Share this content
11 Downing Street
iStock_oversnap_11_downing_street

Ten Chancellors and counting…

by

Rebecca Cave has seen 10 Chancellors pass through the revolving door at number 11. Here she considers them all, good and bad.

28th Jul 2022
Share this content

In my tax career I’ve seen 10 Chancellors of the Exchequer come and go. Some have made a lasting impression on the tax system, and not always in a good way. 

Nigel Lawson 

Lawson occupied Number 11 Downing Street when I first joined the tax department of KPMG, and we were still calculating income tax on large paper forms with a column for 60% tax. He reduced the top tax rate to 40%, and removed a lot of the rates in between, which cut the number of columns I had to grapple with. 

However, at the same time, he raised the rate of capital gains tax (CGT) from a flat 30% to align with the taxpayer’s highest income tax rate – simplifying with one hand and complexifying with the other. I remember some grumbling about the CGT hike, but the indexation relief (introduced by Chancellor Geoffrey Howe) took the edge off that. 

Lawson should be remembered for pushing through independent taxation, proposed in the 1988 Budget, which finally came into effect from 6 April 1991. Lawson was a great friend of prime minister Margaret Thatcher (until they fell out) and it is rumoured that Thatcher was not impressed that her husband had to include her income on his tax return. 

John Major 

Major was only Chancellor for just over a year, and I thank him for introducing the tax-exempt special savings account (TESSA), which I used to save up for my first sports car.

Norman Lamont 

Lamont had three years in the Chancellor job with Major as PM, and mercifully had minimal impact on the tax system as they were too busy battling inflation and recession (plus ça change!). 

Ken Clarke

Clarke should be remembered for introducing self assessment for individuals, announced in his first Budget in 1993, coming into effect from 6 April 1996. He also moved the Budget from spring to autumn, so 1993 had two Budgets. 

Gordon Brown

Gordon Brown was the longest serving Chancellor of the Exchequer since 1832, serving for over ten years under PM Tony Blair. And boy did Brown have a big effect on the tax system! 

In his first Budget in 1997 he removed the ability of pension funds to reclaim dividend tax credits, which at a stroke cut their income by millions. He also abolished advance corporation tax and cut the tax credit on dividends to 10%. 

The last press release in his 1999 Budget pack was numbered IR35, and we all know what became of that.

Other low points for Brown were the 10% starting rate of corporation tax from 2000 to 2002 followed by the zero rate of corporation tax from 2002. This resulted in massive numbers of businesses incorporating, as coupled with zero tax on dividends within the basic rate band, those with profits of around £50,000 could pay no tax at all. Genius (not!).

Brown should also be remembered for introducing working and child tax credits – state benefits administered by HMRC but which otherwise had nothing to do with tax, and landed lots of claimants with unexpected debt.

Alistair Darling 

Darling’s term as Chancellor was dominated by the financial crisis of 2007 to 2009, and he had to raise taxes to pay for the clean-up. The 10% starting rate of income tax had to go, but this was going to cost low earners up to £200 per year. Finally, the penny dropped and in early May 2008 Darling announced a £600 increase in the personal allowance for the current year to compensate those on low pay. I recall tax experts at the Chartered Tax Advisers address that evening could hardly believe it. 

Darling clearly had a thing about the personal allowance as he also introduced tapering of the allowance where income exceeds £100,000 (an effective tax rate of 60%), and he added the 50% addition rate on income over £150,000. These changes came in from 6 April 2010, and may have contributed to Labour losing the next general election on 6 May 2010. 

George Osborne 

I can never forgive Osborne for dreaming up Making Tax Digital (MTD), billed as the “end of the tax return”. Over seven years later MTD for income tax self assessment (ITSA) is still to be launched.

Osborne must also be remembered for his “omishambles” Budget in 2012 when he attempted to charge 20% VAT on hot pasties and reduce tax relief on charitable donations. These proposals did not survive the bad press, but the new Employee Shareholder Scheme did, to be later quietly abolished when it became a vehicle for tax avoidance. 

Phil Hammond 

Hammond was a boring Chancellor, and after Brown, Darling and Osborne that was a relief. Although he did have his wobbles when he proposed increasing class 2 NIC with a view to merging with class 4, but the Daily Mail protested and it never happened. 

Sajid Javid 

Javid is the Chancellor who never presented a Budget, as he walked out just weeks before his big day after clashes with the prime minister’s adviser Dominic Cummings. Perhaps he will return to Number 11 under the new prime minister. 

Rishi Sunak

Chancellor Sunak has had a love/hate relationship with the British public. They loved him while he was shaking his magic money tree to give away loads-a-money during the pandemic, but came to hate him for the national insurance contribution increases, which hit just as inflation took off. 

Sunak has also messed around with the income tax bands mid tax year, taking a lesson from Darling perhaps. 

Nadhim Zahawi

Zahawi is another Chancellor who hasn’t presented a Budget and probably never will. Although he has been in the role for merely weeks, scandal is already knocking on his door and I suspect he will be gone by the end of the summer. 

