Toxic Budget: The Chancellor Who Leaves a Toxic Legacy

timeHere’s a look at the budget that collapsed within minutes of the Chancellor’s Commons speech: Think George Osborne’s botched taxation, one of his many blunders that meant his 2012 Budget will forever be known as “total chaos.”

Then there are the “poison pill” budgets: budgets introduced at the end of parliament in which the prime minister of the day throws everything he has (sometimes literally) into wooing voters and trying to stay in office. If their party fails, the opposition parties are left to clean up the mess.

Jeremy Hunt is expected to launch a raid on the public finances on March 6 in a bid to add some pre-election benefits to his budget. He will create space for tax cuts mainly by tightening the austerity already imposed on Whitehall departments. Whoever takes over after the election will find a huge funding gap, empty coffers, high debt and low growth. Hunter College will definitely rank as one of the worst colleges in terms of legacy.

Here, we compare six early poison pill budgets.

Derek Heathcoe-Amory, 1958

The 1950s were characterized by government tax cuts, but the Tory budget before the 1959 election was an extreme example, filled with tchotchkes like cuts to income tax, purchase tax (the forerunner of VAT) and beer duty, and was disconcerting. surprise Movie ticket tax halved.

Christopher Hood, professor of public administration at Oxford University, believes the irresponsible budget is one of the worst examples of pre-election bribery. He said the chancellor had used forecasts of a bumper tax harvest and curbs on public spending to make the giveaway look possible, and many believed it was a fraud.

It enabled the Conservatives to win the 1959 election. But according to Hood, Heathcote-Amory’s successor, Selwyn Lloyd, “started the taxation almost immediately”. Hood recently published a new book. Where the money goes suggests that a blowout budget before an election “could do a lot of political damage to incumbents if they end up being re-elected and have to live with the consequences of their generous budgets.”
Toxicity level ★★★★★
Bribery★★★★★

Reginald Modlin, 1964

Maudlin spent much of his time as Conservative chancellor trying to boost the economy through tax cuts and increased public spending. Jason Leonard, an economic historian at the London School of Economics, said: “The context of his pre-election budget was that the economy was already overheating, with demand outstripping supply, pushing up inflation. But while Magdalen talked about sustainable expansion, he economic reforms are minimal, the wheels will inevitably fall off.”

In the 1964 budget, Maudling increased indirect taxes in an attempt to achieve a soft landing. He has not further cut income taxes, leaving the base rate at 38.75%. Conservative voters abandoned him, and in October that year Labor narrowly won.

Modlin wrote to his Labor successor James Callaghan: “Good luck to you, old fellow… I’m sorry for making such a mess.”
Toxicity level ★★★★★
Bribery★★☆☆☆

Tony Barber, 1973

In 1973, Conservative Chancellor of the Exchequer Barber followed in Magdalen’s footsteps. Unemployment was rising a year after Ted Heath’s government came to power in 1970, and he responded by vigorously developing the economy.

In 1972, Barber was furious. A year later he became more cautious, introducing a 10p VAT rate as one of the conditions for Britain’s membership of the European Economic Community earlier that year.

Conservative voters once again punished their leaders for raising taxes, and the February 1974 election resulted in a hung parliament. Labor narrowly took control after a second election in October amid an energy and fuel crisis triggered by a quadrupling of oil prices.

Barbour’s boom triggered a spike in inflation and a wave of strikes that devastated the incoming Labor government and ultimately forced Chancellor Denis Healey to seek a bailout loan from the International Monetary Fund.
Toxicity level ★★★★★
Bribery★★☆☆☆

Norman Lamont, 1992

This historical lesson still gives Labor nightmares today. Conservative chancellor Lamont’s budget is packed with giveaways to boost the party’s chances of winning after a long recession and the humiliation of Britain’s exit from the European Union’s exchange rate mechanism: two things that should have marked the Conservative government’s 13 years in power. Full stop. Income taxes, car sales taxes and gambling taxes were all slashed.

Labor leader Neil Kinnock dismissed it as “pre-election sweetener for panic”, but Labour’s opposition to the introduction of lower income tax rates is widely seen as fatal, making it a high-tax party. The Conservatives won, Kinnock resigned, and Lamont was left to digest his own poison.

A year later the chancellor found himself unable to afford his previous generosity and had to withdraw much of the funds. Years later, it was revealed that Lamont’s Treasury Department hid the extent of the damage from the enterprise risk management debacle to make it add up to its budget.
Toxicity level ★★★★★
Bribery★★★★★

Ken Clark, 1996

Conservative chancellor Clark is widely seen as leaving a golden legacy to Tony Blair’s government. Indeed, government finances were in reasonable shape when New Labor came to power. However, a series of austerity budgets helped Clark propose modest tax cuts before the 1997 election. A further pledge to keep public spending low for at least two years gives Clark the financial space to raise the inheritance tax threshold.

Even though a booming domestic and global economy meant a flood of cash flowing into the Treasury’s coffers, Gordon Brown felt the need to stick to Clark’s strict spending targets. The multi-year budget freeze in Whitehall under Clark continued into the end of the decade under Brown, while much-needed public service and welfare reform was delayed until late in Labour’s first term.
Toxicity level ★★★☆☆
Bribery★★☆☆☆

Alistair Darling, 2010

In 2008, the Labor Party was caught in the financial turmoil that erupted in the U.S. housing market and spread to other parts of the world. As chancellor, Darling had to bail out those caught in the crossfire, mainly the Bank of England, with wartime levels of spending. By 2010, he and Prime Minister Gordon Brown were under pressure to tighten a tight rein on public finances.

Ahead of the election, Brown hoped for an upbeat budget to defeat David Cameron’s reshaped Conservative Party, but Darling convinced him that financial markets remained frantic and any sign of additional borrowing would trigger a rise in debt financing costs, UK The risk is that, like Greece, it is on the verge of exiting the EU.

Darling made sweeping cuts to public investment in an effort to balance the budget – while his successor, George Osborne, left the country largely unchanged, leaving Britain to regret a decade of low productivity and growth.

Labor suffered a crushing defeat at the polls and has been punished again after a light-hearted note left by then finance minister Liam Byrne came to light. Byrne responded to Magdalen’s apology in a letter to his successor: “There is no money left, I’m afraid.” This was seen by Osborne as a confession and has since been used as a cudgel to defeat Labour.
Toxicity level ★★☆☆☆
Bribery★☆☆☆☆