Another budget, and another set of parliamentary debates – and newspaper comments – that will generate much heat but very little light about the choices Britain faces in raising state revenue and funding public services.  Since Margaret Thatcher used revenues from North Sea oil and receipts from privatization to fund current spending through asset sales rather than higher taxes, Britain has been stuck with a false self-image that we can be a country of both lower taxes than our continental counterparts and comparably generous public services.  Brexit of course, with its consequences in in depressing economic growth, has made the choices more difficult.  But we still have politicians calling for tax cuts without suggesting what impact on public spending they will have.  How do they get away with it?

I’ve just been reading a paper a novice Liberal Democrat MP wrote 25 years ago on how badly the British Parliament handles budgetary scrutiny and debates on spending and taxation.  He notes that the British Parliament has one of the weakest systems for parliamentary influence over government expenditure in the world.  He condemns the way in which taxation and spending are discussed separately rather than as unavoidably linked, with changes in the tax structure sprung from the Chancellor’s budget statement rather than carefully examined for their impact on the economy – which has led to the UK now having one of the most complex and untidy systems of taxation in the developed world.  He decries the false divide between ‘policy’ and ‘finance’ – the first the province of ministers, the second the responsibility of permanent secretaries who answer to the Public Accounts Committee for how funds have been spent. ‘It matters how a country takes its decisions on the budget. It may be less exciting, but process matters’, Ed Davey argued.  He therefore made a series of proposals to strengthen the role of MPs in discussing financial choices and in later scrutinising how well funds have been spent.

As you listen to or read about exchanges across the floor on this November budget, share my regret that these sensible proposals got nowhere. Ed Davey referred to them again in his speech on energy and the economy in July; but no-one in either of the ‘main’ parties picked it up, nor commentators in the press.  Process and procedure are for nerds; the clash of synthetic arguments about ‘shrinking the state’ and ‘squeezing the rich’ makes for good soundbites, but don’t clarify what choices have to be made.  Ed’s proposals to equip Parliament with more staff to examine budgetary proposals Department by Department, to query the distribution of taxation and the distinction between capital and current spending, would have made for a more informed, sober and unavoidably cross-party debate.  He compares Westminster with the way the New Zealand Parliament, after significant reforms, handles such issues – making opposition politicians share the burdens of fiscal responsibility through responding to detailed debates, rather than the heated generalizations which characterise how budgets are handled here.

There’s a broader issue here about the underlying weakness of how Westminster operates, and the desperate need for constitutional reform.  The fiscal irresponsibility of the last Conservative government was partly enabled by the power of government whips to drive proposals unchanged through Parliament.  The extraordinary complexity of our tax system reflects the attractions for chancellors of the exchequer to catch headlines by offering additional concessions  (and find extra revenues) to spring on the opposition and the public in presenting the budget.

In the past few days some glimmers of financial reality have appeared, in the chancellor’s admission that taxes will have to rise and in Policy Exchange’s detailing of the sort of cuts in spending that lower taxes would have to involve.  Even Reform has admitted that its promises to slash taxes were absurd. But ritual denunciations from the Daily Mail and the Conservatives have continued to denounce revenue-raising without addressing spending priorities.  Evidence is piling up of the cumulative neglect of the UK’s public services and infrastructure.  Prisons are understaffed and overcrowded, police numbers have not yet recovered from Conservative cuts, the NHS is facing yet another winter crisis, the government has again postponed major investments in our transport system and almost nothing has been said about increasing spending on defence. 

Ed Davey was right, all those years ago.  We shouldn’t make key decisions on managing our economy and prioritising our public spending like this.  A more open debate on the choices, and the direct link between taxing and spending, would better inform the public and force competing politicians to recognise hard choices.    The House of Commons should provide the focus for that debate.  Ed proposed a Budget Committee, an ‘Office of the Taxpayer’ to promote tax simplification and provide MPs with detailed analysis rather than having the chancellor spring major decisions upon them, and with select committees able to examine departmental budgets and future spending plans.  

I hope that our MPs will again make the case for changes in the way the UK handles tax and spending decisions when the budget is presented. No doubt our right-wing media and Conservative and Reform oppositions will want to focus on immediate tax demands instead.  But we should persist in our argument, and aim to change the direction of the debate.

* William Wallace is LibDem peer, a former vice-chair of the Federal Policy Committee and convenor of the party's 1997 manifesto team.