All about the Budget
The next Budget statement will be made by the Chancellor of the Exchequer on Wednesday 19 March 2014.
The Chancellor of the Exchequer, George Osborne, will make the next Budget statement on Wednesday 19 March 2014.
Each year the Chancellor of the Exchequer makes the Budget statement to the House of Commons outlining the state of the economy and the government’s proposals for changes to taxation. The House of Commons debates the Budget and looks at the Finance Bill, which will make law the Chancellor’s proposals.
The Budget
The Budget, or Financial Statement, is a statement made to the House of Commons by the Chancellor of the Exchequer on the nation’s finances and the government’s proposals for changes to taxation. The Budget also includes forecasts for the economy by the Office for Budget Responsibility (OBR).
The Budget and the Finance Bill are annual events, in part because Income Tax and Corporation Tax are annual taxes which have to be renewed by legislation each year. By contrast, most UK taxes including all indirect taxes, Petroleum Revenue Tax and taxes on capital are ‘permanent’.
In election years, after a change of government, a Budget will usually be introduced by the incoming Chancellor of the Exchequer, even if the outgoing Chancellor has already delivered one.
The Budget statement
The Chancellor of the Exchequer delivers his Budget statement to Members of Parliament in the House of Commons. The first part of the statement typically begins with a review of the nation’s finances and the economic situation. The statement then moves on to proposals for taxation.
Provisional collection of taxes
Some measures, such as any changes to the rates of duty on alcohol and tobacco, come into effect on Budget day or soon after.
The power to make these changes, before the Finance Bill is passed, comes from the House of Commons approving a motion for the provisional collection of these taxes. After the Chancellor finishes his speech but before the Leader of the Opposition responds, the Chairman of Ways and Means puts a single motion to the Commons asking for agreement to these changes.
This is called the ‘Provisional Collection of Taxes’ and is agreed by the House, meaning that the changes can come into effect at 6pm on Budget day.
Debates on the Budget Resolutions
Traditionally the Leader of the Opposition, currently Labour Leader Edward Miliband, replies to the Budget Speech.
The Budget is usually followed by 4 days of debate on the Budget Resolutions - these are the tax measures announced in the Budget. Each day of debate covers a different policy area such as health, education and defence. The Shadow Chancellor makes his response the day after the Budget statement during the Budget debates.
Budget Resolutions can come into effect immediately if the House of Commons agrees to them at the end of the 4 days of debate, but they need the Finance Bill to give them permanent legal effect.
The Finance Bill
A new Finance Bill is presented to Parliament each year. It makes law the proposals for taxation made by the Chancellor of the Exchequer in his Budget statement.
Once the House of Commons has agreed the Budget Resolutions, the Finance Bill starts its passage through Parliament in the same way as any other bill.
The House of Lords has a limited role in respect of Finance Bills. The House of Commons has the sole right to initiate and amend bills whose main purpose is to levy taxes or authorise expenditure.
The House of Lords will have a second reading debate on the Finance Bill but they will not consider the Bill clause by clause and will not amend the Bill.
Scrutiny of the Budget by Committees
The Commons Treasury Select Committee is a cross-party committee of MPs whose role is to scrutinise the work of the Treasury.
Following each Budget statement the Treasury Committee conducts an inquiry into the government’s proposals, gathering evidence from expert witnesses and publishing a report with its conclusions and recommendations.
The government then produces a report in response to the Committee’s findings, often with a contribution from the OBR.
The House of Lords Economic Affairs Sub-Committee examines selected aspects of the Finance Bill, including tax administration, clarification and simplification.
The Autumn Statement
The Chancellor of the Exchequer makes an Autumn Statement each year in November or December. The Autumn Statement provides an update on the government’s plans for the economy based on the latest forecasts from the OBR.
The OBR forecasts are published twice each year, at the Budget and at the Autumn Statement.