Budget, what Budget?
Given that the Chancellor will almost certainly have nothing to say about taxes on 3 March, Philip Fisher asks whether there is any point in having a Budget.
You need to be quite long in the tooth to remember exactly what a real Budget looks like.
Despite the fact that various Chancellors of the Exchequer, although not Sajid Javid, have stood up in the House of Commons and presented what were described as Budget speeches, it is over five years since the last time that Philip Hammond delivered a full-scale effort.
As a quick reminder, a typical budget day used to take place in the spring and started with photos of the reigning Chancellor of the Exchequer smiling outside number 11 Downing Street holding up a battered red briefcase.
This apparently held lots of important papers including a speech filled with what he (it was never a 'she') firmly believed were many pearls of wisdom.
At their best, these announcements were highly dramatic, would last over an hour and included some corny jokes at the expense of the opposition, a brief overview of macroeconomic matters that could be read in greater detail in what was known as the Red Book, followed by detailed announcements about changes or freezes on every tax and duty imaginable.
Often, jaunty chancellors would even take a sip of malt whisky having told the country that the increase in the relevant duty was less than expected or sometimes even non-existent.
As soon as the great man had sat down, accountants would start beavering away at budget booklets that would be delivered to their clients’ doorsteps on the following morning and also speeches for events designed to impress their clients the following day, often over breakfast.
At the same time, the national newspapers would be poring over not only the speech but also literally dozens of vital press releases many of which contained information that had been hidden from the public amongst the platitudes delivered in Parliament.
Philip Hammond almost inadvertently started the slide by changing Budget Day from the spring to what he described as the autumn but according to any almanac was firmly entrenched in winter.
This was then supplemented by a somewhat meaningless Spring Statement, which rarely contained anything of great interest to those in the accountancy business.
The big change came when, much to the surprise and distress of Mr Hammond and his boss, David Cameron, the United Kingdom voted to leave Europe, rather than rubber-stamping the government’s preferred route of maintaining the status quo.
Since then, any kind of serious fiscal change has been on hold, awaiting the outcome.
That was bad enough but then a global pandemic appeared on the horizon, piling on uncertainty and ensuring that the current Chancellor, Rishi Sunak has so far had no opportunity to make any serious decisions about taxes.
This article is being written one month before the announced Budget Day of 3 March and the writer is very dubious about whether it will even take place. Mr Sunak already has a track record of announcing Budgets and then going into full U-turn mode.
As everybody in the country knows all too well, we are currently in a fairly fundamental version of lockdown, which is just about guaranteed to be in place on the proposed date.
This means that if Rishi Sunak does stand up during the first week in March in front of a handful of parliamentarians and a large number of TV cameras, he will have very little to say about taxes.
It is almost certain that he will need to continue his new favourite game of spend, spend, spend probably extending furlough and the self-employed equivalent, offering even more loans to needy companies and making various other associated changes in a desperate effort to keep businesses afloat and people in jobs.
In addition to the uncertainty about how the pandemic will play out over the next 12 months, the quick and dirty (though it did take over four years) deal with the EU has many inherent unknowns that could hit the economy very hard both in the short-term and for many years into the future.
It is therefore generally accepted by economists, regardless of their political and intellectual leanings, that what we must all hope is the low point of the pandemic is not the moment to increase taxes.
It isn’t even the moment to announce delayed tax rises, since these could spook both individuals and the market.
For the avoidance of doubt, please note that this neither adviser nor AccountingWEB is competent to give investment advice. Therefore, please read the following sentence in the spirit in which it was intended.
Time will tell but for those who enjoy gambling and find shares in GameStop too hair raising, perhaps a small bet that there will be no Budget on 3 March might add a touch of much-needed excitement to some readers’ heavily restricted lives.