The Chancellor’s Autumn Statement has increasingly taken on the importance of a second Budget, creating uncertainty for businesses and additional costs for the taxpayer, a Treasury Select Committee report has said.
MPs stated that the annual Budget, typically announced in March, should be re-established as the main focus of economic policy making.
The report said: “The Autumn Statement is not, nor should it be, a second Budget. In recent years it has come to read like one.”
The Autumn Statement, which replaced the pre-Budget report, has historically been used to provide an update on the state of public finances. But the Treasury Select Committee criticised its recent use to announce changes to tax and policy.
The Committee argued that the Autumn Statement has effectively become a second Budget, something that would be of use only in an emergency situation where it could carry a long-term benefit.
“The implications are that business and the economy needs to react to two periods, not one, of potential uncertainty and change. A return to a position of one Budget in the spring, and an updating statement in the autumn, would be desirable,” it said.
The Committee also raised concerns around:
• Inadequate time frames for Parliament to properly scrutinise the Finance Bill
“The time provided in 2012 fell well short of what was required,” read the report.
• The Bank of England’s decision making process
The Committee announced its intention to question the future Bank of England Governor, Dr. Mark Carney, on possible alternatives to the inflation targeting that currently underpins the work of Bank’s Monetary Policy Committee (MPC).
• The Funding for Lending Scheme (FLS)
Designed to boost the flow of credit to the economy, the Committee said it was concerned by reports the FLS was improving mortgage lending but failing to reach small businesses as intended.
• Fuel duty
The Committee criticised the recent delays in planned fuel duty increases as failing to provide the certainty and stability ‘that are the hallmarks of good tax policy.’