Chancellor of the Exchequer

Chancellor of the Exchequer
	Royal Arms of Her Majesty's Government
	Incumbent; Sajid Javid ; since 24 July 2019
	Her Majesty's Treasury
Style	Chancellor; (informal); The Right Honourable ; (within the UK and the Commonwealth)
Member of	Cabinet ; Privy Council ; National Security Council
Reports to	Prime Minister of the United Kingdom
Residence	11 Downing Street
Seat	Westminster
Appointer	The Monarch ; on advice of the Prime Minister
Term length	At Her Majesty's pleasure
Formation	22 June 1316
First holder	Hervey de Stanton ; in the Kingdom of England only
Deputy	Chief Secretary to the Treasury
Salary	£69,552 (excluding salary as MP)
Website	www.gov.uk

Last updated September 16, 2019

The Chancellor and Under-Treasurer of Her Majesty's Exchequer, commonly known as the Chancellor of the Exchequer,^{[lower-alpha 1]} or simply the Chancellor,^[1] is a senior official within the Government of the United Kingdom and head of Her Majesty's Treasury. The office is a British Cabinet-level position.

The Government of the United Kingdom, formally referred to as Her Majesty's Government, is the central government of the United Kingdom of Great Britain and Northern Ireland. It is also commonly referred to as simply the UK Government or the British Government.

Her Majesty's Treasury, sometimes referred to as the Exchequer, or more informally the Treasury, is the British government department responsible for developing and executing the government's public finance policy and economic policy. The Treasury maintains the Online System for Central Accounting and Reporting (OSCAR), the replacement for the Combined Online Information System (COINS), which itemises departmental spending under thousands of category headings, and from which the Whole of Government Accounts (WGA) annual financial statements are produced.

The Cabinet of the United Kingdom is the collective decision-making body of Her Majesty's Government of the United Kingdom, composed of the Prime Minister and 22 cabinet ministers, the most senior of the government ministers.

The chancellor is responsible for all economic and financial matters, equivalent to the role of finance minister 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.

Finance minister position in the government responsible for economic and financial policies

A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation. It may also be a junior minister in the finance department, the British Treasury, for example has four junior ministers.

The Great Offices of State in the United Kingdom are the four most senior and prestigious posts in the British government. They are the Prime Minister, Chancellor of the Exchequer, Foreign Secretary and Home Secretary. According to convention, when the Prime Minister names his or her Cabinet, either after a general election or a mid-term reshuffle, the first Cabinet ministers to be announced are the Chancellor, the Foreign Secretary and the Home Secretary.

The Prime Minister of the United Kingdom, until 1801 known as the Prime Minister of Great Britain, is the head of government of the United Kingdom. The Prime Minister directs both the executive and the legislature, and, together with the Prime Minister's Cabinet,, is accountable to the Monarch, to Parliament, to the Prime Minister's political party and, ultimately, to the electorate for the policies and actions of the executive and the legislature.

The Chancellor of the Exchequer is now always Second Lord of the Treasury as one of the Lords Commissioners for executing the office of Lord High Treasurer. In the 18th and early 19th centuries, it was common for the prime minister also to serve as Chancellor of the Exchequer if he sat in the Commons; the last chancellor who was simultaneously prime minister and Chancellor of the Exchequer was Stanley Baldwin in 1923. Formerly, in cases when the chancellorship was vacant, the Lord Chief Justice of the King's Bench would act as Chancellor pro tempore.^[2] The last Lord Chief Justice to serve in this way was Lord Denman in 1834.

The Lords Commissioners are Privy Counsellors appointed by the Monarch of the United Kingdom to exercise, on his or her behalf, certain functions relating to Parliament which would otherwise require the monarch's attendance at the Palace of Westminster. These include the opening and prorogation of Parliament, the confirmation of a newly elected Speaker of the House of Commons and the granting of Royal Assent. The Lords Commissioners are collectively known as the Royal Commission. The Royal Commission includes at least three—and usually five—Lords Commissioners. In current practice, the Lords Commissioners usually include the Lord Chancellor, the Archbishop of Canterbury, the leaders of the three major parties in the House of Lords, the convenor of the House of Lords Crossbenchers and the Lord Speaker.

The post of Lord High Treasurer or Lord Treasurer was an English government position and has been a British government position since the Acts of Union of 1707. A holder of the post would be the third-highest-ranked Great Officer of State, below the Lord High Steward and the Lord High Chancellor.

