The Autumn Statement: from Keynesianism to political theatre


Autumn is the season of mists and mellow fruitfulness but also a time when the Chancellor performs one of his two big set-piece Parliamentary duties of the year. This mainstay of the political calendar is, however, a fairly recent innovation and has a rather chequered antecedence and history that tells us much about how HM Treasury keeps control of the agenda of economic policymaking. George Osborne’s fourth statement shows how the politics of coalition has given a further twist to that evolutionary journey.

The Autumn Statement is the formalisation of a process which began with the requirement under the Industry Act 1976 that short-term forecasts on the economy should be presented twice a year. This took place during the dying embers of a Keynesian macroeconomic regime where the Treasury would be guided by such forecasts in its policymaking on managing economic demand through taxes and expenditure. By the beginning of the Thatcher Government, the Treasury had come under considerable criticism for its lack of transparency in budgeting. A report sponsored by the newly formed Institute for Fiscal Studies chaired by Lord William Armstrong reported in July 1980 and recommended the autumn statement should provide the space for a consultative or ‘green budget’ [as in a ‘green paper’ – a tentative or consultation paper] bringing together taxation and spending options prior to the March Budget. In 1982 the Treasury bowed marginally to that pressure, which had been endorsed by the Treasury and Civil Service Select Committee, by using the forecast requirement as the basis for a formal Autumn Statement delivered by the Chancellor.  No Green Budget has been produced.  As part of the post-ERM crisis response, Chancellor Lamont announced that there would be a ‘Unified Budget’ from November 1993.  The first such was given by Chancellor Clarke when public spending and taxation decisions were presented together. 

This use of the space in the autumn did not survive the change of Government in 1997.  Gordon Brown used the autumn statement as an opportunity to announce policy reviews, report on previous reviews, or announce new spending initiatives. It became a pivotal time in the year for Treasury officials who would be asked to accelerate work on key projects in order for an announcement to be made by the Chancellor. We had moved full circle from an event stimulated by either Keynesian ideas or joined-up fiscal policy to another piece of political theatre. The Coalition has given this story an interesting twist. The Chancellor and the Treasury have been forced because of the politics of coalition management to show that alternative proposals are being entertained and considered. The Liberal Democrat demand for clearer evidence of their impact on decision-making has led to a slightly more open form of economic policymaking. The well-spring of this is the Coalition agreement tying both parties to an austerity plan over the course of the Parliament. Next week Chancellor Osborne will be responding to the competing pressures to reduce energy costs, maintain the Government’s green [ecological] credentials, whilst finding the resources to absorb some of the green costs into public expenditure. We should also expect much political theatre extolling the virtues of perseverance with difficult policies reaping the rewards of steady growth and rising levels of employment.

Professor Colin Thain, Professor of Political Science, Department of Political Science and International Studies, University of Birmingham