A modest proposal – let’s just abolish the Budget
Once upon a time, it made sense to have an annual Budget speech. When the central economic fact of the year was whether the harvest had failed or not, it behoved the Chancellor to declare how he planned to spend whatever he happened to have in his coffers. But a vital institution for the pre-industrial age has mutated into a mere circus for the post-industrial one. The central question that this Budget provoked in my mind was this: why on earth do we still have a Budget?
Skim through the transcript of yesterday’s speech — if you can bear to — and you’ll find that the items fall into a few categories: (1) trivial; (2) responses to silly self-imposed rules; (3) economic forecasts that will later be wrong; (4) pure rhetoric; (5) worse than useless; (6) irrelevant.
Mr Osborne opened with a list of all the ways in which the UK economy is strong, skimmed over all the ways in which it is weak, and blamed the Labour party or foreigners for everything. (Rhetoric.)
Then he ran through the latest outlook from the Office for Budget Responsibility, an institution that represents all that is best about rigorous independent economic forecasting — and is therefore bound to be wrong. (Bad forecasts.)
He admitted that he had broken his own rather odd rule about the ratio of debt to gross domestic product, before announcing that according to a different, nonsensical metric, he looked rather good. (Silly self-imposed rules.)
Mr Osborne threw the usual glitter-bomb of little presents. (Trivial.)
Consider the £19m for “community-led housing schemes” in the south-west of England. Very nice, but if every £1m of spending earned one word from the chancellor, his Budget speech would be considerably longer than War and Peace. Then there’s the donation of tampon VAT revenues to charity, the halving of the Severn Bridge toll, and a tax break for touring museum exhibitions. Isn’t it strange how the treats are emphasised and the multibillion pound cuts and tax rises are always relegated to the appendices?
Then there’s the Chancellor’s odd tradition of pencilling in an increase to fuel duty year after year and, regardless of circumstances, coming up with an excuse to cancel the increase one more time. (Worse than useless.)
We also have major reforms to the school system. (Nothing to do with the Budget.)
What are we left with? The bodged introduction of a sugar tax and yet another wheeze to reform pension saving, the Lifetime Isa. Both policies would have been far better separated from the rabbit-out-of-hat Budget show, and considered on their merits.
There have been more dramatic Budgets than this, of course, but even then the drama has too often fallen into the “worse than useless” category.
Would the country’s economic policy really be harmed if the chancellor set out his fiscal direction at the beginning of the parliament and left it unchanged unless extraordinary circumstances intervened?
We should abolish 100 per cent of Autumn Statements and 80 per cent of Budgets — that’s a fiscal rule that I could really get behind.
Written for and first published in the Financial Times.