Stanley Baldwin, 1st Earl Baldwin of Bewdley, was a British Conservative statesman who dominated the government of the United Kingdom between the world wars, serving as Prime Minister on three occasions.

The chancellor is the third-oldest major state office in English and British history; it originally carried responsibility for the Exchequer, the medieval English institution for the collection and auditing of royal revenues which dates from the Anglo-Saxon period ^[3] and survived the Norman conquest of England.^[4]^:149 The earliest surviving records which are the results of the exchequer's audit, date from 1129–30 under King Henry I and show continuity from previous years.^[5] The chancellor controlled monetary policy as well as fiscal policy until 1997, when the Bank of England was granted independent control of its interest rates. The chancellor also has oversight of public spending across Government departments.

The British Isles became inhabited more than 800,000 years ago, as the discovery of stone tools and footprints at Happisburgh in Norfolk has revealed. The earliest evidence for early modern humans in North West Europe, a jawbone discovered in Devon at Kents Cavern in 1927, was re-dated in 2011 to between 41,000 and 44,000 years old. Continuous human habitation in England dates to around 13,000 years ago, at the end of the last glacial period. The region has numerous remains from the Mesolithic, Neolithic, and Bronze Age, such as Stonehenge and Avebury. In the Iron Age, all of Britain south of the Firth of Forth, was inhabited by the Celtic people known as the Britons, including some Belgic tribes in the south east. In AD 43 the Roman conquest of Britain began; the Romans maintained control of their province of Britannia until the early 5th century.

The Act of Union 1800 added the Kingdom of Ireland to create the United Kingdom of Great Britain and Ireland.

In the civil service of the United Kingdom, Her Majesty’s Exchequer, or just the Exchequer, is the accounting process of central government and the government's current account i.e. money held from taxation and other government revenues in the Consolidated Fund. It can be found used in various financial documents including the latest departmental and agency annual accounts.

Second Lord of the Treasury

The holder of the office of Chancellor of the Exchequer is ex officio Second Lord of the Treasury as a member of the commission exercising the ancient office of Lord High Treasurer.^[6] As the Second Lord, his official residence is 11 Downing Street in London, next door to the residence of the First Lord of the Treasury (a title that has for many years been 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 an apartment made from attic rooms previously resided in by servants.

In the United Kingdom there are at least six Lords Commissioners of Her Majesty's Treasury, serving as a commission for the ancient office of Lord High Treasurer. The board consists of the First Lord of the Treasury, the Second Lord of the Treasury, and four or more junior lords to whom this title is usually applied.

11 Downing Street is the official residence of Britain's Chancellor of the Exchequer. The residence, in Downing Street in London, was built alongside the official residence of the Prime Minister at Number 10 in 1682.

The First Lord of the Treasury is the head of the commission exercising the ancient office of Lord High Treasurer in the United Kingdom, and is by convention also the Prime Minister. This office is not equivalent to the usual position of the "Treasurer" in other governments; the closer equivalent of a Treasurer in the United Kingdom is Chancellor of the Exchequer, who is the Second Lord of the Treasury.

Since 1827, the chancellor has always simultaneously held the office of Second Lord of the Treasury when that person has not also been the prime minister.

Roles and responsibilities

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 is his duty to distribute as fairly as he can."

Robert Lowe, 1st Viscount Sherbrooke, GCB, PC, British statesman, was a pivotal but often forgotten figure who shaped British politics in the latter half of the 19th century. He held office under William Ewart Gladstone as Chancellor of the Exchequer between 1868 and 1873 and as Home Secretary between 1873 and 1874. Lowe is remembered for his work in education policy, his opposition to electoral reform and his contribution to modern UK company law. Gladstone appointed Lowe as Chancellor expecting him to hold down public spending. Public spending rose, and Gladstone pronounced Lowe "wretchedly deficient"; most historians agree. Lowe repeatedly underestimated the revenue, enabling him to resist demands for tax cuts and to reduce the national debt instead. He insisted that the tax system be fair to all classes. By his own main criterion of fairness – that the balance between direct and indirect taxation remain unchanged – he succeeded. However historians do not believe this balance is a good measure of class incidence and was by that time thoroughly archaic.

Fiscal policy

The chancellor has considerable control over other departments as it is the Treasury which sets Departmental Expenditure Limits. The amount of power this gives to an individual chancellor depends on his personal forcefulness, his status within 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 the same position throughout his ten years as prime minister; making Brown an unusually dominant figure and the longest-serving chancellor since the Reform Act of 1832.^[7] This has strengthened a pre-existing trend towards the Chancellor occupying a clear second position among government ministers, elevated above his traditional peers, the Foreign Secretary and Home Secretary.

