There are budgets that fall apart within minutes of the chancellor delivering his Commons speech: think of George Osborne’s pasty tax, one of many missteps that meant his 2012 budget will be forever known as an omnishambles.
Then there are the “poison pill” budgets: the ones that come at the end of a parliament, when the chancellor of the day goes for broke – sometimes literally – to attract voters and attempt to stay in office. If their party loses, the opposition is left to clean up the mess.
Jeremy Hunt is expected to raid the public finances to conjure some pre-election goodies in his budget on 6 March. He will create the headroom for tax cuts mainly by tightening the squeeze already imposed on Whitehall departments. And whoever takes over after the election will find gaping funding holes, empty coffers, high debt and low growth. As legacies go, Hunt’s is on course to rank as one of the worst.
Here we compare six earlier poison pill budgets.
Derick Heathcoat-Amory, 1958
The 1950s were characterised by tax-cutting administrations, but the Conservatives’ budget before the 1959 general election was an extreme example – bursting with baubles including cuts to income tax, purchase tax (a forerunner of VAT) and beer duty, and a surprise halving of a tax on cinema tickets.
Christopher Hood, professor of public administration at Oxford University, picks out this irresponsible budget as one of the worst examples of pre-election bribery. He says the chancellor made the giveaways seem possible by using forecasts for bumper tax receipts and restrained public spending that many described as a fraud.
It won the Tories the 1959 election. But Heathcoat-Amory’s successor, Selwyn Lloyd, “had the job of putting up taxes almost immediately”, according to Hood, whose recent book The Way the Money Goes shows that pre-election blowout budgets “can do a lot of political damage to incumbents if they turn out to be re-elected and have to live with the consequences of their budgetary largesse”.
Poison rating ★★★★★
Bribery ★★★★★
Reginald Maudling, 1964
Maudling spent much of his time as Tory chancellor pumping up the economy with tax cuts and higher public spending. Jason Lennard, an economic historian at the London School of Economics, said: “The backdrop to his pre-election budget was of an already overheating economy with demand outstripping supply, pushing inflation higher. But while Maudling talked about a sustainable expansion, his economic reforms were minimal and the wheels inevitably came off.”
In his 1964 budget, Maudling increased indirect taxes to try to engineer a soft landing. He also refrained from further income tax cuts, with the basic rate stuck at 38.75%. Conservative voters deserted him and in October that year, Labour scored a narrow victory.
Maudling wrote to his Labour successor, James Callaghan: “Good luck, old cock … Sorry to leave it in such a mess.”
Poison rating ★★★★★
Bribery ★★☆☆☆
Tony Barber, 1973
In 1973, Tory chancellor Barber followed in Maudling’s footsteps. A dash for growth was his answer to the rise in unemployment that took hold a year after Ted Heath’s government gained power in 1970.
Barber let rip in 1972. A year later, he was more circumspect, and introduced a 10p VAT rate, which had been one of the conditions of Britain’s entry earlier that year into the European Economic Community.
Conservative voters again punished their leaders for raising taxes and the February 1974 election resulted in a hung parliament. In the midst of an energy and fuel crisis sparked by the oil price quadrupling, Labour narrowly took control after a second election, in October.
Barber’s boom had triggered a surge in inflation and a wave of strikes that battered the incoming Labour government and eventually forced chancellor Denis Healey to seek a bailout loan from the International Monetary Fund.
Poison rating ★★★★★
Bribery ★★☆☆☆
Norman Lamont, 1992
It’s the history lesson that still gives Labour nightmares. Tory chancellor Lamont’s budget was full of giveaways to bolster his party’s chances of winning after a long recession – an event that should have brought the curtain down on 13 years of Tory government.
Lamont offered cuts in income tax, car sales tax and betting duty. Labour leader Neil Kinnock dismissed it as “a panic-stricken pre-election sweetener”, but Labour’s opposition to the introduction of a lower rate of income tax is widely seen as having been fatal, casting it as the high-tax party. The Tories won, Kinnock resigned, and Lamont was left to digest his own poison.
A year later, the chancellor had to claw back much of his previous generosity after it became clear it was unaffordable.
Poison rating ★★★★★
Bribery ★★★★★
Ken Clarke, 1996
There is a commonly held view that Tory chancellor Clarke bequeathed Tony Blair’s government a golden inheritance. And it is true that government finances were in reasonable shape when New Labour took power. However, a succession of austerity budgets had helped Clarke offer modest tax cuts ahead of the 1997 election. A further pledge to maintain low levels of public spending for at least another two years gave Clarke financial headroom to raise the inheritance tax threshold.
Gordon Brown felt obliged to stick to Clarke’s tough spending targets even though booming domestic and global economies meant plentiful cash flowing into the Treasury’s coffers. Years of frozen Whitehall budgets under Clarke stretched to the end of the century under Brown, with a much-needed overhaul of public services and welfare delayed until later in Labour’s first term.
Poison rating ★★★☆☆
Bribery ★★☆☆☆
Alistair Darling, 2010
Labour had been caught in the financial firestorm that erupted in the US housing market and fanned out across the world during 2008. Darling, as chancellor, had to spend at wartime levels to bail out those caught in the crossfire, primarily UK banks. By 2010, he and prime minister Gordon Brown were under pressure to keep a tight rein on the public finances.
Ahead of the election, Brown wanted an upbeat budget to beat David Cameron’s refashioned Tory party, but Darling persuaded him that financial markets remained febrile and any sign of extra borrowing would trigger a rise in the cost of debt financing, and risk seeing the UK pushed to the brink of quitting the EU, as Greece had been.
To balance his budget, Darling took a scythe to public investment – cuts his successor, George Osborne, largely kept in place, leaving the UK to rue a decade characterised by low productivity and low growth.
Labour suffered at the polls, and was punished again when a lighthearted note left by then chief secretary to the Treasury Liam Byrne came to light. Echoing Maudling’s mea culpa, Byrne wrote to his successor: “I’m afraid there is no money.” It was treated as a confession by Osborne and has been used as a stick to beat Labour ever since.
Poison rating ★★☆☆☆
Bribery ★☆☆☆☆
• This article was amended on 2 March 2024 to remove a reference to the UK’s withdrawal from the European exchange rate mechanism, which occurred in September 1992, not – as an earlier version implied – before Norman Lamont’s budget of that year.
