Budget speculation is paralysing Britain. So let’s scrap it ...Middle East

The Government is at a standstill. So is the business world and so are millions of ordinary taxpayers trying to work out what to do with their money.

We are all waiting for the Budget. In three weeks’ time, Rachel Reeves will finally reveal where the burden of tax rises will land, and what sweeteners will be on offer to make up for all the pain.

Until 26 November, there is a sense of suspended animation. Businesses and individuals cannot make investment decisions because they do not know the tax implications of anything they do, and Cabinet ministers are reluctant to launch any grand plans while all the public attention is on the contents of the Budget.

There is no question that the Chancellor herself is partly responsible for this. She chose to hold the Budget unusually late, leaving months and months of empty space in which speculation was free to fly around. And she chose not to shut any of that speculation down, meaning that the range of potential tax increases still on the table is vast.

There is also an element of pure bad luck: it is not Reeves’s fault that Donald Trump has shaken the global economy, nor that the fiscal watchdog has chosen this moment to decide that the underlying potential of the UK’s growth is weaker than it previously thought. These shocks will create holes in the public finances that have only made the Chancellor’s job harder.

But the fundamental reason why the nation is locked in this bizarre game of wait and see is a flaw in the structure of the state. The very fact that the Budget exists creates this tension. Every single major tax and spending decision is crammed into a package that is opened once or twice a year, with radio silence from the Treasury in between.

There is an answer: The Budget should be abolished.

This might sound eccentric. The Budget in its current form (more or less ) goes back to William Gladstone’s time in the Treasury, in the middle of the 19th century. Other countries have adopted their own fiscal traditions, usually including a budget presented annually, based on the UK’s lead.

There is certainly little appetite within the current Government for such a radical overhaul of how our economic policy is managed. One senior Treasury official said the thought of scrapping the Budget was “mad” and stormed off when the idea was floated at a recent Westminster get-together. Reeves is terrified of doing anything that would upset the bond markets, and unlikely to countenance this kind of revolution in fiscal policy.

But it should surely be considered. If not now, then in the future. Changes to tax and spending policy could be announced whenever they are ready, just as happens with every other department. This would reduce the frenzied anticipation around the Budget each year, and probably make Whitehall operate better by spreading out big decisions throughout the calendar rather than rushing them through to meet an arbitrary deadline.

Getting rid of the big one-off fiscal event might also loosen the grip of the Treasury over the rest of the state. The department is known to be stacked with the smartest civil servants, and is usually run by the most able ministers, allowing it to outsmart the rest of Whitehall and rule the government with an iron fist, which means that good ideas get squashed if they do not fit neatly into the Treasury spreadsheet.

Abandoning the Budget would not be simple. Safeguards to ensure that the public finances are under control would need to be strict, arguably stricter than now, with the Office for Budget Responsibility issuing its verdict on whether the borrowing rules are being met at least once a year. Some economists believe that only the current process can ensure that these rules are genuinely adhered to, by bringing together all taxation and spending into a single balance sheet which can be easily assessed.

But the status quo is not working. The fate of the government, and of thousands of individual businesses, is tied to a single day and a single pass-fail verdict on what is announced that day. We would miss the pageantry of the Budget – the red box, the chancellor’s cheesy jokes – but we would end up better off if the Treasury could open up the books, invite the public in, and make decisions in the full glare of daylight just like every other part of the state.

Let’s make this month’s Budget the last one ever.

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