Chancellor of the Exchequer and Second Lord of the Treasury | |
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His Majesty's Treasury | |
Style |
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Type | |
Member of | |
Reports to | The Prime Minister |
Residence |
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Seat | Westminster |
Appointer | The Monarch (on the advice of the Prime Minister) |
Term length | At His 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 | £153,022 (including £81,932 salary as Member of Parliament) |
Website | Official website |
The chancellor of the Exchequer, often abbreviated to chancellor, [2] is a senior minister of the Crown within the Government of the United Kingdom, and head of His Majesty's Treasury. As one of the four Great Offices of State, the Chancellor is a high-ranking member of the British Cabinet.
Responsible for all economic and financial matters, the role is equivalent to that of a finance minister in other countries. The chancellor is now always Second Lord of the Treasury as one of at least six lords commissioners of the Treasury, responsible for executing the office of the Treasurer of the Exchequer – the others are the prime minister and Commons government whips. 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. [3] The last Lord Chief Justice to serve in this way was Lord Denman in 1834.
The chancellor is the third-oldest major state office in English and British history, and in recent times has come to be the most powerful office in British politics after the prime minister. They originally carried responsibility for the Exchequer, the medieval English institution for the collection and auditing of royal revenues. The earliest surviving records which are the results of the exchequer's audit, date from 1129 to 1130 under King Henry I and show continuity from previous years. [4] The Chancellor has oversight of fiscal policy, therefore of taxation and public spending across government departments. It previously controlled monetary policy as well until 1997, when the Bank of England was granted independent control of its interest rates.
Since 1718, all chancellors of the exchequer, except at times the lord chief justice as interim holders, have been members of the House of Commons with Lord Stanhope being the last chancellor from the House of Lords.
The office holder works alongside the other Treasury ministers and the permanent secretary to the Treasury. The corresponding shadow minister is the shadow chancellor of the Exchequer, and the chancellor is also scrutinised by the Liberal Democrat Treasury spokesperson and the Treasury Select Committee. [5]
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 Treasurer of the Exchequer. [6] As 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.
Since 1827, the chancellor has almost always held the office of Second Lord of the Treasury when that person has not also been the prime minister. A notable recent exception is Kwasi Kwarteng, whom Charles III appointed Second Lord on 18 October 2022, [7] four days after Kwarteng had resigned the chancellorship.
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."
The chancellor has considerable control over other departments as it is the Treasury that sets Departmental Expenditure Limits. The amount of power this gives to an individual chancellor depends on their personal forcefulness, their status within their party and their 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. [8] 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. [9]
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. [10] 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.
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 the occasions 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, 2nd Baron Delamer (created Earl of Warrington shortly after leaving office) from 9 April 1689 to 18 March 1690. The chancellor holds the formerly independent office of Master of the Mint as a subsidiary office. [11]
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. [12] 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 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) [13] of parkland, was allocated to Deputy Prime Minister John Prescott. It reverted to the chancellor in 2007, then Alistair Darling. [14]
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. [15]
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. [16] The key to the original budget box has been lost. [17]
By tradition, the chancellor has been allowed to drink whatever they wish 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). [18]
The recent chancellors, Philip Hammond, George Osborne, Alistair Darling and Gordon Brown, [19] 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. [20]
The chancellor, as Master of the Mint, has a robe of office, [21] 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) [22] 'went missing' during Gordon Brown's time as chancellor. [23]
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Although the Kingdoms of Great Britain and Ireland had been united by the Acts of Union 1800 (39 & 40 Geo. III c. 67), the Exchequers of the two Kingdoms were not consolidated until 1817 under 56 Geo. III c. 98. [26] [27] For the holders of the Irish office before this date, see Chancellor of the Exchequer of Ireland.
James Gordon Brown is a British politician who served as Prime Minister of the United Kingdom and Leader of the Labour Party from 2007 to 2010. He previously served as Chancellor of the Exchequer in Tony Blair's government from 1997 to 2007, and was a Member of Parliament (MP) from 1983 to 2015, first for Dunfermline East and later for Kirkcaldy and Cowdenbeath. He is the most recent Labour politician as well as the most recent Scottish politician to hold the office of prime minister. As well as the last labour prime minister to serve under Elizabeth II.
The first lord of the Treasury is the head of the Lords Commissioners of the Treasury 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.
Reginald Maudling was a British politician who served as Chancellor of the Exchequer from 1962 to 1964 and as Home Secretary from 1970 to 1972. From 1955 until the late 1960s, he was spoken of as a prospective Conservative leader, and he was twice seriously considered for the post; he was Edward Heath's chief rival in 1965. He also held directorships in several British financial firms.
The Lord High 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 in England, below the Lord High Steward and the Lord High Chancellor of Great Britain.
Alistair Maclean Darling, Baron Darling of Roulanish, is a British politician who served as Chancellor of the Exchequer under Prime Minister Gordon Brown from 2007 to 2010. A member of the Labour Party, he was a Member of Parliament (MP) from 1987 until he stepped down in 2015, most recently for Edinburgh South West.
Anthony Perrinott Lysberg Barber, Baron Barber, was a British Conservative politician who served as Chancellor of the Exchequer from 1970 to 1974.
