The Robin Hood chancellors
"It is rather a shame for a rich country like ours – probably the richest in the world, if not the richest the world has ever seen – that it should allow those who have toiled all their days to end in penury and possibly starvation," David Lloyd George said in defence of a Budget that had landowners and the higher-paid up in arms and which set off a constitutional crisis.
The People's Budget of 1909 introduced old age pensions, at a cost of £8m a year, and made the rich pay for it by introducing two new rates of income tax for the higher paid and a land tax, while introducing tax relief for middle-class families with children. When peers blocked the Budget, the Liberals called a general election and passed the Parliament Act to curb the power of the Lords.
Dalton is now remembered, if at all, as the Chancellor who had to resign because he leaked Budget secrets – though the information he disclosed on his way into the chamber was less than is briefed every day in the run-up to a modern Budget.
By 1947, Dalton was a much weakened figure because the war loan from the United States was exhausted and there was a run on the pound. When he came to office in 1945, he was confronted by a national debt three times as bad as the current one, at 250 per cent of GDP – but during his short time as Chancellor he introduced measures to cut the prices of everyday household goods, increased pensions, and reduced entertainment tax. His 1946 Budget also pushed up death duties and set up a fund to encourage landowners to bequeath their property to the National Trust.
Brown's unhappy tenure in 10 Downing Street and the long-running drama of his power struggle with Tony Blair have obscured the fact that he was not only the longest-serving Chancellor since Gladstone, but was also a covert Robin Hood. The ethos of New Labour never allowed him to use the word "redistribution", so he talked instead about helping the low-paid, helping poorer families with children and alleviating Third World poverty. The overseas aid budget rose from 0.26 per cent of GDP in 1997 to 0.43 per cent in 2008.
Domestically, redistribution was achieved through a complex system of tax credits. The overall effect, according to the Institute of Fiscal Studies, was "highly progressive ... significantly reducing the incomes of richer households and increasing those of poorer ones". He was rightly criticised for abolishing the 10p tax rate in his last Budget – but he was also the Chancellor who introduced the 10p rate.
The Sheriff of Nottingham chancellors
Snowden was the first Labour Chancellor, and in his first spell in office in 1924 looked after the people who voted Labour by lowering the duties on tea, coffee and sugar and providing money for council housing.
When he came back into office in 1929, he introduced changes to tax and public spending which benefited the poor and the unemployed, but when mass unemployment took hold he was deaf to any radical ideas from Labour colleagues for tackling the problem, such as borrowing to stimulate production, preferring to cut public spending and raise taxes. Keynesian economics were too modern for him. He was glued to the Gladstonian doctrine of free trade and a balanced budget.
As the crisis deepened, he supported a proposal to cut unemployment benefit, which split the Cabinet and brought down the government. He stayed on as Chancellor for three months in Ramsay MacDonald's National Government, then quit Parliament.
The Budget that Geoffrey Howe delivered to a stunned Commons in March 1981 can still set Tory MPs arguing about whether it was an act of far-sighted political courage or economic destructiveness. Howe had already shown an enthusiasm for redistributing wealth upwards into the pockets of the well off. He had slashed the top rates of income tax while almost doubling VAT, from 8 to 15 per cent.
In 1981, he did something even more startling. The country was in recession, unemployment had risen by 836,000 during 1980, yet Howe set himself the task of reducing government borrowing through a combination of tax rises and spending cuts. The result was that unemployment kept rising, but inflation – which affected everyone – fell dramatically, and the Tories pulled off a huge election victory two years later. George Osborne was said to have been studying that Budget as he prepared for yesterday's big speech.
Lawson was the great tax simplifier. In every Budget he delivered he abolished at least one tax. He was also one of the few cabinet ministers to oppose the introduction of the poll tax. But while other Chancellors tightened the purse strings after a general election so that they could be generous later, Nigel Lawson delivered an astonishing tax-cutting budget in spring 1988.
Every taxpayer gained something. The basic rate was cut from 27p to 25p and personal allowances were raised by twice the rate of inflation. But those who gained most were the wealthy, as the threshold for inheritance tax was raised and four out of five higher rates of tax were scrapped in favour of a single 40p rate, knocking a third off the income tax liabilities of the highest paid. There was such an outcry in the Commons that the Speaker suspended the session to calm the House down.Reuse content