Everything about The Chancellor Of The Exchequer totally explained
The
Chancellor of the Exchequer is the title held by the
British Cabinet minister who is responsible for all
economic and
financial matters. Often simply called
The Chancellor, the office-holder controls
HM Treasury and plays a role akin to the posts of
Minister of Finance or
Secretary of the Treasury in other nations. The position is considered one of the four
Great Offices of State and in recent times has come to be the most powerful office in British politics after the
Prime Minister.
The Chancellor is the third oldest major state office in
English and
British history, one which originally carried responsibility for the
Exchequer, the medieval
English institution for the collection of
royal revenues. Until recently, the Chancellor controlled
monetary policy as well as
fiscal policy, but this ended when the
Bank of England was granted independent control of its interest rates in 1997. The Chancellor also has oversight of
public spending across
Government departments.
The office shouldn't be confused with those of the
Lord Chancellor or the
Chancellor of the Duchy of Lancaster, both Cabinet posts, the
Chancellor of the High Court, a senior judge, or the
Lord Chief Baron of the Exchequer, a defunct judicial office.
The current Chancellor of the Exchequer is
Alistair Darling.
Roles and responsibilities
Fiscal Policy
The Chancellor has considerable control over other departments as it's the Treasury which sets departmental
expenditure limits. The amount of power this gives to an individual Chancellor depends on his personal forcefulness, his status with his party and his relationship with the Prime Minister.
Gordon Brown, who became Chancellor when Labour came into Government in
1997, had a large personal power base in the party. Perhaps as a result,
Tony Blair chose to keep him in his job throughout his ten years as Prime Minister; making Brown an unusually dominant figure. This situation has strengthened a pre-existing trend towards the Chancellorship moving into a clear second among government offices, elevated above its traditional peers, the
Foreign Secretaryship and
Home Secretaryship.
One part of the Chancellor's key roles involves the framing of the annual "
Budget", which is summarised in a speech to the
House of Commons. Traditionally the budget speech was delivered on a Tuesday (although not always) in March, as Britain's
tax year follows the
Julian Calendar. From 1993, the Budget was preceded by an annual '
Autumn Statement', now called the
Pre-Budget Report, which forecasts government spending in the next year and usually takes place in November or December. This preview of the next year's Budget is also referred to as the "mini-Budget". The 1997, 2001, 2002, 2003, 2006, 2007 and 2008 Budgets were all delivered on a Wednesday.
Monetary Policy
Although the
Bank of England is responsible for setting interest rates, the Chancellor also plays an important part in the monetary policy structure. He sets the inflation target which the Bank must set interest rates to meet. Under the Bank of England Act 1998 the Chancellor has the power of appointment of four out of nine members of the Bank's
Monetary Policy Committee - the so-called 'external' members. He also has a high level of influence over the appointment of the Bank's Governor and Deputy Governors, and has the right of consultation over the appointment of the two remaining MPC members from within the Bank.
(External Link
) The Act also provides that the Government has the power to give instructions to the Bank on interest rates for a limited period in extreme circumstances. This power has never been used.
Ministerial arrangements
At
HM Treasury the Chancellor is supported by a political team of four junior ministers and by permanent
civil servants. The most important junior minister is the
Chief Secretary to the Treasury, a member of the Cabinet, to whom the negotiations with other government departments on the details of government spending are delegated, followed by the
Paymaster General, the
Financial Secretary to the Treasury and the
Economic Secretary to the Treasury. Two other officials are given the title of a
Secretary to the Treasury, although neither is a government minister in the Treasury: the
Parliamentary Secretary to the Treasury is the Government
Chief Whip in the
House of Commons; the
Permanent Secretary to the Treasury isn't a
minister but the senior
civil servant in the Treasury.
The holder of the office of Chancellor is
ex-officio Second Lord of the Treasury. As Second Lord, his official residence is Number
11 Downing Street in
London, next door to the residence of the
First Lord of the Treasury (a post usually, though not always, held by the
Prime Minister), who resides in
10 Downing Street. While in the past both houses were private residences, today they serve as interlinked offices, with the occupant living in a small apartment made from attic rooms previously resided in by servants.
The Chancellor is obliged to be a member of the
Privy Council, and thus is
styled the
Right Honourable (Rt. Hon.). Because the
House of Lords is excluded from Finance bills, the office is effectively limited to members of the House of Commons.
Accoutrements of Office
Official Residence
The Chancellor's official residence is No. 11 Downing Street. In 1997, the then First and Second Lords,
Tony Blair and
Gordon Brown respectively, swapped apartments, as the Chancellor's apartment in No. 11 was bigger and thus better suited to the needs of Blair (who had children) than Brown who was at that stage unmarried. So although No. 11 was still
officially Brown's residence, he actually resided in the apartment in the attic of No. 10, and Blair — although
officially residing in No. 10 — actually lived in the attic apartment of No. 11.
Budget Box
The Chancellor traditionally carries his Budget speech to the House of Commons in a particular red
briefcase. The Chancellor's red briefcase is identical to the briefcases used by all other government ministers (known as ministerial boxes or "
red boxes") to transport their official papers but is better known because the Chancellor traditionally displays the briefcase, containing the Budget speech, to the press in the morning before delivering the speech.
The original Budget briefcase was first used by
William Gladstone in 1860 and continued in use until 1965 when
James Callaghan was the first Chancellor to break with tradition when he used a newer box. Prior to Gladstone, a generic red
briefcase of varying design and specification was used. The practice is said to have begun in the late
16th century, when
Queen Elizabeth I's representative
Francis Throckmorton presented the Spanish Ambassador,
Bernardino de Mendoza, with a specially constructed red briefcase filled with
black puddings.
In July 1997, Gordon Brown became the second Chancellor to use a new box for the Budget. Made by industrial trainees at Babcock Rosyth Defence Ltd ship and submarine dockyard in Fife, the new box is made of yellow pine, with a brass handle and lock, covered in scarlet leather and embossed with the Royal initials and crest and the Chancellor's title.
In March 2008, Alistair Darling reverted to using the original budget briefcase.
Trivia
- A previous Chancellor, Robert Lowe, described the office in the following terms in the House of Commons, on 11 April 1870: "The Chancellor of the Exchequer is a man whose duties make him more or less of a taxing machine. He is entrusted with a certain amount of misery which it's his duty to distribute as fairly as he can."
The Townshend Acts were named after Charles Townshend, an 18th-century Chancellor who encouraged taxes to earn revenue from the colonies after the French and Indian or Seven Years War.
The office is the only remaining one of the four Great Offices of State to have never been filled by a woman.
List of holders of the office since 1559
Chancellors of the Exchequer of England
» See Parliament of England.
For the equivalent Scottish post, see Treasurer of Scotland.
Chancellors of the Exchequer of Great Britain
» See Kingdom of Great Britain.
Further Information
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