Wednesday, March 22, 2006

In Place Of Annual Budgets

Budget Day. The annual theatre set-piece where the Chancellor gets to be centre-stage, and MPs get to wear their top-hats. Well, Denis Skinner does anyway.

But as Danny Finkelstein reminds us, these days annual budgets are little more than an exercise in political spin. Even worse, in the absence of substance, they're an open invitation to Chancellors to tinker- and the current one hardly needs encouragement on that score.

Of course, really high spending Chancellors do have to raise tax rates, and Gordo has done that on numerous occasions. But wouldn't it be better if, instead of being able to bury such measures in para 48, section c, subsection iii of HMRC's routine 400 page Budget pack, he had to convene an emergency session of the House to request them? After all, he's got the stealthy power of fiscal drag constantly increasing taxes anyway without him lifting a finger.

In place of an annual budget we should have a third fiscal rule. It would limit taxes as a percentage of GDP. There would be a medium term target- say 5 years- suitably adjusted for cyclical effects, and monitored not by the Chancellor but by an independent Fiscal Audit Office appointed by and reporting to Parliament.

In overall charge of that and the National Audit Office would be the Wastefinder General, with powers similar to those being planned for his Chinese counterpart. Obviously he would need to be provided with an armoured bulldozer to smash down the walls of official spin and outright deceit. But it could be done.

I humbly volunteer to serve.

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