On Wednesday, the Autumn Statement celebrates its 40th birthday. It was conceived as part of the Industry Act 1975, a piece of legislation both strange and familiar to contemporary eyes. Industry Secretary Anthony Wedgwood Benn said the Act would deliver, "far-reaching democratic Socialist reforms." Those included the power for government to block foreign takeovers and the creation of the National Enterprise Board, which invested in the likes of British Leyland and Inmos, Britain's would-be microchip champion. The Act also sought to boost investment, give employees more say in how businesses were run and strengthen regional economies. Plus ça change.
Quaintly, the Act required the government to keep a model of the economy, "maintained on a computer," and to use that model to produce economic forecasts, "not less than twice a year." By convention, one of those forecasts is made at the time of the Budget in the spring and the other at what we now call the Autumn Statement.
However, it has not always taken place in the autumn and it has travelled under a number of different names. During Kenneth Clarke's time at the Treasury it became the Summer Statement while for Gordon Brown and Alistair Darling it was the Pre-Budget Report.
Whereas the Budget, with all its pomp, tradition and red boxes has a clear role in the fiscal, economic and parliamentary life of the nation, the Autumn Statement struggles to find a rationale beyond the requirement to produce those forecasts. For a while it was the occasion on which government spelled out its spending plans with the Budget focusing on taxes. Among other things, the advent of multi-year spending reviews put an end to that distinction. As the Pre-Budget Report, it served the potentially valuable purpose of allowing government to test policy proposals before implementing them through the Budget.
Now the Autumn Statement has become little more that a second Budget and the second class one at that. There is a decent argument that at 40 it should be given early retirement. The fact of its existence means months of activity in the Treasury and other departments so that “something” can be announced on the day. More than 25 years ago, Norman Lamont argued for a single, annual unified Budget statement. In the absence of a new government being formed, which provides a sound rationale this year, or a genuine national need arising one major fiscal announcement each year should be enough.
If an autumn set piece event is to remain in the calendar there is a strong case for a pre-Budget report. Proper pre-legislative scrutiny of proposed Budget measures, both spending and taxation, would enhance the quality of decision-making as well as offering a forum for government to test proposals and build a consensus for action.
Perhaps the Autumn Statement has outlived its usefulness. However, without repealing that part of the Industry Act 1975, the government will still have to produce forecasts using a computer.