The announcement of the UK’s annual budget holds special significance in British politics. It’s when the Chancellor of the Exchequer unveils their plan for the upcoming fiscal year, including the details of government expenditure and expected rates of taxation. After passing through parliament, budgets become Finance Bills enacted into law.
Famously, the details of the budget are held in a red briefcase and are delivered to the House of Commons in a highly scrutinised speech.
But when did the budget announcement originate? What are its customs? And of course, what exactly is the importance of that threadbare briefcase?
Here are 10 facts about the history of the UK budget.
1) The first annual budget was in response to a financial crisis
The budget announcement originated under Sir Robert Walpole’s early 1720s government. For Walpole, restoring public confidence was paramount: his government faced a looming financial crisis following the crash of the South Sea Company’s trade monopoly, the South Sea Bubble.
When the South Sea Company’s share prices rapidly collapsed, thousands of investors were bankrupted, members of parliament were exposed as having taken bribes and King George I, governor of the South Sea Company from 1718, saw his reputation damaged. To restore the nation’s financial health, Walpole was essentially drafted in as the UK’s first de facto prime minister.
2) The word ‘budget’ has a playful origin
The word ‘budget’ comes from the French word bougette, meaning ‘little bag’. Though often attributed to the literal use of a leather bag to contain the annual financial statement, the likely origin is more playful. The Oxford English Dictionary notes the 16th-century usage of ‘to open one’s budget’ meaning to reveal a secret, perhaps a slightly unwelcome one.
3) Chancellors used the same despatch box for over a century
A leather bag was originally used to transfer the financial statement to the House of Commons, but this was updated in 1860 when Wickwar and Co. handcrafted a wooden despatch box for Prime Minister William Gladstone. This remained in use for over a century until James Callaghan broke with tradition and employed what his critics called a “vulgar brown valise” in 1965. It was used until 1997 when Gordon Brown requested an update.
Although Gladstone’s original box was revived between 2007 and 2010 under Alistair Dowling and then George Osborne, it was subsequently removed due to fragility and housed in the Churchill War Rooms in Whitehall.
The renowned red briefcase used by Chancellors of the Exchequer was first used by William Gladstone in 1860.
Image Credit: The National Archives UK / Public Domain
4) Disraeli and Gladstone hold two budget records
There’s no set time for how long a budget speech ought to last, but Benjamin Disraeli holds the record at both ends of the spectrum: he delivered the longest speech at 5 hours in 1852 before presumably being reprehended by his colleagues and delivering the shortest speech at 45 minutes in 1867.
As Disraeli’s marathon 1852 effort included a break, William Gladstone’s 4 hours and 45 minutes contribution in 1853 is the longest uninterrupted budget speech.
Listen Now5) Chancellors can wash their budget speeches down with booze
While delivering a budget speech, Chancellors of the Exchequer may take advantage of a unique parliamentary rule which allows them to consume alcohol. This privilege is specific to the role and the context of delivering the budget – at no other time during parliamentary debate may ministers consume alcohol in the House of Commons.
While recent Chancellors Gordon Brown and George Osborne opted for mineral water, their predecessors were not nearly as health and PR conscious. Ken Clarke drank whiskey, Geoffrey Howe took a gin and tonic, John Major and Benjamin Disraeli each enjoyed a brandy and water while Gladstone was partial to a sherry and beaten egg.
6) One chancellor left the budget at home
One of the most infamous budget speeches in British history was made in 1868, when Chancellor George Ward Hunt was unable to ceremonially display the distinctive red box before the House of Commons because he had left it at home.
After delaying parliament for some considerable time, Hunt delivered one of the shortest budget speeches in history.
7) The Speaker of the House steps down on Budget Day
House of Commons debates are generally chaired by the Speaker of the House but on Budget Day, he or she vacates the seat. Instead, the Deputy Speaker who is also the Chairman of Ways and Means chairs the debate. This practice dates back to the 17th century when it was believed the Speaker’s proximity to the King compromised the role.
8) Budget changes can occur immediately
Proposed changes in taxation may come into effect from 6 pm on Budget Day. This is often the case with new rates of duty on tobacco and alcohol. Such changes are generally passed immediately after the chancellor’s speech, following members of parliament agreeing on a single provision of taxation motion.
New taxes, however, must be debated in the house. This generally takes four days with a motion passed or rejected within 10 days of the budget announcement. Major taxes such as corporation and income tax are technically temporary and must therefore be reapproved each year.
Listen Now9) Lloyd George produced the most controversial budget
David Lloyd George’s ‘People’s Budget’ of 1909-1910 was the UK’s most contentious Finance Bill. Aided by then Liberal colleague Winston Churchill, Lloyd George proposed unprecedented tax increases on Britain’s wealthy to “wage implacable warfare against poverty and squalidness”.
A proposed survey to gauge Increment Value Duty on land sales was dubbed “Lloyd George’s Domesday land survey” by right-wing critics.
3 and a half hours into his speech, Lloyd George lost his voice and was given 30 minutes to recover. After 72 days of parliamentary discussion and 554 votes, the House of Lords rejected Lloyd George’s plans. This prompted an immediate general election, which ultimately led to the People’s Budget being committed into law in 1910, and the removal of the Lords’ veto.
David Lloyd George (left) and Winston Churchill (right) were responsible for the UK’s most controversial budget.
Image Credit: Wikimedia Commons / Public Domain
10) The secrecy of the budget is highly respected
Even in the leaky world of British politics, revealing the contents of an upcoming budget speech can be costly. In 1936, a tribunal found cabinet minister Jimmy Thomas guilty of leaking budget proposals to a Conservative MP while Thomas was also suspected of informing a business associate for personal gain. Thomas resigned from Stanley Baldwin’s government and then from the House of Commons altogether.
In 1947, Chancellor Hugh Dalton apologised to the House and offered his resignation when The Star printed budget specifics on the morning of his speech. Even as recently as 1996, budget secrecy was so respected that Daily Mirror editor Piers Morgan returned a near-complete copy of Ken Clarke’s budget announcement without publication.
