House of Commons Library

The Budget and the annual Finance Bill

Published Monday, July 15, 2019

This paper discusses the way that Parliament scrutinises the Government's proposals for taxation, set out in the annual Budget statement. It looks at how this procedure may be affected by the timing of a General Election, and the decision in 2017 to move the Budget from the Spring to the Autumn. It also provides some suggestions for further reading.

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Each year the Chancellor of the Exchequer presents the Budget, which contains all the tax measures for the year ahead. Traditionally the Budget has been in March, prior to the start of the tax year on 6 April.  The statutory provisions to give effect to these tax measures are set out in a single Bill: the annual Finance Bill.  This paper sets out the way that Parliament debates the Budget and scrutinises the Finance Bill, and how this procedure can be affected by the timing of a General Election.

In 2011 the Coalition Government reformed the Parliamentary timetable, moving the Queen’s Speech and the beginning of the annual session to the spring.  In turn provision was made to allow for the Finance Bill to be carried over from one session to the next to ensure that this reform did not substantially reduce the amount of time available for the Bill’s scrutiny.

It has been the practice in recent years for Chancellors to make tax announcements twice a year, using the Pre-Budget Report or Autumn Statement as a second fiscal event. In his Autumn Statement in November 2016 the Chancellor Philip Hammond announced that from autumn 2017 the Government would present a single autumn Budget, to allow for greater Parliamentary scrutiny of Budget measures ahead of their implementation. Mr Hammond presented the last Spring Budget on 8 March 2017, and the first Autumn Budget on 22 November 2017.

This reform has had implications for the annual Budget timetable for policy announcements, consultations, and the passage of legislation. In December 2017 the Government published details of this new timetable, which noted, “under the new cycle of a single fiscal event each year, most tax policies will continue to be developed through an established cycle, whereby a policy announcement at the Budget is followed by a policy consultation, the publishing of draft legislation, and proposals are finally legislated in the next Finance Bill. However, to reflect the move of the Budget from spring to autumn, the timing of this cycle will change. Policies will be announced at the Budget in the autumn, and consulted on in winter and over the spring. Draft legislation will then be published in July for technical consultation ahead of the Finance Bill being introduced in the autumn.”[1] On 11 July this year the Government published draft provisions to be included in the Finance Bill 2019/20; some of these follow earlier consultation exercises, others provide for certain technical changes, while a third group are to have immediate or retrospective effect.[2] This draft legislation is on[3]

Although the Chancellor may often mention public spending in his Budget speech, the procedure by which Parliament scrutinises and approves of government expenditure is quite separate and is not discussed in this paper.[4] Other Library papers provide a checklist of Budgets since 2010 with a list of recommended reading on tax policy,[5] and a longer historical list of Budgets and Finance Bills since 1968.[6]

Notes : 

[1]    HM Treasury, The new Budget timetable and the tax policy making process, 6 December 2017

[2]    Written Statement HCWS1713, 11 July 2018; HM Treasury press notice, Finance Bill 2019-20: government publishes draft legislation, 11 July 2019

[3]    As is standard practice, HM Treasury & HMRC have published tax information & impact notes on these measures, but also ‘impacting definitions’ for these notes.

[4]    For more details see, Scrutiny Unit, Financial scrutiny uncovered, 3rd ed. July 2017; Main Estimates: Government spending plans for 2019/20, Commons Briefing paper CBP8575, 22 May 2019.

[5]    Key documents: taxation, CBP 4680, 12 July 2019

[6]    Budget debates and finance bills since 1968, CBP 2271, 29 October 2018

Commons Briefing papers SN00813

Author: Antony Seely

Topics: Elections, Taxation

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