Budget History: Does the red box deliver victory at the ballot box?
Gordon Brown hopes that the Chancellor's speech will keep him in Number 10. Andy McSmith looks at previous pre-election Budgets to see whether history is on the Prime Minister's side
Thursday 25 March 2010
Hugh Gaitskill, 1951
Hugh Gaitskell had only recently taken over as Chancellor after his predecessor, Stafford Cripps, had resigned due to ill health. Public finances were under severe strain because of the Korean war, so Gaitskell was in no position to be generous. What he did caused a major split in the Labour Party. He not only put up taxes, but for the first time, he introduced prescription charges to the NHS. Aneurin Bevan, who had set up the NHS, resigned from the Cabinet in protest. Two other ministers later followed, including Harold Wilson. Labour lost the election, but Gaitskell won the contest to be the next Labour leader.
Reggie Maudling, 1964
Reggie Maudling's last Budget was a sad contrast with the one he had confidently unveiled a year earlier. In 1963, he made political history with his "dash for growth", which promised 4 per cent growth without inflation. His transient popularity faded after a few months, and he failed to make a real mark in the Conservative leadership contest that followed Harold Macmillan's resignation. As he stood up to deliver his final budget, he had to accept that the chronic balance-of-payments problem had worsened and the instability of the pound had persisted. He put up taxes. The Conservatives lost the election.
Roy Jenkins, 1970
This Budget has gone down in political folklore as the "Hair-shirt Budget" which allegedly precipitated Labour's unexpected defeat at the ensuing general election. Roy Jenkins insisted on being careful not to undo the painstaking work he had done over the previous two years to mend the UK's shaky economy. But he did adjust the allowances to take two million people out of tax, when income tax was the equivalent of 47.5p in the £. For the rest of his life, Jenkins denied responsibility for Labour's defeat, but no subsequent Chancellor followed his example by insisting on so tight a Budget on the eve of a general election.
Denis Healey, 1974
The year 1974 was unique in that there were two general elections, and three Budgets. Denis Healey's first post-election Budget, in March, made grim listening. The oil-producing nations had quadrupled the world price of oil after the 1973 Israel-Arab war, and Healey had to warn that runaway inflation was on the way. He raised income tax and introduced a wealth tax. In July, he returned with a mini-Budget containing better news: VAT was to come down, and food subsidies were going up. Labour won the October election, and the third Budget, less generous than the second, followed in November.
Denis Healey, 1979
After the Labour government was brought down by a vote of no confidence, they had no choice but to call an immediate election. Chanellor Denis Healey was not therefore in a position to produce a bag full of giveaways. It was a "caretaker" budget, framed by agreement between the main parties, to allow taxes to continue to be raised until the new (Conservative) government was in place.
Nigel Lawson, 1987
The speech that Nigel Lawson delivered just before the 1987 general election lasted only 59 minutes, making it the shortest since Disraeli's in 1867, but it made up in largesse what it lacked in length. The economy was booming, and Lawson announced that he was going simultaneously to cut tax, increase public spending, and reduce government debt. The tax cuts, which included bringing the basic rate down by 2p to 27p in the £, totalled £2,600m. Neil Kinnock, the Labour leader, called it a "bribes budget". If so, the voters enjoyed being bribed, and returned the Conservatives to power with another thumping majority.
Norman Lamont, 1992
When Norman Lamont delivered his budget in March 1992, he was on a high, having won rapid promotion by managing John Major's leadership campaign. This was five months before Lamont's reputation, and the Tory government's, was wrecked by the collapsing pound and the Black September debacle. In March, the economy climbed out of recession and Lamont set the tone for the election campaign, declared the day after his budget. He had a big rabbit to pull from his hat. He was expected to say the basic rate of income tax was falling, but instead launched a new 20p rate on the first £2,000 of taxable income, benefiting the low paid. The Tories won the election.
Kenneth Clarke, 1996
For five years, Conservative Chancellors presented the Budget in the autumn, so Kenneth Clarke's last budget was in November 1996, six months before the general election. Clarke knew the election was lost, but wanted to preserve his reputation as a tough custodian of the public purse. Even so, he cut the basic rate of income tax by 1p to 23p, and introduced measures which left a family on average earnings £370 a year better off. He also brought in public spending cuts, apart from in health and education, causing a headache for the incoming Labour government, because Tony Blair and Gordon Brown had decided to keep to Clarke's spending limits for two years.
Gordon Brown, 2001
This was the first pre-election Budget from Gordon Brown. Having kept public spending so tight in the first years of the Labour government, he was now, as expected, in a more generous mood. He froze duties on alcohol, and reduced some of the duties on petrol. The effect of his complex tax changes, designed particularly to benefit the low paid, families with children under 16, and pensioners, increased real household disposable income by 4.25 to 4.5 per cent, opening Brown to the accusation that he was setting off an unsustainable boom – though economists' warnings that inflation could shoot up in a year or two turned out to be too pessimistic.
Gordon Brown, 2005
Gordon Brown was in no position to give billions away because public finances were far too tight at this time. He was caught between a Labour Party that wanted good news that they could spread to the voters in time for the election, which was less than two months away, and the City that would have punished him heavily if he had been too generous. He handled this tight situation with considerable political skill. He gave away £2bn, mainly to poorer families, and took an almost equal amount back by closing tax loopholes, removing tax breaks and bringing forward payments from North Sea oil companies.
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