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Budget Statement 2014 – What is it?

The Budget is an annual statement made by the Chancellor of the Exchequer about the state of the nation’s finances. Within the statement, the Chancellor of the Exchequer announces proposals to change taxation law in order to strengthen the state of the economy.

The Chancellor of the Exchequer, usually just referred to as the Chancellor, is essentially the Prime Minister’s right hand man who is tasked to maintain the growth of the nation’s economy. The job of Chancellor of the Exchequer has been taken by George Osborne since the last general election in 2010.

How will the Budget affect me?

The Budget affects everybody in the country, as everything from the tax you pay on your income to your groceries is debated, and potentially changed.

When is it?

The Budget Statement is held annually, and usually takes place in either March or April, just before the tax-year ends on April 5th. However, this can be a little different in ‘election years’ where a new party comes to power. In this case the new Chancellor of the Exchequer will announce another Budget Statement, even if the outgoing Chancellor has already made one.

This year the Budget Statement will take place on March 19th, and will be held by the current Chancellor of the Exchequer, George Osborne.

How long does it last?

There is no set limit on how long the Budget Statement itself should last, although it usually lasts a few hours.

Looking at the history of Budget Statements, the longest statement was made by William Gladstone on 18 April 1853, lasting 4 hours and 45 minutes, and the shortest by Benjamin Disraeli in 1876, lasting just 45 minutes.

There was one other Budget speech by Benjamin Disraeli that lasted for 5 hours, however this did include a break, so technically it wasn’t the longest speech.

What happens?

The Statement

There are usually two main stages to the Budget Statement, and will usually last a few hours; this begins with a review of the nation’s economic position and the overall financial situation. Afterwards, the Chancellor will move onto making proposals on changes to current taxation, this includes everything from how much tax you pay on your income to the petrol you put in your car.

After the proposals are made, certain measures such as tax on tobacco, alcohol and petrol are introduced as of 6pm on the day of the Budget Statement, but only on a provisional basis. This is so the government can start collecting tax based on the new proposals.

However, before the proposals become law, a series of debates are triggered over the course of a few days, followed by the introduction of the ‘finance bill.’

The Debate

The proposals are followed by four days of debate led by the opposition leader, which this year is Ed Milliband of the Labour party. Each day of debate is earmarked for a different area of the Budget such as Health, Education and Defence.

At the end of the debate, the House of Commons will decide whether or not they agree with the proposals and bring them into effect immediately. However, the new proposals will not become law until the ‘Finance Bill’ is passed.

The Finance Bill

In order for these proposals to become law, a ‘Finance Bill’ has to be presented to parliament; this outlines all of the agreed changes to taxation, essentially taking proposals for taxation, and turning them into to law.

Once the House of Commons agrees to the Chancellors Budget resolutions, the Finance Bill then proceeds through parliament, meaning that all of the agreed proposals become law.

The House of Lords will give the Finance Bill a ‘second reading’ but will not read it clause-by-clause, nor amend the bill, as the House of Commons has the sole responsibility to levy taxes.

The Scrutiny

The Finance Bill is then scrutinised by a committee of MPs from different political parties, gathering evidence and publishing a report which includes their own recommendations. The government then produces a report in response to the committee’s findings, which will usually include a contribution from the Office for Budget Responsibility.

Following the Budget?

Keep following the blog for more information on the Budget Statement, or keep up to date with our live tweets on 19th March 2014 by following @financialuk

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