Budget 2011 - Treasury Contents

1  Introduction

1. It has been the practice of Treasury Committees in previous Parliaments to report on the Budget before Second Reading of the Finance Bill. This year the Budget fell on 23 March, just two weeks before the House rises for the Easter recess. We decided to report before the Easter recess in order to ensure publication before Second Reading. This required taking evidence from our first witnesses the day following the Budget, with a deadline for written evidence of 25 March and the final oral evidence hearing on 29 March.

General issues

2. As announced in the Government's consultation document Tax Policy Making: A New Approach[1], many of the tax measures outlined in the Budget had previously been put out to consultation and published as part of a draft Finance Bill. As part of our commitment to take a more active role in scrutinising tax policy, we have sought expert advice from the Institute of Chartered Accountants, England and Wales (ICAEW) on the measures in the draft Finance Bill. Their views are published alongside the written evidence for this report.[2] We have also invited accountancy professional bodies to submit more considered memoranda on the extent to which the provisions of the Finance Bill meet the criteria set out in our recent report: Principles of tax policy.[3] We expect to publish this material in time for Committee Stage of the Bill. We hope that that this will assist our colleagues in scrutinising the Finance Bill when it comes before the House.

3. There is one other matter we wish to draw to colleagues' attention. Currently the Government has between four and seven months to pass the Finance Bill before the resolutions allowing taxes to be collected on a temporary basis run out. This will be standardised by Clause 88 of the Finance Bill (published on 31 March) to seven months in all cases. There needs to be some amendment to the Provisional Collection of Taxes Act 1968 to make provision for Finance Bills to be carried over, given that Sessions are to run from one May to another. There may well be good reasons why the Finance Bill also contains provisions extending the period for which all Budget Resolutions have statutory effect to seven months, but we recommend that our colleagues on the Finance Bill seek a full explanation for this change.[4]

4. It has been noticeable over many years under successive Governments that measures appear to have been trailed, sometimes accurately, sometimes in a way designed to place them in the most favourable light. Whether particular press reports are leaks or briefings or merely press speculation, we have no view, but we deprecate both leaks, and any advance briefing. Such activities are corrosive of good government. We will return to this issue at future autumn statements and budgets.

Our inquiry

5. Our programme of oral evidence was as follows:

Economists and interested parties

Simon Hayes, Chief UK Economist, Barclays Capital;

Roger Bootle, Managing Director, Capital Economics;

Gillian Guy, Chief Executive, Citizens Advice;

Stuart Green, Chief UK Economist, HSBC;

Paul Johnson, Director, Institute for Fiscal Studies;

Jonathan Portes, Director; and

Professor Ray Barrell, Director of Macroeconomic Research and Forecasting, Taxation, National Institute of Economic and Social Research; and

Matthew Sinclair, Director of Policy, TaxPayers' Alliance.

Tax Experts

Frank Haskew, Director, Tax Faculty, Institute of Chartered Accountants in England and Wales;

Robin Williamson, Technical Director, Low Incomes Tax Reform Group; and

John Whiting, Director, Office of Tax Simplification, and Tax Policy Director, Chartered Institute of Taxation.

Office for Budget Responsibility

Robert Chote, Chairman;

Graham Parker, Member; and

Professor Stephen Nickell, Member, Budget Responsibility Committee.

HM Treasury

Rt Hon George Osborne MP, Chancellor of the Exchequer;

Sir Nicholas Macpherson, Permanent Secretary;

Dave Ramsden, Chief Economic Adviser;

Edward Troup, Managing Director, Budget, Tax and Welfare;

Mark Bowman, Director, Budget and Tax; and

Peter Schofield, Director, Enterprise and Growth Unit.

6. We are very grateful to all our witnesses and those who submitted written evidence. Their flexibility in fitting in with the very tight timescale for this inquiry is much appreciated.

1   HM Treasury, Tax Policy Making: A New Approach, June 2010 Back

2   Available on the Committee's website at www.parliament.uk/treascom Back

3   HC (2010-11) 753 Back

4   Currently, the resolutions allowing the provisional collection of taxes cease to have statutory effect if Parliament is prorogued. Clause 88 also stipulates that resolutions permitting the collection of taxes shall continue to have effect for seven months. This is a considerable extension on the historic limits for such resolutions. At the outset, Governments had four months for the passage of the Finance Bill. The original text of the Provisional Collection of Taxes Act 1968 has been amended, so that a resolution passed in November or December does not expire until 5 May the following year (a maximum of seven months), but currently resolutions passed in February or March expire on 5 August (a maximum of six months) and all other resolutions expire at the end of four months after they are passed. Back

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Prepared 9 April 2011