I was disappointed to read the follwoing article http://www.harwoodhutton.co.uk/cgi-bin/item.cgi?id=33028&d=601&h=160&f=260 dated 6 September which suggests that the Coalition Government is going to drop this year’s Pre-Budget Report (‘PBR’).
The PBR was one of the good innovations of the last Labour Government (along with independence for the Bank of England) and, just because Gordon Brown introduced it, it doesn’t mean it should be scrapped now.
What was good about the PBR was that it lifted the veil on Budget secrecy. Beforehand Chancellors went into weeks, or even months, of ‘purdah’ when they refused to make any public statements in case they let slip any Budget secrets. Their Budget measures were then sprung on the country in a great act of showmanship only on Budget Day itself and everyone had to react to the measures from a standing start. So strict was Budget secrecy that famously Hugh Dalton had to resign as Chancellor in 1947 for disclosing a Budget measure to a journalist only a few hours before his speech.
Budget purdah is no good for business. How can business plan sensibly if everything is kept under wraps until the last moment? How can the Treasury get the legislation right if it doesn’t consult openly with those who have the necessary expertise and will have to implement the measures on the ground?
There is an argument that the Government should not show its hand if it intends to block what it perceives to be ‘loopholes’ in case everyone tries to beat the system beforehand. But the counter argument is that announcing an intention to block warns off many people and dissuades them from undertaking the planning if it will only have a short shelf-life.
I hope that the decision to drop the PBR is for this year only since the Government will be concentrating all its efforts on the comprehensive spending review to be published on 20 October. A return to purdah permanently will not be in the country’s best interests.