Sunday, 14 February 2010

Two Stags Lock Horns: Budget or Bust

"Speculation about a spring general election was heightened last night after Gordon Brown, the Chancellor of the Exchequer, announced that he would his hold his Budget on 7 March."



Don't panic! You didn’t miss anything. This is the headline from an article in the Independent on Valentines Day 2001, nine years ago today. It shows that the budget date and a spring election go hand in hand. In this article Bunnco revisits his August 1st 2009 Article where he predicted an April 8th Election following a chance conversation with a senior Tory he met on the Norwich North by-election.

Let’s start with a bit of budget history

“For most of last century, with the exception of the period 1993 to 1996, the annual Budget statement has been delivered in the spring. In his Budget Speech on 10 March 1992 the then Chancellor of the Exchequer (Norman Lamont) announced that he intended to revise the annual Budget timetable so that tax and spending proposals could be presented to Parliament at the same time – the “unified Budget”... the Chancellor's Budget Statement to the House of Commons covered tax proposals for the forthcoming financial year and the Government's spending plans for the next three years, thus combining the Budget with the Autumn Statement.

However, Labour reverted to spring Budgets once Chancellor Gordon Brown had delivered his first Budget in July 1997, where in words which will come back to haunt him, he boasted “My first rule - the golden rule - ensures that over the economic cycle the Government will borrow only to invest and that current spending will be met from taxation."

Budgets have traditionally been delivered on Tuesdays, though there is nothing sacrosanct about the day. Recently Budget statements have been given on a Wednesday.

1990 Major Tue 20 Mar
1991 Lamont Tue 19 Mar
1992 Lamont Tue 10 Mar
1993 Lamont Tue 16 Mar
1993 Clarke Tue 30 Nov
1994 Clarke Tue 29 Nov
1995 Clarke Tue 28 Nov
1996 Clarke Tue 26 Nov
1997 Brown Wed 2 Jul
1998 Brown Tues 17 Mar
1999 Brown Tues 9 Mar
2000 Brown Tues 21 Mar
2001 Brown Wed 7 Mar
2002 Brown Wed 17 Apr
2003 Brown Wed 9 Apr
2004 Brown Wed 17 Ma
2005 Brown Wed 16 Mar
2006 Brown Wed 22 Mar
2007 Brown Wed 21 Mar
2008 Darling Wed 12 Mar
2009 Darling Wed 22 April

Since 1998, the Government has held the annual Budget in the spring and has also presented a Pre-Budget Report in the autumn of each year. The main budget cannot be held within three months of the Pre Budget report.

So this is where we start to think about what this year holds.

Last year's PBR was held on 9th December. Three months after that is Tuesday 9th March 2010, the earliest possible date a budget could be held this spring. It’s not an accident that the PBR was held on 9th December. Somebody had been looking ahead.

Politicians are governed by timetables more than you’d think. With requirements to consult laid down in statute, it’s common to set a date and work backwards from that. Politicians don’t have unlimited freedom of manoeuvre. With an April 8th election, you can have a budget before [starting on 9th March] or after the election [last year's was 22nd April] depending on circumstances. It gives you options so 9th December was chosen carefully. In politics, options are everything.

Recently changed, by law the General Election campaign lasts a minimum if 17 working days exclcuding Weekends & Public Holidays. So if a budget is to be given before the election, then it follows that the earliest possible general election date is 8th April following on from 9/10th March budget as per the timetable I don't think that coincidence with the locals in the Mets/Districts-by-thirds on May 6th is that important.

So, how does recent speculation about a March 25th election square with reports in the Telegraph that "In a speech in Edinburgh, the Chancellor admitted that the 2010 Budget will confirm major spending cuts, but added that the extra cuts a Conservative government would impose would damage the economy. He said that the Budget which, he confirmed for the first time, will take place next month, would also cement: "fair tax rises, with the biggest burden falling on those who can most afford it."

Darling just boxed Brown in.

You'd think that this rules-out the March 25th election. And this is where we get political. Who’s in charge here? Brown or Darling? You can’t have a March 25th election and a March Budget. With the ComRes poll gap widening, any remaining March budget is receding and, in any event, this fails the 17-day rule. We're now into an April ballot at the earliest.

I suspect that Darling [decides the Budget] and Brown [chooses the election] may not be in agreement on the date.

