Opinion
28 Feb 2013 12:22pm

Should the chancellor drop the autumn statement?

Two experts go head to head to discuss whether the chancellor drop the autumn statement

No: Patrick Stevens, partner at Ernst & Young

The autumn statement that the chancellor presented on 5 December did feel like something of a mini-Budget and caused many to suggest one Budget a year is enough. I agree – but that doesn’t mean that the autumn statement should be scrapped. Far from it: it has a definite place in our fiscal calendar, but I would suggest it needs to be used properly.

For a start, we need the autumn statement to give a formal update on how the economy is doing. Things move too fast these days for the annual Budget statement to suffice. In effect, we need the autumn statement as the interim report from the CFO of UK plc. A set-piece economic statement with properly prepared documentation to support it seems entirely appropriate.

If the chancellor is going to get to his feet with the attention of the media upon him, it will always be tempting to use the occasion to announce tax changes. This is where the autumn statement can go wrong – he needs to resist that temptation.

The autumn statement is a good time to give a progress report on consultations started in the March Budget

Patrick Stevens

One of the best things the coalition government has done as far as tax policy is concerned is the Tax Policy Making: a new approach document and methodology. That points to steady evolution of tax changes through proper consultation in a number of stages, normally over a year.

The autumn statement has a role in that process: it is a good time to give a progress report on consultations started in the March Budget, probably finalising the direction to be taken with the draft legislation following soon after.

Additionally, there will always be things (usually avoidance) that require a prompt change to the tax system.

The autumn statement might well be a convenient time and place to announce such things – but at the same time it shouldn’t lead to things being stored up to make a big impact with a flurry of changes.

 Used properly, the autumn statement has a very useful role to play.

It is just a question of resisting temptation to turn it into a second annual Budget.

 


 

Yes: Francesca Lagerberg, head of tax at Grant Thornton UK

For a politician repetition can be the sincerest form of flattery. Which chancellor wants to forgo the chance to be the focus of attention? It is no surprise that we are once again moving into the world of “two Budgets” – one dressed up as an autumn statement – where major economic and tax issues are laid out and sometimes repeated.

The current coalition began very differently. The Finance Bill process was to move to a cyclical approach with consultation over the summer, firm proposals set out in the autumn, draft legislation before Christmas, followed by a longer time to consult before the Budget set out where the proposals had ended up.

Strip back the two-step process and make it a simpler affair

Francesca Lagerberg

The Bill would be published, debated in Parliament and become an Act by the end of July when the whole process would begin again. But the autumn statement and Budget have become more stand-alone moments.

The coalition replaced the pre-Budget report favoured by the previous government with an autumn statement. It was originally intended as an opportunity to set out UK economic growth forecasts produced by the newly created Office for Budget Responsibility, but increasingly it has taken on political significance all of its own.

For example, major corporation tax changes were announced last time rather than in the forthcoming Budget.

Parliament has certain rules it must follow. There remains a duty to publish twice annual economic forecasts (under the Industry Act 1975). Certain taxes have to be renewed annually. This means that without radical change there are certain staging posts that must be passed.

But now may be the time to be more radical. Strip back the two-step process and make it a simpler affair with clear announcements when rules are ready.

Why not also look again at whether a bumper Finance Bill should occur once a year or whether smaller Bills should be introduced as and when.

Consult more and legislate only when necessary is a good motto for any government to consider.

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