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Last week, the Evening Standard was on the naughty step for releasing embargoed details of the Budget. The Chancellor hadn’t even got up to speak before key points of his statement were all over the internet.

Less remarked upon, however, was a piece by Ben Gummer, which appeared in City AM a full two days earlier. Commenting on the “tiresome ritual” in which every Tom, Dick and Adam breathlessly implores the Chancellor to do this or that to save the economy, he offers up a little perspective:

  • “…what the chancellor says on Wednesday will have little short-term impact. The most significant announcements will take months to come into force and years to show their full effect.”

He wasn’t wrong, was he? A few days on, the world is much as it was before the Budget. But how did Gummer know? Had he received a sneak preview of what the Chancellor was going to say? 

Well, of course not! After all, he’s only a Conservative MP, not someone really important like a journalist on the Evening Standard. The real reason why he could be so sure about last week's Budget, is that all Budgets (and Autumn Statements) are the same – good at drawing everyone’s attention to the trivia of economic policy, but really bad at getting us to think about what actually matters:

  • “In seeking to make the right decisions for the long term, [the Chancellor] must do battle with the short-termism of Labour politicians and those know-it-alls who think that a tax cut here or a spending increase there will make all the difference he and we so desperately need.
  • “The root of the problems lies in the way we budget. Tinkering with the Comprehensive Spending Review every six months at the despatch box is no way to match government spending to income, nor to gauge whether that income is appropriate to the size and speed of growth of the economy… The chancellor’s most noticed sentences should be about meeting our massive demographic and competitive challenge, not the price of petrol or a pint of beer.” 

As well as distracting responsible Chancellors from they should be doing, the twice-yearly circus also enables irresponsible Chancellors to get away with what they shouldn’t do:

  • “…for all the millions of words written around each of Gordon Brown’s budgets, he still managed to run a structural deficit from 2001, increasing public debt from 37 per cent of GDP in 2001-02 to 44 per cent of GDP in 2007-08. As a result, we entered the banking crisis without wriggle room: we had boxed ourselves in with accumulated debt. That was his fault and he will be dammed by history for doing so, but it was also the responsibility of the press and of politicians to point it out. That most did not was not some oversight: it is simply that the architecture of government budgeting distracts from the real effects of what a chancellor has or has not actually done.”

There is a better way:

  • “The good news is that there is an answer, and one we can easily and quickly adopt. Sweden and Switzerland have both transformed their public finances by turning their governmental budgeting on its head, forcing governments, opponents and commentators to think strategically rather than simply gaze at the short term. Both did it by the introduction of tough and binding fiscal rules that set budgets with a medium-term outlook and mandate surpluses when the going is good”

Not only do such rules embody fiscal conservatism, they have the additional benefits of allowing businesses to plan ahead and of focusing economic debate on the fundamental questions.

Who knows, such an approach might even persuade the Labour Party to come up with some meaningful economic policies of their own.

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