Sir Howard Kingsley Wood was a British Conservative politician. The son of a Wesleyan Methodist minister, he qualified as a solicitor, and successfully specialised in industrial insurance. He became a member of the London County Council and then a Member of Parliament.
In the United Kingdom there are at least six Lords Commissioners of His Majesty's Treasury, serving as a commission for the ancient office of Treasurer of the Exchequer. The board consists of the First Lord of the Treasury, the Second Lord of the Treasury, and four or more junior lords acting as assistant whips in the House of Commons to whom this title is usually applied.
David Michael Gauke is a British political commentator, solicitor and former politician who was the Member of Parliament (MP) for South West Hertfordshire from 2005 to 2019. He served in the Cabinet under Theresa May, most notably as Secretary of State for Justice and Lord Chancellor from 2018 to 2019. First elected as a Conservative, Gauke had the Conservative whip removed on 3 September 2019 and until the dissolution sat as an independent politician.
Christopher Ian Brian Mynott Philp is a British politician serving as Minister of State for Crime, Policing and Fire since October 2022. He served as Minister for the Cabinet Office and Paymaster General in October 2022. A member of the Conservative Party, he has been the Member of Parliament (MP) for Croydon South since May 2015.
Red boxes, or sometimes ministerial boxes, are a type of despatch box produced by Barrow Hepburn & Gale or Wickwar & Co and are used by ministers in the British government and the British monarch to carry government documents. Similar in appearance to a briefcase, they are primarily used to hold and transport official ministerial papers. Red boxes are one modern form of despatch boxes, which have been in government use for centuries. Despatch boxes of a very different design remain in use in the chamber of the lower house of the British and Australian parliaments. Those boxes hold religious books for swearing-in new members of the chamber, but are also used as lecterns by front bench members.
Sir Thomas Whinfield Scholar is a British civil servant who served as Permanent Secretary to the Treasury until 8 September 2022.
Margaret Thatcher was Prime Minister of the United Kingdom from 4 May 1979 to 28 November 1990, during which time she led a Conservative majority government. She was the first woman to hold that office. During her premiership, Thatcher moved to liberalise the British economy through deregulation, privatisation, and the promotion of entrepreneurialism.
Akwasi Addo Alfred Kwarteng is a British Conservative Party politician who has been the Member of Parliament (MP) for Spelthorne in northern Surrey since May 2010. He was Secretary of State for Business, Energy and Industrial Strategy from 2021 to 2022, and Chancellor of the Exchequer in the short-lived Liz Truss government between September and October 2022.
The third Blair ministry lasted from May 2005 to June 2007. The election on 5 May 2005 saw Labour win a historic third successive term in power, though their majority now stood at 66 seats – compared to 167 four years earlier – and they failed to gain any new seats. Blair had already declared that the new term in parliament would be his last.
Simon Richard Clarke is a British politician who served as Secretary of State for Levelling Up, Housing and Communities from September to October 2022 and Chief Secretary to the Treasury from 2021 to 2022. A member of the Conservative Party, he has been Member of Parliament (MP) for Middlesbrough South and East Cleveland since 2017.
Gordon Brown served as Chancellor of the Exchequer of the United Kingdom from on 2 May 1997 to 27 June 2007. His time as chancellor was marked by major reform of Britain's monetary and fiscal policy architecture, transferring interest rate setting powers to the Bank of England, by a wide extension of the powers of the Treasury to cover much domestic policy and by transferring responsibility for banking supervision to the Financial Services Authority. Brown presided over the longest period of sustained economic growth in British history.
Liz Truss was invited by Queen Elizabeth II—two days before the monarch's death—to succeed Boris Johnson as prime minister of the United Kingdom on 6 September 2022. Johnson resigned as leader of the Conservative Party the previous day and resigned as prime minister on 6 September following the election of Truss as the new leader of the Conservative Party on 5 September. The Truss ministry was formed from the 2019 Parliament of the United Kingdom, as a Conservative majority government. With Queen Elizabeth's death on 8 September 2022, Truss became the first UK prime minister to serve under more than one monarch since Winston Churchill in 1952.
Liz Truss's tenure as prime minister of the United Kingdom began on 6 September 2022 when she accepted an invitation from Queen Elizabeth II to form a government, succeeding Boris Johnson, and ended 49 days later on 25 October upon her resignation. While prime minister, Truss also served as First Lord of the Treasury, Minister for the Civil Service, and Minister for the Union.
On 23 September 2022, the Chancellor of the Exchequer, Kwasi Kwarteng, delivered a Ministerial Statement entitled "The Growth Plan" to the House of Commons of the United Kingdom. Widely referred to in the media as a mini-budget, it contained a set of economic policies and tax cuts such as bringing forward the planned cut in the basic rate of income tax from 20% to 19%; the abolition of the 45% higher rate of income tax in England, Wales and Northern Ireland; reversing a plan announced in March 2021 to increase corporation tax from 19% to 25% from April 2023; the reversal of the April 2022 increase in National Insurance; and the abolition of the proposed Health and Social Care Levy. Following widespread negative response to the mini-budget, the planned abolition of the 45% tax rate was reversed 10 days later, while plans to cancel an increase in corporation tax were reversed 21 days later.
Chancellor of the Exchequer George Osborne gives evidence to the Treasury Select Committee.