There is press speculation over what the Chancellor of the Exchequer intends to do in the forthcoming budget to plug a £10bn hole in revenue predicted in the previous budget, due to lower than expected growth and a consequent fall in tax revenue.
The options are: to increase taxation; to increase borrowing; or to announce spending cuts.
You are preparing a feature article to inform your readers of the nature of the problem and its possible solution.
(a) Explain the purpose of the budget and how it is presented and debated in Parliament.
The budget is set out by the Chancellor of the Exchequer in a formal House of Commons Statement.
The purpose of the budget is to set out Government's taxation proposals for the next but one financial year and its spending proposals for the next three years. It also sets out the government's borrowing targets.
Budget proposals have to be approved by Parliament passing the Finance Bill but some tax changes can be implemented immediately (ie within a couple of hours) under delegated legislation.
The Finance Bill undergoes by a committee of the whole House and an ordinary standing committee.
As a money bill, the Finance cannot be delayed by the House of Lords. The fine details of the Budget is set out in the so-called red book, which is pored by accountants and tax advisors looking for loopholes.
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