The Budget Statement
Each year, usually in March or April, The Chancellor of the Exchequer presents 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.
The last Budget Statement was delivered by The Chancellor of the Exchequer, George Osborne, on Wednesday 18 March 2015.
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. This is called the provisional collection of taxes.
After the Chancellor finishes his speech but before the Leader of the Opposition responds, the Deputy Speaker, in their role as the Chairman of Ways and Means, puts a single motion to the Commons asking for agreement to make these changes on an interim basis, before the Finance Bill is passed. These changes then come into effect on 6pm on Budget day.
Find out more about role of the Chairman of Ways and Means during the Budget process in this video with Lindsay Hoyle MP.
Debates on the Budget Resolutions
The Leader of the Opposition, rather than the Shadow Chancellor, replies to the Chancellor’s Budget Speech.
The Budget is then usually followed by four days of debate on the tax measures announced in the Budget, called the ‘Budget Resolutions’. Each day of debate covers a different policy area. 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 four days of debate but they require the Finance Bill to give them permanent legal effect.
The Finance Bill
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 Office for Budget Responsibility (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 Office for Budget Responsibility (OBR). The OBR forecasts are published twice each year, at the Budget and at the Autumn Statement.
When is the next Budget?
The Chancellor of the Exchequer, will deliver the next Budget on Wednesday 16 March 2016.
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’.
House of Commons Library analysis
The House of Commons Library produces briefing papers to inform MPs and their staff of key issues. The papers contain factual information and analysis on each subject, and aim to be politically impartial. These papers are available to the public on the Parliament website.
History and traditions
The red budget box
The word Budget comes from an old French word ‘bougette’ meaning little bag. It was customary to bring the statement on financial policy to the House of Commons in a leather bag. The modern equivalent of the bag is the red despatch box or Budget box.
The distinctive red Budget Box which Chancellors used to carry their speech from 11 Downing Street to the House of Commons was in use for over one hundred consecutive years. The wooden box was hand-crafted for William Ewart Gladstone around 1860. It was lined with black satin and covered with scarlet leather.
Lord Callaghan was the first Chancellor to break with tradition in 1965 when he used a new box. In July 1997 Gordon Brown became the second Chancellor to use a new box for the Budget. George Osborne used the Gladstone Box for his first Budget in 2010 but used a new box in 2011.
Traditionally the Chancellor is photographed on Budget day on the steps of 11 Downing Street, the official residence of the Chancellor of the Exchequer, holding up the Budget Box.
Despatch box drinks
By tradition, the Chancellor, unlike Ministers at the despatch box at any other time of the year, may drink alcohol during the Budget Speech if they wish.
George Osborne has chosen to drink mineral water, as did the previous Chancellor Alistair Darling.
Other Chancellors have chosen mineral water (Gordon Brown), whisky (Kenneth Clarke), spritzer (Nigel Lawson), gin and tonic (Geoffrey Howe), brandy and water (Benjamin Disraeli) and sherry and beaten egg (William Ewart Gladstone).
Longest and shortest Budget Speeches
The longest continuous Budget speech was by William Gladstone on 18 April 1853, lasting 4 hours and 45 minutes. Benjamin Disraeli's speech in 1852 lasted 5 hours but included a break.
Benjamin Disraeli’s 1867 Budget Speech lasted only 45 Minutes.
With twelve Budget speeches, William Ewart Gladstone holds the record for delivering more Budget speeches than any other Chancellor of the Exchequer.