From the archive: We need a People’s Budget
In contrast to the idea of open policy, the most important thing that government does is strictly a closed affair. It’s time this changed.
This year’s Budget takes takes on 20th March. It’s at about this time of year that serious speculation begins to mount about which measures will be announced. Budget decisions are supposed to be secret before the speech of course, and it used to be the case that any leaks were a matter for ministerial resignations (most notably Hugh Dalton in 1947).
Nowadays, many of the more popular Budget measures are leaked in advance, while unpopular or controversial decisions are often carefully buried away in the depths of the various Budget reports and annexes published by the Treasury (surely a largely pointless activity, since these decisions are usually unearthed in a matter of hours).
In the run-up to this year’s Budget (perhaps in response to last year’s omnishambles), there’s been some discussion about how the process could change. The Institute for Government hosted a discussion this week on how government could produce ‘Better Budgets‘ – albeit with a less-than-incredibly-diverse set of speakers ranging from PWC and the CBI to the FT. Paul Johnson, director of the Institute of Fiscal Studies and the main speaker at the event, argues that there are three barriers to developing better tax policy – that tax policy is made annually (or increasingly biannually) in Budgets and Autumn Statements rather than strategically for the tax system as a whole, the lack of challenge within government and effective scrutiny and challenge from Parliament, and the generally poor quality of political and public debate (although the latter feels rather like blaming the victim).
It might be right to identify the “urgent need for an improvement in the public debate about tax policy” – but why can’t the public regarded as participants in the process, rather than just the audience for it?
The political class might blanch at such a notion, on the basis that government taxation and expenditure is too complicated for the ‘average person’ to understand. But this view effectively waves the white flag for democracy and any hope that economic and fiscal decisions can ever receive public legitimacy.
The Budget is primarily political, not economic – it’s about social choices and priorities, not economic theory. You don’t have to be an economist to have an informed view on Budget decisions (and economists generally don’t make good Chancellors), you just have to be affected by them.
Take the 10p tax rate.
It was a political decision to introduce it, a political decision to abolish it (Gordon Brown wanted his last Budget as Chancellor to include a grandstanding cuts in the basic rate of income tax to 20 per cent), a political disaster and costly mistake to correct, and a political decision by Ed Miliband to propose its return under a future Labour government in a speech a couple of weeks’ ago.
The abolition of the 10p rate was also famously a decision that the political class, including the mainstream media, didn’t recognise the significance of until ordinary people started to complain in large numbers to their MPs.
The same political class was rather dismissive of Miliband’s proposal to bring it back, so making exactly the same mistake it made the first time by ignoring that fact that it might actually help to improve the living standards of people who are typically considerably less wealthy than they are.
There might be better ways to put more money in people’s pockets – but if Budgets are primarily political, then what they suggest politically is worth bearing in mind, and the 10p tax rate obviously mattered (and matters) politically because it is seen to signal that ordinary people on low incomes matter as well.
Why then can’t we establish a ‘People’s Budget’ process – one that develops Budget policy in the open, in parallel to the (somewhat necessarily) closed decision-making process in the Treasury, and whereby the former could inform better (and more legitimate) decisions in the latter?
In theory, the Budget process is open to outside ideas. The Treasury says that it “…welcomes representations as part of the policy-making process [and] views of stakeholders are gratefully received”, but the ‘Budget representations‘ page (the antiquated and less-than-welcoming phrase is perhaps telling) is somewhat buried away on the Treasury’s website, and the guidance for submissions is hardly friendly or accessible. (You can also make a Freedom of Information request regarding the process, but genuinely open government would make all of the ‘representations’ publicly available by default.)
To no-one’s surprise, as Damien McBride’s interesting blog last year on the Budget process suggested, submissions from the public are not treated very seriously: “Anyone can come up with an idea for the Budget: members of the public who write in; NGOs and Business groups; other government departments; officials in HMRC; Treasury staff, special advisers and ministers; and of course the Chancellor himself. It would be nice to say they are all given equal weight and consideration, but the order I’ve put them in usually corresponds to the amount of effort the Treasury will put into developing their ideas.”
In an era of supposed ‘open policy‘, it’s unacceptable that the Budget is the opposite – closed, manipulative, political, and deeply flawed.
The political class typically has great difficulty in conceiving different processes that open up policy to a much wider set of participants, but it’s not so hard to sketch out a possible process for a People’s Budget. Some local authorities and areas have experimented with citizens’ juries and other participatory budgeting mechanisms. Commissions of inquiry provide a model by which a panels issue calls for evidence and interview ‘witnesses’. Globally, there is increasing interest in ‘open budget‘ processes that promote greater transparency, participation, and accountability.
Perhaps its not the potential processes that cause such difficulty for the political class, but rather the proposals that might garner support through a People’s Budget. For example polls have revealed widespread public support for a ‘Robin Hood Tax’ on financial transactions. A YouGov poll for Oxfam in 2011 found that the majority of people in the UK would support such a tax if the proceeds were used to tackle poverty or protect public services.
A People’s Budget could produce different, better, more robust ideas – and a different agenda. It could hardly be worse than last year’s official shambles. It could also inadvertently serve to warn government about stupid decisions it is about to make. Even though it says it recognises that the Budget itself is a “bizarre anachronism”, the Institute for Government suggests that ‘10p or not 10p – that is NOT the question‘.
They’re wrong – 10p or not 10p is exactly the question.
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