George Osborne is moving ahead with plans for a new fiscal framework that will allow the government to borrow only in exceptional circumstances.
The Chancellor will introduce a rule to prevent future governments from spending more than they collect in revenue during periods of growth in order to cut the national debt and prepare for uncertainty in the future.
"With our national debt unsustainably high, and with the uncertainty about what the world economy will throw at us in the coming years, we must now fix the roof while the sun is shining," Osborne will say in his annual Mansion House speech.
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Running a budget surplus is something few governments have been able to achieve since World War Two, the BBC points out. The new framework will, however, allow the country to run a deficit when in recession and the task of policing the plan will fall on the independent Office for Budget Responsibility.
Osborne will also announce that a group known as the Committee of the Commissioners for the Reduction of the National Debt will be revived and meet for the first time in 150 years.
Initially set up to help repair the economic damage caused by the Napoleonic wars, the group will include the governor of the Bank of England, the speaker of the House of Commons, and the Lord Chief Justice, who will meet to discuss a plan for permanent deficit reduction.
The House of Commons is expected to vote on the proposal later this year, but it is likely to have vocal critics on the left and will be a major test for the next Labour leader, says the Financial Times.
Peter Dominiczak at the Daily Telegraph agrees, describing the move as "a trap" for the Labour party, which will face widespread criticism if it doesn't support the vote. "After the borrowing under the last Labour government and the policies put forward by Ed Miliband, the next leader of the party will have a lot of questions to answer," a government source told the newspaper.
The Chancellor's proposals have already been viewed by many as an attempt to secure his legacy. "Osborne sees his proposed budget surplus law as the capstone of his struggle to restore order to the public finances since becoming chancellor in 2010: a means of locking in his legacy of balancing the books," says the Financial Times.