Politically, it makes sense for the General Election to be called as soon as possible. There’s a growing consensus that economic data is getting worse, not better. The cold-snap in January derailed the recovery. VAT is up. Fuel and heating oil are noticeably more expensive and everyone has turned up the thermostat. Ouch.

The Greek Euro debacle is still to play-out. Commentators are lining up to forecast a double-dip to be revealed on St Georges day. Tax rises announced last year hit-home in early April and the QE money’s drying-up. An early election would spare Gordon’s blushes with Chilcott, a critical issue amongst LibDems swingers who he needs to woo. I could go on.

It’s inconceivable to think that Brown would go to the electorate without a budget. People would say he’s got something to hide. So having a budget means Election-delay in a deteriorating environment.

And this is where the battle of wills at the heart of Government is being played out.

Brown could call Darling’s bluff and go for March 25th anyway and hang the consequences. He has to decide whether the criticism for dodging the budget and snubbing his Chancellor outweighs the risks of hanging on and see the emerging poor economic data destroying the long-campaign under an avalanche of Tory money.

But then Darling could just keep Brown guessing. It can be done. Brown did it to Blair for a decade. If Darling decides to take his time in March, then you’d think the May 6th election is nailed-on.

Any May 6th election would be called on April 12th, the day that MPs would return from their Easter recess. That sounds easy but as I wrote back in August last year, I just can’t see this. It would mean that for all practical purposes formal campaigning would start at the start of the Easter recess and that would be expensive for Labour and, because strict broadcasting rules demand equal time for all parties, it would be contrary to Mike’s third golden rule that states the more Cameron’s on the box, the better he does. Labour needs the shortest campaign possible before the wheel falls of the Economic stats.

The compromise, of course is to hold the budget on 9/10th March and call the election straight away for April 8th. But it's leaving it all a bit late. If it was March 9th, previous practice would indicate that the date should have been set by now. But there again, if they want to keep us all guessing....

If Brown's thinking straight, he'll go as soon as he can and force Darling to hold the budget asap. On March 9/10th both Brown and Darling would therefore be able to announce all sorts of ‘official’ forecasts without the inconvenience of having them unpicked in the Finance Bill debates that follow.

An April 8th Election Date is the Thursday after Easter. Brown’s going to reckon that the Tories will be on holiday. The clocks will have gone forward giving activists a long Bank Holiday weekend to deliver the final leaflets.

If Darling holds out for a later date, it would be a case of the tables being turned on Gordon Brown by his Chancellor who, for so many years thumbed his nose at his neighbour at Number Ten.

Recent history tells us that Brown’s going to analyse this to death and then probably miss his chance. And whilst he’s analysing, Darling is digging Labour’s grave with his delay. But what I sense is that the date of the budget is the expression of the battle of wills between two prime stags locking horns: Chancellor and Prime Minister. We'll know who's won in 8 days time when Parliament returns. The budget date announcement can't be delayed much longer than that.

Bunnco - Your Man On The Spot

8 comments:

Liberal Democrat Nazi said...

The election will be on May 6th 2010!

Labour cannot afford the defeat of more cllr, what ever they say! An April election is out of the window! They are going down to a massive defeat!

Richard Manns said...

I really don't feel that Brown has got it in him to call it any earlier than necessary. If he was afraid in 2007, why would he voluntarily go early now?

He is sincerely convinced of his own genius, that he is the remedy, not the cause, of the ailment. Coupled with 2 ministers letting it slip about 6th May, and the fact that Brown hopes that green shoots will save him if he waits long enough, my bet's on May.

Anonymous said...

(AnneJGP)

Why is the 3 months minimum between PBR and Budget cast in stone? This government has overturned so many precedents, why not this one?

Enlight_bystand said...

AnneJGP-

IIRC, It's not a precedent, it's statutory, so it would require emergency legislation to bring it forward.

DavidL said...

I am still not convinced that Brown could take a Budget and commit himself to such serious cuts in public expenditure. I think he will go early enough to avoid this.

BrianSJ said...

It goes to the core of Labour values. Arrogance and dithering call for May, while feckless irresponsibility says March. Tough one for them.

Barnacle Bill said...

My money is on March 25th with no Budget before hand.

bunnco said...

Looks like the split between Brown & Balls against Darling & Mandleson is now becoming part of the narrative which gives credence to the setting date of the budget being pivotal in the balance of power in Government.

http://www.spectator.co.uk/coffeehouse/5774768/it-is-brown-and-balls-versus-darling-and-mandelson-again.thtml