The Reality of Budgetary Reform in OECD Nations

The Reality of Budgetary Reform in OECD Nations

Trajectories and Consequences

Edited by John Wanna, Lotte Jensen and Jouke de Vries

The Reality of Budgetary Reform in OECD Nations investigates the impacts and consequences of budgetary reform through a comparative assessment of advanced Organisation for Economic Co-operation and Development (OECD) democracies that have undertaken budget reforms over the past two to three decades.

Chapter 3: Budget Reform in the United Kingdom: The Rocky Road to ‘Controlled Discretion’

Colin Thain

Subjects: economics and finance, public finance, public sector economics


Colin Thain* BRITAIN’S HIGHLY POLITICAL TRAJECTORY OF BUDGET REFORM Budgetary policy in the United Kingdom has long been dominated by the Treasury, one of the oldest state institutions in the Western world. Its story is essentially that of a ministry of finance, but it has accrued political and administrative resources that make it an amalgam not only of a ministry of finance and an economics department, but also a powerful central department, an influential policy actor in its own right, and a foreign economic policy agent. Unlike most of its comparators internationally, the Treasury gains its authority for managing and controlling public expenditure, setting tax rates, managing borrowing and setting the overall fiscal framework from convention, quasi-legal rules and precedent. Little of its authority is statute-based. It is the most political of all central departments – acutely attuned to the prevailing winds of power in Westminster and Whitehall. In looking at the impact and consequences of budgetary reform from 1976, this chapter captures five themes in the UK case. First, the constant battle by the Treasury to maintain or regain power to control spending from the rest of Whitehall’s spending departments, involving ever more complex political and administrative techniques to keep spending levels within prescribed limits. Second, the Treasury’s repeated attempts since the 1970s to ground budgetary policy in a wider macroeconomic framework – from crisis measures in 1976, to monetarist experiments in the 1980s, through to the ‘controlled discretion’ under the Treasury of Gordon Brown. Third, a spasmodic but real tension...

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