Who’s next?

The role of Chancellor of the Exchequer has never been taken by a woman, although Darling had a team of three female Treasury ministers. 

Perhaps the time is now right for a capable woman to take the reins of the country’s finances. But who?

Replies (15)

Please login or register to join the discussion.

avatar
By Hugo Fair
28th Jul 2022 20:16

Tinkerers the lot of them (at least those who stayed awake long enough to do anything) ... without any clarity of vision or obvious strategic direction.

Mind you, Gordon Brown had the best opportunity (not just personal tenure but a government with a substantial majority and little sectarian in-fighting for most of his time) ... and yet his more 'creative' inventions (like TCs and PFI) were arguably the worst things brought in by any of them

Moral? No idea ... but we need some root & branch reform of the basic tax infrastructure and a Chancellor with belief & commitment in balance, who is unflustered by dreams of being PM.

Thanks (1)
Caroline
By accountantccole
29th Jul 2022 09:10

I served Norman Lamont in the duty free shop on a ferry - tax dodger LOL

Thanks (2)
Replying to accountantccole:
avatar
By Paul Crowley
29th Jul 2022 23:57

Tax avoider
Not dodger
That is reserved for the last three

Thanks (0)
avatar
By Paul Crowley
29th Jul 2022 09:37

This shows how politics have changed
The position was for years in the past, just a temporary posting now, with no follow on responsibility

Thanks (0)
avatar
By Justin Bryant
29th Jul 2022 10:14

GB is famous for selling our gold at the bottom of the market in favour of low interest bearing f/x, but that loss was probably nothing compared to RS's losses from BBL fraud and more recently RPI linked gilts.
https://www.accountingweb.co.uk/business/finance-strategy/insolvency-ser...
https://www.accountingweb.co.uk/any-answers/treasury-muppets

At least Gideon was not dumb enough to do either of those.

Thanks (0)
avatar
By Geoff56
29th Jul 2022 10:11

"I can never forgive Osborne for dreaming up Making Tax Digital (MTD)"

I'm with you on that, Rebecca.

Thanks (3)
Replying to Geoff56:
avatar
By Jo Nokes
29th Jul 2022 15:03

Except I can’t believe he actually dreamed it up. Someone in HMRC is responsible, I’d love to know who

Thanks (0)
avatar
By johnjenkins
29th Jul 2022 10:30

Dennis Healey and "what crisis" always makes me laugh.

Thanks (0)
Replying to johnjenkins:
avatar
By Justin Bryant
29th Jul 2022 10:49

I thought it was Sunny Jim who said that and interestingly if you're referring to the IMF bail-out, that was not a case of the UK running out of money (as Maggie portrayed it at the time), but a simple short-term adverse f/x issue and the IMF USD$ facility was never actually needed or used in the end. It's all explained on the internet if you do a search.

Thanks (0)
Replying to Justin Bryant:
avatar
By johnjenkins
29th Jul 2022 11:01

Done a bit of research and actually nobody said those words. Media was just as bad in those days.

Thanks (0)
avatar
By Winnie Wiggleroom
29th Jul 2022 13:11

Of course it does depend on your individual perspective - GB might have made a big blunder but the rush to incorporate benefitted every single practice in the UK - we still have clients that we incorporated back in those heady days and of course their fees are twice the amount they would have been if they had not incorporated, Gordon might be a moron but he has kept me in tins of beans over the years.

Thanks (2)
avatar
By Burlington Bertie
29th Jul 2022 19:54

I used to work in practice near to one of the cheapest petrol stations in Nottingham. The day after the Budget & a not insignificant fuel duty rise, I was filling up my car on the way home behind a besuited chap wearing brown brogues & wolfing a Mars Bar while filling up his Jag...yes, you've guessed the Chancellor...good ol' Ken Clarke

Thanks (0)
paddle steamer
By DJKL
01st Aug 2022 15:39

Did Nigel not, as well as reducing IT, also slide NI rates up? I used to have an early Tolleys to check these things but it went out recently. Nigel was I think also going to really simplify the UK system (big fail on that count) In circa 84/85 one Volume Yellow one Volume Orange, these days is it not two of each with the odd thin supplement.

You also did not cover the Dead Sheep, I sort of get him as I first studied tax at Edin Uni in 1982-83 (though was not studying accountancy until 1984 and was not working in practice until 1985)

Thanks (1)
Replying to DJKL:
avatar
By Hugo Fair
01st Aug 2022 22:08

Although also predating my professional time, I can remember them all the way back to 1970 ... or thought I did until looked them up and found I'd forgotten the one who in 1970 only lasted exactly one month (before dying suddenly in post).

And on a fun note, if you look up https://www.gov.uk/government/history/past-chancellors you'll find an entry for 1606 to 1614 of whom I was unaware.
Apparently it took him a little over 1.5 millenia to achieve power!

Thanks (2)