One part of the Chancellor's key roles involves the framing of the annual year budget. As of 2017, the first is the Autumn Budget, also known as Budget Day which forecasts government spending in the next financial year and also announces new financial measures. The second is a Spring Statement, also known as a "mini-Budget". Britain's tax year has retained the old Julian end of year: 24 March (Old Style) / 5 April (New Style, i.e. Gregorian). From 1993, the Budget was in spring, preceded by an annual autumn statement. This was then called Pre-Budget Report. The Autumn Statement usually took place in November or December. The 1997, 2001, 2002, 2003, 2006, 2007, 2008, 2012 and 2016 budgets were all delivered on a Wednesday, summarised in a speech to the House of Commons.

The budget is a state secret until the chancellor reveals it in his speech to Parliament. Hugh Dalton, on his way to giving the budget speech in 1947, inadvertently blurted out key details to a newspaper reporter, and they appeared in print before he made his speech. Dalton was forced to resign.^[8]

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.^[9] 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 officially 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. Whilst not continuously in use, there can also be appointed a Commercial Secretary to the Treasury and an Exchequer 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 is not a minister but the senior civil servant in the Treasury.

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 financial matters by tradition confirmed by the Parliament Acts, the office is effectively limited to members of the House of Commons; apart from these occasions (see above) when the Lord Chief Justice of the King's Bench has acted as interim Chancellor the last peer to hold the office was Henry Booth, 1st Earl of Warrington (at that time only a Baron, Lord Delamer) from 9 April 1689 to 18 March 1690. The chancellor holds the formerly independent office of Master of the Mint as a subsidiary office.^[10]

Perquisites of the office

Official residence

The Chancellor of the Exchequer has no official London residence as such but since 1828 in his role as Second Lord of the Treasury he lives in the Second Lord's official residence, No. 11 Downing Street.^[11] 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 living with him, including one born during his tenure) than Brown who was at that stage unmarried.

Dorneywood

Dorneywood is the summer residence that is traditionally made available to the chancellor, though it is the prime minister who ultimately decides who may use it. Gordon Brown, on becoming chancellor in 1997, refused to use it and the house, which is set in 215 acres (87 ha)^[12] of parkland, was allocated to Deputy Prime Minister John Prescott. It reverted to the chancellor in 2007, then Alistair Darling.^[13]

Budget box

The chancellor traditionally carries his Budget speech to the House of Commons in a particular red Despatch Box. The Chancellor's red briefcase is identical to the briefcases used by all other government ministers (known as ministerial boxes or "Despatch 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 Ewart Gladstone in 1853 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 Despatch Box 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.^{[ citation needed ]}

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 cypher and crest and the Chancellor's title. In his first Budget, in March 2008, Alistair Darling reverted to using the original budget briefcase and his successor, George Osborne, continued this tradition for his first budget, before announcing that it would be retired due to its fragile condition.^[14] The key to the original budget box has been lost.^[15]

Budget tipple

By tradition, the chancellor has been allowed to drink whatever he or she wishes while making the annual Budget Speech to parliament. This includes alcohol, which is otherwise banned under parliamentary rules.

Previous chancellors have opted for whisky (Kenneth Clarke), gin and tonic (Geoffrey Howe), brandy and water (Benjamin Disraeli and John Major), spritzer (Nigel Lawson) and sherry and beaten egg (William Gladstone).^[16]

The recent chancellors, Philip Hammond, George Osborne, Alistair Darling and Gordon Brown,^[17] opted for water. In fact Darling drank what was named "Standard Water" in reference to, and support of, the London Evening Standard newspaper's campaign to have plain tap water available in restaurants at no charge to customers.^[18]

Robe of office

The chancellor has a robe of office,^[19] similar to that of the Lord Chancellor (as seen in several of the portraits depicted below). In recent times, it has only regularly been worn at Coronations, but some chancellors (at least until the 1990s) have also worn it when attending the Trial of the Pyx as Master of the Mint. According to George Osborne, the robe (dating from Gladstone's time in office, and worn by the likes of Lloyd George and Churchill)^[20] 'went missing' during Gordon Brown's time as chancellor.^[21]

List of Chancellors of the Exchequer

Chancellors of the Exchequer of England (c. 1221 – c. 1558)

