Today the Chancellor of the Exchequer will present the Budget, which contains a range of tax and spending measures for the year. But how do we understand it?
Today the Chancellor of the Exchequer, Philip Hammond, will present the Budget to MPs. One of the key points in the parliamentary year, the Budget contains a range of tax and spending measures for the year ahead, as well as providing an update on the state of the UK’s economy.
In recent years the Budget has been presented in the spring, with a second ‘financial event’, the autumn statement, providing another opportunity for tax announcements to be made later in the year. However, in the last autumn atatement, Philip Hammond announced that from autumn 2017 the Government would have only one major financial event a year.
On Budget day, the first public event is for the Chancellor to be photographed outside 11 Downing Street holding the red Budget box, which contains his speech for later in the day. This stems from a tradition dating back well over a hundred years. At around midday, the Chancellor makes his budget speech to the House of Commons. This usually lasts for around an hour, although the longest Budget speech ever, made by William Gladstone in 1853, lasted close to five hours.
When Do The Changes Come Into Effect?
As soon as the Chancellor has finished his speech, some changes to taxes can come into effect immediately, such as the changes to taxes on tobacco or alcohol. These changes are approved in the House of Commons by a single vote, known as a ‘Provisional Collection of Taxes motion’ which is approved after the Chancellor’s speech.
MPs then spend four days debating the Budget, beginning with a response to the Chancellor from the Leader of the Opposition, Jeremy Corbyn. Parliament must vote to approve any new tax suggested by the Chancellor, as well as for any proposed increase to the burden of an existing tax.
Once these tax changes have been agreed to, they are written into law by a Finance Bill. By convention, since the late 17th century, the House of Lords do not amend the provisions in the Finance Bill — they do debate the Bill’s general principles but without any vote taking place.
What Impact Does The Budget Have?
The Budget has a huge impact when it’s passed by Parliament. New taxes on excise duties for products like tobacco and alcohol can have a big effect on the prices of those items. Additionally, changes to public sector pay and welfare spending can directly impact people’s household finances. This is why both businesses and ordinary people alike have a vested interest in what the Chancellor has to say on November 22.
Tune in to parliamentlive.tv to watch the Budget live. And for more information on the Budget and how the House of Commons checks Government taxation and Spending watch our animation: https://www.youtube.com/watch?time_continue=2&v=w5SCMPSs-yI