Banish the Omnishambles! Britain Needs a Sensible Budget Process
It was just a tweet. Maybe I am being optimistic. I acknowledge that when Philip Hammond becomes the voice of sanity, we are in dodgy territory. However, the Chancellor of the Exchequer is proving to be one of the more thoughtful members of the government. No wonder there are calls for him to be sacked.
Forget the gaffs (and there are many). Forget the sombre (depressing?) tone. First, Hammond has stood out against a “no deal” Brexit and has tried to edge Theresa May towards a negotiation strategy that puts the economy first. Now, it appears he has taken his Budget proposals to Cabinet, accepting suggestions and provoking discussion.
Perhaps Britain is one step closer to ending the absurd Budget theatre it endures every year.
The budget ritual is one of the supposedly great traditions of Parliament, like the State Opening. The Speaker gives way to one of his deputies. MPs used to wear top hats, a custom abandoned soon after the House of Commons was televised. The Chancellor is allowed to drink alcohol as he speaks - a practise that was enjoyed more by Ken Clark than Gordon Brown.
While the Treasury Red Book details all the pledges and predictions of the Budget, it is the statement to the House of Commons that grabs the media and MPs’ attention. A joke or a sleight of hand, can obscure an important detail; sometimes something is just not mentioned at all. The devil is not in the detail, it is in the budget Red Book whose publication is market sensitive.
Absurdly, the leader of the opposition has to respond immediately to the budget in the House of Commons. A clever leader can work out a budget strategy from the leaks that inevitably precede Budget Day. However, it is an awesome task. Even the opposition leaders with backgrounds in economics struggle. I will say no more.
Inevitably, most fall back on general attacks rather than finding the runts from the rabbits that the chancellor has picked out of his hat.
The realities of minority government are forcing Hammond into a collegial mindset
In 1994, Ken Clark was forced into a mini budget after a revolt on VAT on fuel. Gordon Brown’s last budget - as he was on the cusp of succeeding Tony Blair - cut income tax and abolished the 10p tax rate. At the time he was cheered to the rafters by MPs, it was only later that the more astute noticed his income tax cut was paid for by the abolition of the lower rate, meaning the poorest were most affected. It was Alistair Darling who was eventually forced into retreat.
Are these kinds of budget u-turns becoming common?
Both George Osborne and Philip Hammond have scrapped original plans when grim details have been studied. Pasty tax, anyone?
Maybe by opening up the process the Chancellor has learned from his humiliation earlier in the year over his NI changes for the self-employed.
Remarkably, there is no formal process for the UK Budget. The Chancellor is not required to present his ideas to a Cabinet sub-committee. Very often the are not discussed at all. In 1981, Geoffrey Howe presented his controversial budget to the Cabinet. Margaret Thatcher’s internal opponents were left with the immediate choice of resigning or accepting it fait accompli. They chose the latter.
So absurd is the lack of process that Tony Blair was reduced first to pleading with Brown to share budget details in advance, then to trying to spy on the Treasury.
The realities of minority government are forcing Hammond into a collegial mindset. Circumstances should not force a change but a desire for good government.
Britain severely needs a Cabinet Government Act
Decisions are improved when put to groups. Hammond - unlike Osborne - has shown that he has learned something from his previous mistake: perhaps he realises that one of his colleagues might have spotted that his March NI hike broke a manifesto commitment and would hit Tory voters. If so, that it is a good thing. He should go further.
If Hammond ended the theatre of the budget he would be doing good government a service. Britain severely needs a Cabinet Government Act (suggested by Jack Straw) to formalise some of government’s arcane structures; part of that act could involve a formal process for the budget.
Proposals could be debated in Cabinet sub-committees before being taken to full Cabinet. They would then be tested by argument before being published. Moreover, would it not make for more rational government if these proposals were published in advance of the Chancellor’s statement to allow for greater scrutiny. Gone would be the days of immediate rises in alcohol, petrol and tobacco taxes - but at least it would ensure that MPs knew what they were talking about when they debated and questioned our financial future.
Separation of powers in the United States means an inherently different relationship between executive and legislature. However, the budget process in the US - and elsewhere - could become a model for the UK. There is no theatre. A budget becomes a compromise between what a president wants and what Congress will allow.
Bizarrely, it was George Osborne who started this process: by creating the Office for Budget Responsibility, he devolved power from the Treasury to an independent body. The next step should be to devolve power from the centre to Parliament and end the new budget traditional of an omnishambles.
About the author
Educated at Durham University and UCL, Graham is Disclaimer's editor and a regular contributor. He has written for numerous publications including Tribune, Out Magazine and Vice. He has also contributed to two books of political counterfactuals for Biteback Media, Prime Minister Boris (2011) and Prime Minister Corbyn (2016).
A democratic republican lefty, he struggles daily with the conflict between his ingrained senses of idealism and pragmatism.
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