What
is "The Budget" and why is there one each
year?
The Budget is the annual financial statement and
review of levels of taxation, which has generally
taken place in the Spring. The Budget speech includes
a statement of the Government's medium term financial
strategy and the short term economic forecast. The
economic aspect of the Budget is important; taxes
are imposed for their effect on the nation's economy
as well as for raising revenue to meet expenditure
for the year.
The Conservative Government changed the Budget
timetable in 1993 so that tax and spending proposals
could be presented to Parliament at the same time.
Between 1993 and 1996 the "unified Budget",
as it was called, was delivered in November and
it covered both the Government's taxation plans
for the coming financial year together with its
spending plans for the next three years, thus
combining the Budget with the Autumn statement.
(The details of the unified Budget were set out
in a Government White Paper in March 1992 - Budgetary
Reform, Cm 1867).
In election years, after a change of Government,
it is usual that the incoming Chancellor will
introduce a Budget, whether or not one has already
been delivered by the outgoing Chancellor. A new
Government can, of course, decide to vary the
timetable again, and the new Labour Government
did just that: Budgets are now delivered again
in the Spring. The general pattern now is that
a "Pre-Budget Report" is presented in
November, opening up the Government's Budget plans
to comment and scrutiny several months in advance
of the Budget itself.
The Budget statement in recent years has been
followed by a general debate lasting about four
days. The Leader of the Opposition, rather than
the Shadow Chancellor, traditionally replies to
the Chancellor's statement. To allow a wide-ranging
discussion on the complete package, debate takes
place upon the first Budget resolution proposed,
normally that entitled "amendment of the
law". The Budget Resolutions which form the
basis of the Chancellor's statement are the resolutions
for the continuance of income tax and corporation
tax, and the imposition of any new duties or increase
in permanent duties necessary to adjust revenue
to expenditure. It is upon these, and any other
necessary resolutions, that the subsequent is
founded.
The reason why the Budget and the Finance Bill
have to be annual events is because income tax,
corporation tax and advanced corporation tax are
annual taxes, which means they must be renewed
by legislation each year. (Most UK taxes, including
all indirect taxes, petroleum revenue tax and
taxes on capital, are, by contrast, "permanent".)
The name Budget derives from bougette, the French
for a "little bag" which came to mean
a little stock or store in the 18th century, and
sometimes with a pejorative overtone. Thus the
Chancellor produces from his bougette tax changes
and other bitter pills.
Is the Budget always delivered on a Tuesday?
Traditionally the Budget has been delivered
on a Tuesday, though it can take place on any
day.
The Budget speech has been made on a Wednesday
for the last three years. Gordon Brown's first
budget in 1997 was held on a Wednesday, ending
a long run of Tuesday budgets.
But why traditionally Tuesday? It may simply
be a preference for the early part of the week,
and Tuesday rather than Monday to accommodate
Members with seats outside London, who cannot
always be in the House on Mondays.
Mondays and Thursdays were
popular at the turn of the century, and a run
of Tuesdays began in 1911. Then Wednesdays followed
from 1917, with Mondays largely figuring in the
1920s. Mondays and Tuesdays, with the odd Wednesday,
featured thereafter. Between 1964 and 1997 only
one Budget did not take place on a Tuesday.
The longest serving Chancellor this century was
Lloyd George - 7 years 1 month between 12 April
1908 and 24 May 1915.
