Baroness Hogg, the former head of John Major's Policy Unit, says a state of the nation address is needed to fill the gap caused by the decision to move the Budget from the spring to the autumn.
Highlighting weaknesses in the machinery of government, Baroness Hogg calls for a "green" budget to allow more consultation with Cabinet colleagues in Prospect, a magazine launched tomorrow.
Her advice is likely to be resisted by the Treasury which she says has jealously guarded its power to take unilateral decisions on tax.
But Lady Hogg says the Treasury is unlikely to be able to maintain this barrier much longer. Members of the Cabinet committee on spending, code named EDX, chaired by the Chancellor, will demand a say in tax decisions, she warns.
"Involving other senior ministers in spending decisions provides the Treasury with extra firepower against public spending pressures in Cabinet. She says that for this assistance committee members are bound to extract a price which may as high as demanding to become involved in tax decisions.
"Sooner or later, this side of the government's balance sheet is bound to become a matter of collective discussions too. That may even lead the Treasury towards the still more open process of publishing a green budget of forecasts and tax proposals. That would entail abandoning the traditions of purdah and the internal mystique that have surrounded the Budget process for far too long."
Baroness Hogg also warns the Prime Minister that he cannot allow his spending priorities to be thrown off course by the demands of the pounds 85bn budget for welfare.
"Other programmes cannot continue indefinitely absorbing cuts forced on them by persistent overshooting of the wel fare benefits budget," she says.
She says special commitments, the need to avoid Parliamentary trouble, and "above all, ministerial deals" have undermined government spending priorities.
"Tightening the qualifying conditions for receiving invalidity benefit is only the first response to the seemingly relent less growth in social security. No-one can suppose that this is the end of the story. Other programmes cannot continue indefinitely absorbing cuts forced on them by persistent overspending of the welfare benefits budget."
She throws her weight behind the growing calls for the abolition of the spending caps on local authorities. As reported in the Independent last week, Mr Major may have to intervene to resolve a split in the Cabinet over the issue and her advice could be decisive.
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