What is an emergency Budget? Government process explained

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Former Labor Prime Minister Gordon Brown has urged Boris Johnson and the Conservative leadership candidates to identify one now or avoid a major crisis this winter

There are just four weeks until the Conservative Party elects Boris Johnson’s successor as British Prime Minister.

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So what exactly is an emergency budget?

The budget is typically an annual event (Image: AFP/Getty Images)

What is a budget?

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It is given because the government needs to convince MPs to approve their spending plans.

During a budget, the chancellor informs MPs about the state of government finances and what the government intends to do with taxation.

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Budgets envisage the Treasury preparing a finance bill to be passed by the House of Commons (Image: AFP/Getty Images)

This event is usually held twice a year – both spring (usually March) and autumn (either October or November) – although only one of these is considered full budget, while the other is considered more of an update.

Currently, the Autumn Budget has been used as the UK’s primary financial update and fiscal policy announcement.

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The OBR was set up by the coalition government in 2010 to assess how policies might affect the economy and to provide public assessments of the government’s performance against its budgetary targets.

What is the budget process?

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After the budget has been presented, the opposition must comment on the announced measures.

This is usually followed by a four-day debate, during which the House of Commons must decide whether or not the bill announced in the Budget – i.e. the Finance Bill – will go into effect.

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The House of Lords can also look at the bill but has limited powers to amend it.

It then reaches the Commons Treasury Select Committee – a cross-party group of MPs – which reviews the announcements.

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Normally the budget is passed as the ruling party will have the majority of MPs.

But if it doesn’t pass, it will be seen as a vote of no confidence in the government as it has no permission to collect vital taxes to keep the state running.

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To avoid this scenario, governments can withhold unpopular announcements from the original finance bill and submit them to Parliament at a later date.

What is an emergency budget?

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While the budget is relatively set in stone on the parliamentary calendar (the exact dates are unknown, but events tend to occur at the same time each year), emergency budgets are much looser affairs.

They are usually introduced to address a specific problem that poses a threat to the UK economy.

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Since the Covid pandemic in 2020, Rishi Sunak has technically declared four emergency budgets – although the government hasn’t marked them that way.

They could be considered contingency budgets because they contained large spending commitments that would require tax adjustments.

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his first Delivered March 2020 – just days after he presented a full spring budget – he announced measures to protect the UK economy as the Covid pandemic began to hit the country.

It included the announcement of furloughs and other fiscal support measures and came just days before the UK went into a national lockdown.

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Rishi Sunak has technically given four contingency budgets (Picture: Getty Images)

In July 2020, Mr. Sunak provided another financial update.

These financial reports could not (as usual) be sent to the House of Commons because of the virus.

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The previous emergency budget was called after the 2010 general election.

As the UK has an unwritten constitution, there is no strict protocol for how a government can convene an emergency budget.

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Since the inception of the OBR, they have typically been announced 10 weeks in advance to give the organization time to develop a forecast.

But they don’t have to make such a communication as the OBR forecast isn’t a requirement – although proceeding without it could damage the government’s credibility.

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The government does not have to submit such a budget to parliament either.

However, this would be seen as anti-democratic as it would deprive MPs of a chance to properly scrutinize legislation.

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