Chancellor of the Exchequer of England
Name	Term of office		Monarch (Reign)
Eustace of Fauconberg Bishop of London (died 1228)	c. 1221	N/A	Henry III (1216–1272)
John Maunsell Secretary of State (1190/95–1265)	c. 1234	N/A
Ralph de Leicester	before 1248
Edward of Westminster	1248	N/A
Albric de Fiscamp	before 1263
John Chishull Lord Chancellor ^{[1221 1]} (died 1280)	1263	1265
Walter Giffard Bishop of Bath and Wells (c. 1225 –1279)	1265	1266
Godfrey Giffard Lord Chancellor (c. 1235 –1302)	1266	1268
John Chishull Lord Chancellor (died 1280)	1268	1269
Richard of Middleton Archdeacon of Northumberland (died 1272)	1269	1272^†
Roger de la Leye	before 1283
Geoffrey de Neuband	before 1283		Edward I (1272–1307)
Philip de Willoughby	1283	1305
Sir John Benstead KB Secretary of State (c. 1275 –1323/24)	1305	1306
John Sandale Bishop of Winchester (died 1319)	c. July 1307	1308	Edward II (1307–1327)
John of Markenfield	1309	1312
John Hotham Bishop of Ely (died 1337)	1312	1316
Hervey de Stanton (1260–1327)	1316	c. 1323
Walter de Stapledon Lord High Treasurer (1261–1326)	1323	c. 1324
Hervey de Stanton Chief Justice of the Common Pleas (1260–1327)	1324	c. January 1327
Adam de Harvington (c. 1270 – c. 1345)	c. January 1327	1330	Edward III (1327–1377) ^{[1221 2]}
Robert Wodehouse (died 1346)	1330	1331
Robert de Stratford Bishop of Chichester (c. 1292 –1362)	1331	1334
John Hildesle	c. 1338	N/A
William de Everdon	1341	N/A
William Askeby Archdeacon of Northampton	1363	N/A
Sir Robert de Ashton (died 1385)	1375	c. June 1377
Sir Walter Barnham	c. June 1377	c. September 1399	Richard II (1377–1399)
Henry Somer MP for Middlesex (c. 1370 –1450)	1410	1437	Henry IV (1399–1413)
			Henry V (1413–1422)
			Henry VI (1422–1461) ^{[1221 3]}
John Somerset (died 1454)	1441	1447
Sir Thomas Browne MP for Dover (1402–1460)	1440?	1450?
Thomas Witham (c. 1420 –1489)	1454	N/A
Thomas Thwaites (c. 1435–1503)	c. March 1461	N/A	Edward IV (1461–1470)
Thomas Witham (c. 1420 –1489)	1465	1469
Sir Richard Fowler (c. 1425 –1477)	1469	c. April 1471
Sir Richard Fowler (c. 1425 –1477)	1469	c. April 1471	Henry VI (1470–1471)
Thomas Thwaites Chancellor of the Duchy of Lancaster (c. 1435–1503)	c. April 1471	c. April 1483	Edward IV (1471–1483)
Sir William Catesby Speaker of the House of Commons (1450–1485)	c. April 1483	c. 1484	Edward V (1483) ^{[1221 4]}
	c. April 1483	c. 1484	Richard III (1483–1485)
Sir Thomas Lovell Speaker of the House of Commons ^{[1221 5]} (died 1524)	c. August 1485	1524	Henry VII (1485–1509)
	c. August 1485	1524	Henry VIII (1509–1547) ^{[1221 6]}
John Bourchier 2nd Baron Berners PC (1467–1533)	1524	1533?
Thomas Cromwell 1st Earl of Essex KGPC Secretary of State (c. 1485 –1540)	12 April 1533	10 June 1540
Sir John Baker MP for Kent (1488–1558)	1545	c. November 1558

			Edward VI (1547–1553) ^{[1221 7]}
			Mary I (1553–1558)

^† Died in office.

↑ Served until 1264.
↑ Lord Lancaster served as Regent of England during the minority of Edward III.
↑ The Regency government led by the Regency Council governed England during the minority of Henry VI.
↑ The Duke of Gloucester served as Regent of England during the reign of Edward V.
↑ Served until 1488.
↑ Margaret Beaufort served as Regent of England during the minority of Henry VIII.
↑ The Duke of Somerset and Duke of Northumberland served as Regent of England respectively during the reign of Edward VI.