Hard Times: six budgets to remember and their chancellors

How Alistair Darling's visionary predecessors shaped the 20th century with their budgets


It may be 100 years old this year, but David Lloyd George's budget of 1909 remains one of the most controversial of all time. Dubbed the "people's budget", it proposed a hefty increase in the tax burden on the landed classes, to pay for radical social reform. Presenting the reforms, Lloyd George, a Liberal, said they would relieve "anxieties and sufferings" that were oppressing the people. Not everyone agreed, and the bill was vetoed by the House of Lords. It was this Lords veto that led to the Parliament Act of 1911, cementing the supremacy of the House of Commons and preventing the upper house from vetoing any legislation previously approved by the Commons.


The 1925 budget saw Winston Churchill fall out of favour for 15 years. Hoping to restore the country to its former position at the centre of the world's financial system, Churchill, as Tory chancellor, returned Britain to the gold standard. Instead of helping the economy, this move made industry uncompetitive and was widely regarded as the catalyst for Britain's prolonged slump. In 1929 Churchill left office; he would not return until 1940.


The "leaky budget" of 1947 became notorious after the Labour chancellor, Hugh Dalton, was forced to resign in the wake of introducing deflationary measures to defend sterling. It was not the contents of the budget that forced Dalton's resignation, but the fact that just minutes before he announced the plans to the House of Commons, some of the details were published in a London newspaper. Dalton had indiscreetly divulged them to a journalist before he had announced them in Parliament.


Geoffrey Howe's budget of 1981 provoked a letter of protest from 364 economists. They said the budget would lead to disaster. The Tory chancellor unveiled his plans to his Cabinet colleagues the day before the budget. Having presided over deflationary policies for the previous two years, he had decided to squeeze the economy still further. Not too long afterwards, the economy began to recover; but debate still rages about the success of Howe's policies.


It was the budget of 1988 that ruined the reputation of Tory chancellor Nigel Lawson. Convinced that the economy was slowing to a sustainable rate, Lawson thought he could justify his tax cuts, which saw basic income tax fall from 29p to 25p. But the chancellor had made a grave error: economic growth was actually accelerating, and tax cuts had given a huge boost to the housing market, with prices rising 20% in a year in what became known as the "Lawson boom". A deep recession followed.


John Smith, the Labour leader of the opposition, described Norman Lamont's budget of 1993 as "shameful" and from a "cynical government that had broken its election promises". With the economy showing signs of recovery after the pound plunged out of the European exchange rate mechanism on Black Wednesday, Lamont raised taxes on cigarettes, petrol and beer by more than the rate of inflation. Big tax rises were introduced for succeeding years on gas and electricity bills (8% for 1994 and 17.5% for 1995). Even though the prime minister, John Major, praised "the right budget, for the right time, by the right chancellor", Lamont was replaced by Kenneth Clarke a few weeks later.