Much ado about nothing?

its Cheltenham week at the races and Budget week in the Treasury.  Newspapers are working themselves into a frenzy of speculation, special pull-out supplements are being commissioned, terrestrial channels are about to clear the airwaves and the IFS is working overtime to develop a series of decreasingly typical stereotype families to tell us how much better or worse off we are likely to be next year than against an index-linked base...

Let me confess straight away that I love budgets (need to be more upfront since I failed to declare my passion for AC in earlier blog)  -- or at least loved them when I was in the Treasury.  They were the biggest adrenaline rush ever to hit the then antiseptic corridors of 1, Parliament Street. The culmination of weeks of long hours, weekends of work, the day when HMT and the Chancellor was the centre of the world (and when there aren't crises to deal with, there are remarkably few of those), and a great excuse for parties and for betting on the length of the speech.  So its easy to see why HMT wants to maintain the budget mystique unmodernised - but also interesting to ask whether the Budget really merits the attention it gets and whether the Budget as event gets in the way of the Budget as good policy-making.

When we had more limited government it was easy to see why the Budget was a big event.  But it is no longer clear that the Budget really warrants the amount of time and effort the broadcasters devote to it.  There is much agonising over whether the Chancellor will go ahead with the 2p increase in fuel duty tomorrow -- I have no idea whether he will or not -- but when I ran fuel pricing in Spain for BP that was a decision that I made every week -- and the lunchtime TV schedules were not cleared for that.  95% of the Budget detail is for the partners of KPMG and PWC, 0.000001% of potential viewers and the number of people affected - or indeed able to understand - most of the Budget measures is far less than for statements by the Health Secretary or the Children Schools and Family Secretary.  We no longer have the twenty minutes on the MTFS (medium term financial strategy to readers under 45) that characterised the budgets of the Howe-Lawson era -- but it is impossible for either the viewer or the studio pundits to make any real sense of the changing forecasts announced by the Chancellor at the start of the speech. In terms of viewer relevance, viewer comprehensibility and impact it is just not clear that the Budget still warrants the deference it gets.

But second, it is far from clear that the Budget as event is the best way of making economic policy,  The secrecy is supposed to apply to market sensitive measures -- but the really market moving measures have to be announced before eight o'clock in the morning when the markets are closed - in the UK at least. But Budget measures - even with the advent of the PBR - are developed behind closed doors for no really good reason.  They look very anachronistic in an era when government has got hugely better at consultation and co-production of policy.  And this becomes more important not less as the Budget becomes a place to set government policy well beyond the narrow realms of tax policy - and as we use tax policy for wider aims than simply determining how we finance public spending.

And third, the Budget as event has the effect of creating more policy than necessary.  So worried have Chancellors always been about the Budget as non-event that the Budget itself becomes overstuffed with measures to appease every group and our tax code gets ever more complicated,  In the Treasury we used to dream of a Budget when the Chancellor stood up - said 5p on fags, 10p on whisky, nothing else changes and sat down. But in every Conservative budget we had an increasingly despairing search for budget lollipops -- to generate positive headlines -- most of which individually would never make it out of the policy starting gates. 

So maybe, once we put the tax system onto a proper statutory index-linked basis (that 2p is just money illusion after all), we could get to a position where the Budget is reduced to a written answer of "no change" and we would - with the exception of the accountants and tax advisers and other deadweight costs on the economy - all be able to focus on more interesting things instead.

But finally -- don't worry Evan -- will still be hanging on to your every word tomorrow.