The Amazing British Budget Process

Yesterday was Budget Day here in Britain, where the Chancellor Of The Exchequer announces how the UK will tax and spend money over the coming year. It’s a process that has fascinated me for years and has yet to lose the novelty.

I first encountered the budget process when I was working at the BBC World Service back in 1988. Fresh out of college, I was working in Britain on a work permit for six months. My job was to type for the World Service journalists who either didn’t know how to type or didn’t want to because it wasn’t their job. Seriously, I sat in front of a computer terminal next to a journalist who would dictate their story to me. But hey, it paid the bills and got me a wife. We both met on the training course to use the BBC’s computers.

On budget day, the newsroom was abuzz. The chancellor came out holding aloft a tatty old briefcase, the symbol of the new budget. It’s was amazing pageantry to watch, not matching anything I’d ever seen as an American in terms of how our own budget is presented. The BBC gives you some history of that briefcase here.

When I came back to Britain to live in 1997, I had a renewed fascination with the budget, since I was now a British taxpayer. Unlike the American budget process, the government here can announce a new budget and have changes go into immediate effect. There’s none of the US President’s budget being aligned or debated with a Congressional Budget. That’s because to be in government in Britain means you control the government. You have all the votes you need to immediately pass your budget. What you say goes.

I remember one year that a pre-budget rumor came out that VAT on petrol was going to rise. People dashed to fill their tanks the day before. Sure enough, the next day the budget came out and all the petrol prices rose that same day.

Similarly, that pint of beer is now going to cost 1p more starting this Sunday. But hey, condoms are getting cheaper. Come July, VAT will drop from 17.5 percent to 5 percent on them and other contraceptive products. So don’t stock up yet, lads. Hang in there until July, if you can 🙂