisky in hand, to set out his latest plans.

In contrast to this ``virtue later'' approach, Gordon Brown trumpets austerity now. What's more, he is going to make sure every future chancellor follows the same path of righteousness. The Code for Fiscal Stability will legislate for prudent Budgets forever. Each chancellor will be able to choose his own particular rules, whether that means keeping borrowing within the level of public investment (Mr Brown's "golden rule") or the Tories' preferred goal of government spending shrinking as a share of the economy. But they will all have to have a rule, publish it, and show how well they are matching up to it.

The new code is meant to do for fiscal policy what Bank of England independence has done for monetary policy. The intention is to subject the government's tax and spending plans to unprecedented scrutiny.

It's hard to quarrel with this ambition. But what will the new code achieve in practice? Would it, for that matter, have changed the Ken Clarke approach? The answer has to be perhaps but not necessarily. Extra scrutiny of a mass of Treasury documents by parliament and the National Audit Office would have made it a bit more embarrassing for him to postpone his target year after year. It would also have made pre-election tax cuts, like those introduced before the 1992 election, far more transparent and therefore less worth gambling on.

But what a stability code can never do is prevent the kind of economic shocks that overturn the most prudent plans. Recessions will always send government borrowing soaring. Nor can any code ensure that the Treasury's forecasts for the economy and borrowing turn out to be correct.

In the end the Brown proposal amounts to little more than window dressing. No Chancellor ever wants to run an irresponsible policy, even if some of them have been easily tempted into it when there's an election to win. These days the capital markets tend to keep governments on the straight and narrow far better than any rule is ever capable of doing. Furthermore, what seems right for today can often seem wholly inappropriate tomorrow. Government's always need to leave room for some flexibility. Even so, the code shows good intentions and is therefore generally to be welcomed.