McCrae: Abolish the Budget, it's archaic

The annual drama of the Budget is a dysfunctional relic and should be scrapped, says Julian McCrae. Ministers and civil servants have bigger – and more nourishing – fish to fry.

By Civil Service World

27 Mar 2013

Let me make a not very radical suggestion. Abolish the Budget. All our lives, including those of the civil servants working on it, would be improved if we just let it become an odd, quirky piece of political history.

Why do I argue this? Well, the Budget is flawed in just about every way. The conventions of Budget secrecy mean that this is a policy process like no other. The public are excluded from involvement, with policies emerging fully (or half-fully) formed in the Budget speech. There is no need to have the usual cycle of public proposals and consultations. The rest of Whitehall is also excluded. The system of cabinet committees is bypassed. Collective agreement is secured as a fait accompli after the Budget is printed. These are seriously bad ways to make policy, breaching the Institute for Government’s policy fundamentals.

The reason for this exceptional process is not about secrecy. In fact, it has become increasingly easy to predict the Budget’s contents from press articles containing “unofficial briefings”. Indeed, the Budget itself is now officially released in the week running up to the speech: thanks to the Evening Standard, it has become very clear that the whole Budget is being released under embargo. There is nothing wrong with this – it is just like any other government announcement! If we now simply applied the standard National Statistics release rules to the truly market sensitive bits, we’d have a perfectly functional system.

We currently release an update of the public finance forecasts on Budget day. This allows the chancellor to announce immediate policy responses to any bad news they contain. Viewed in this light, the lack of transparency in the preparation for the Budget is a necessary cost of providing almost instantaneous reassurance to the markets that the government has a grip. So maybe this gives logic to the process – but again, the facts don’t back this up. For example, since the 2010 Spending Review, as the public finances have deteriorated, the actual Budget day response has been to store up the consequential pain for later. As the Institute for Fiscal Studies has pointed out, this pain is increasingly taking the form of unspecified spending cuts in the next Parliament. Splitting the publication of the forecasts from policy announcements is completely feasible, and would almost certainly improve the consideration of the UK’s fiscal policy.

Maybe the reason lies in politics? Surely the Budget is an ideal political platform. A minor reduction in a duty, like that on beer, can get you good coverage. But it’s best to avoid even a minor increase on things that journalists can easily relate to, like pasties. At a larger scale, as pollster Anthony Wells has pointed out, the polling data suggests that budgets are more exercises in damage limitation. Over the last decade, there are a handful of cases where there has been a small, positive bounce. But the big movements have all been falls in support.

So the Budget is a bad policymaking process, which often fails to address the immediate news, and the whole thing is really a political banana skin. However, these are not the main reasons to abolish it. The main problem with the Budget is the opportunity cost. Huge amounts of time and energy go into what is essentially an announcement-driven process. With its pointless secrecy, it’s not set up to properly consider fundamental reforms. So while the Budget saw some announcements aimed at promoting growth, it did little to address the big structural weaknesses in infrastructure, skills and innovation highlighted by the recent LSE Growth Commission.

Looking to the future, big set-piece statements like the Budget are not what will really matter. As our recent report Transforming Whitehall Departments shows, senior officials in Whitehall already know that the post-election spending challenges will require a different way of working.

Efficiencies need to be found across departmental silos, not just within them. For example, how do you get policing, the courts, prisons and probation operating in ways that save money across the piece, regardless of whether the costs and savings fall within the Home Office or the Ministry of Justice budgets? The government will need to create incentives for leaders from different departments to work together to achieve sector-wide savings.

It would be better if the time and energies of so many officials were concentrated on these major challenges of government, rather than feeding an ultimately pointless relic of a bygone age.

Julian McCrae is the deputy director of the Institute for Government

Share this page