Select Committee on Treasury Third Report

1 Introduction

This inquiry

1. The Chancellor made his statement to the House on the Pre-Budget Report (PBR) 2003[1] on Wednesday 10 December.[2] In accordance with previous practice, we conducted an immediate short inquiry, with a view to reporting to the House as soon as possible after the Christmas recess. Accordingly we held three evidence sessions in the week following the statement, from outside experts[3] on 15 December, Treasury officials[4] on 16 December and the Rt Hon Gordon Brown MP, Chancellor of the Exchequer,[5] on 18 December. We have also received written submissions from a number of outside experts and bodies.[6] We are most grateful to all those who have given this evidence,[7] which is printed with this Report.

The Pre-Budget Report

2. The Pre-Budget Report is one of the key elements of the Government's system for managing the economy and the public finances, as set out in the Code for Fiscal Stability published in November 1998.[8] It is intended to "encourage debate on the proposals under consideration for the Budget" and to be consultative in nature.[9] The document itself has grown steadily in size since 1997.[10] In addition, it is accompanied (like the Budget itself) by a range of announcements about tax and other measures, and a large quantity of consultation papers. It is clearly helpful to public debate for as much relevant information as possible to be placed in the public domain as soon as possible, and we therefore welcome the attempts that the Treasury is making to increase openness. At the same time, effective consultation is aided by simplicity and it is therefore appropriate to sound a note of caution about continued increases in the level of physical documentation.

3. In our Report on the 2002 PBR,[11] we recommended that "every year the Government should set aside time, ideally on the floor of the House before the Christmas recess or very shortly after, for a half or full day's debate on the Pre-Budget Report". In their response, the Government indicated that they would "consider the need for a debate on the 2003 Pre-Budget Report, either in the Chamber or in some other forum, nearer the time".[12] As at the time that this Report has been prepared, there is no indication that there will be such a debate on this year's PBR.[13] We regret this omission, given that transparency and openness demand that government financial statements like the PBR should be subject to parliamentary scrutiny in the Chamber of the House of Commons. We reiterate our recommendation that every year the House should hold a half or full day's debate on the Pre-Budget Report.

4. In last year's report, we also noted that the new practice of announcing the planned recess dates at the beginning of the annual parliamentary session should make it easier to announce the date of the Budget longer in advance than had often been the case. We observed that in 2002 the Chancellor had given almost three months' notice of the Budget date. However, in 2003 only just over one month's notice was given. In our Reports on the 2002 PBR and the 2003 Budget we recommended that there should always be at least two months' notice.[14] In their response, the Government declined to give such a commitment, indicating only that they would "announce the date of the Budget at the earliest convenient opportunity".[15] We have received no acceptable explanation as to why the Treasury will not agree to this modest recommendation. We can only repeat our view that as much notice as possible for the Budget date is desirable and we therefore urge the Government to regard the 2002 practice—of at least 2 months' advance notice—to be at least a working target. Advance notice for the Pre-Budget Report is also helpful. The announcement of the date for this year's Pre-Budget report and statement was made during oral Question Time on Thursday 13 November, less than one month before the statement. We believe that the same arguments hold for advance notice for the Pre-Budget Report as for the Budget.

1   H M Treasury Pre-Budget Report 2003, Cm 6042 (hereafter Pre-Budget Report 2003) Back

2   HC Debates, 10 December 2003, cols 1061-1070 Back

3   Mr Robert Chote (Director, Institute of Fiscal Studies), Professor Peter Spencer (University of York), Mr David Walton (Chief European Economist, Goldman Sachs) and Mr Martin Weale (Director, National Institute of Economic and Social Research) Back

4   Mr Jon Cunliffe (Managing Director, Macroeconomic Policy and International Finance), Mr Nicholas Holgate (Director, Welfare Reform), Mr John Kingman (Head of Enterprise and Growth Unit), Mr Jonathan Stephens (Director, Public Spending) and Mr Andrew Lewis (Head of Tax Policy Team) Back

5   Accompanied by Mr Ed Balls (Chief Economic Adviser) and other officials. Back

6   Including papers on the tax provisions of the PBR, from Mr Edward Troup (Head of Tax Strategy, Simmons & Simmons) and Mr John Whiting (Tax Partner at PricewaterhouseCoopers), and a paper from one of the Committee's advisers on regional productivity, Professor Iain McLean. Back

7   And to the Committee's adviser on public expenditure issues, Professor David Heald, now of Sheffield University Back

8   The Code was laid before Parliament under section155 of the Finance Act 1998 as part of the Pre-Budget Report 1998. Back

9   Code for Fiscal Stability (HM Treasury November 1998) (Introduction and para 16) Back

10   The 2003 PBR comprised some 265 pages, up from 225 last year and 112 in 1997 Back

11   Second Report, The 2002 Pre-Budget Report, HC (2002-03) 159 Back

12   Treasury Committee, Second Special report of Session 2002-03, Government Response to the Committee's Second Report: the 2002 Pre-Budget Report, HC 528, paragraph (c) Back

13   Excluding the brief debate in a Standing Committee on the Government's assessment as set out in the PBR for the purposes of section 5 of the European Communities (Amendment) Act 1993 (see Standing Committee Debates for the Fifth Standing Committee on Delegated Legislation 11 December 2003). This debate does not provide the opportunity for an in-depth debate on the full range of issues. This year it took place only one day after the statement, before there had been time for proper consideration of the statement and accompanying documentation Back

14   Second Report, The 2002 Pre-Budget Report, HC (2002-03) 159, para 8; Seventh Report, The 2003 Budget, HC 652, para 5 Back

15   HC (2002-03) 528, para (d); HC (2002-03) 1028, para 1 Back

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