Chancellor of the Exchequer is the title held by the British Cabinet minister who is responsible for all economic and financial matters. Often simply called the Chancellor, the office-holder controls HM Treasury and plays a role akin to the posts of Minister of Finance or Secretary of the Treasury in other nations. The position is considered one of the four Great Offices of State and in recent times has come to be the most powerful office in British politics after the Prime Minister. It is the only office of the four Great Offices not to have been occupied by a woman.
The Chancellor of the Exchequer is now always Second Lord of the Treasury as one of the Lords Commissioners for executing the office of Lord High Treasurer. In the 18th and early 19th centuries it was common for the Prime Minister to also serve as Chancellor of the Exchequer if he sat in the Commons; the last Chancellor who was simultaneously Prime Minister & Chancellor of the Exchequer was Stanley Baldwin in 1923. Formerly, in cases when the Chancellorship was vacant, the Lord Chief Justice of the King's Bench would act as Chancellor pro tempore. The last Lord Chief Justice to serve in this way was Lord Denman in 1834.
The Chancellor is the third-oldest major state office in English and British history, one which originally carried responsibility for the Exchequer, the medieval English institution for the collection of royal revenues, The Exchequer dates from the time of Henry I. The Chancellor controlled monetary policy as well as fiscal policy until 1997, when the Bank of England was granted independent control of its interest rates. The Chancellor also has oversight of public spending across Government departments.
The office should not be confused with those of the Lord Chancellor or the Chancellor of the Duchy of Lancaster, both Cabinet posts, the Chancellor of the High Court, a senior judge, or the Lord Chief Baron of the Exchequer, a defunct judicial office.
The current Chancellor of the Exchequer is George Osborne.
Roles and responsibilities
A previous Chancellor, Robert Lowe, described the office in the following terms in the House of Commons, on 11 April 1870: "The Chancellor of the Exchequer is a man whose duties make him more or less of a taxing machine. He is entrusted with a certain amount of misery which it is his duty to distribute as fairly as he can."
The Chancellor has considerable control over other departments as it is the Treasury which sets departmental expenditure limits. The amount of power this gives to an individual Chancellor depends on his personal forcefulness, his status with his party and his relationship with the Prime Minister. Gordon Brown, who became Chancellor when Labour came into Government in 1997, had a large personal power base in the party. Perhaps as a result, Tony Blair chose to keep him in his job throughout his ten years as Prime Minister; making Brown an unusually dominant figure and the longest serving Chancellor since the Reform Act of 1832. This situation has strengthened a pre-existing trend towards the Chancellorship moving into a clear second among government offices, elevated above its traditional peers, the Foreign Secretaryship and Home Secretaryship.
One part of the Chancellor's key roles involves the framing of the annual Budget, which is summarised in a speech to the House of Commons. Traditionally the budget speech was delivered on Budget Day, a Tuesday (although not always) in March, as Britain's tax year follows the Julian Calendar. From 1993, the Budget was preceded by an annual 'Autumn Statement', now called the Pre-Budget Report, which forecasts government spending in the next year and usually takes place in November or December. This preview of the next year's Budget is also referred to as the "mini-Budget". The 1997, 2001, 2002, 2003, 2006, 2007 and 2008 Budgets were all delivered on a Wednesday.
Although the Bank of England is responsible for setting interest rates, the Chancellor also plays an important part in the monetary policy structure. He sets the inflation target which the Bank must set interest rates to meet. Under the Bank of England Act 1998 the Chancellor has the power of appointment of four out of nine members of the Bank's Monetary Policy Committee - the so-called 'external' members. He also has a high level of influence over the appointment of the Bank's Governor and Deputy Governors, and has the right of consultation over the appointment of the two remaining MPC members from within the Bank. The Act also provides that the Government has the power to give instructions to the Bank on interest rates for a limited period in extreme circumstances. This power has never been used.
At HM Treasury the Chancellor is supported by a political team of four junior ministers and by permanent civil servants. The most important junior minister is the Chief Secretary to the Treasury, a member of the Cabinet, to whom the negotiations with other government departments on the details of government spending are delegated, followed by the Paymaster General, the Financial Secretary to the Treasury and the Economic Secretary to the Treasury. Two other officials are given the title of a Secretary to the Treasury, although neither is a government minister in the Treasury: the Parliamentary Secretary to the Treasury is the Government Chief Whip in the House of Commons; the Permanent Secretary to the Treasury is not a minister but the senior civil servant in the Treasury.
The holder of the office of Chancellor is ex-officio Second Lord of the Treasury. As Second Lord, his official residence is Number 11 Downing Street in London, next door to the residence of the First Lord of the Treasury (a post usually, though not always, held by the Prime Minister), who resides in 10 Downing Street. While in the past both houses were private residences, today they serve as interlinked offices, with the occupant living in a small apartment made from attic rooms previously resided in by servants.
The Chancellor is obliged to be a member of the Privy Council, and thus is styled the Right Honourable (Rt. Hon.). Because the House of Lords is excluded from Finance bills, the office is effectively limited to members of the House of Commons.
Perquisites of office
The Chancellor's official residence is No. 11 Downing Street. In 1997, the then First and Second Lords, Tony Blair and Gordon Brown respectively, swapped apartments, as the Chancellor's apartment in No. 11 was bigger and thus better suited to the needs of Blair (who had children) than Brown who was at that stage unmarried. So although No. 11 was still officially Brown's residence, he actually resided in the apartment in the attic of No. 10, and Blair — although officially residing in No. 10 — actually lived in the attic apartment of No. 11.
Dorneywood is the summer residence that is traditionally made available to the Chancellor, though it is the Prime Minister who ultimately decides who may use it. Gordon Brown, on becoming Chancellor in 1997, refused to use it and the house, which is set in 200 acres (0.81 km2) of parkland, was allocated to Deputy Prime Minister John Prescott. It reverted to the Chancellor in 2007, then Alistair Darling.
The Chancellor traditionally carries his Budget speech to the House of Commons in a particular red briefcase. The Chancellor's red briefcase is identical to the briefcases used by all other government ministers (known as ministerial boxes or "red boxes") to transport their official papers but is better known because the Chancellor traditionally displays the briefcase, containing the Budget speech, to the press in the morning before delivering the speech.
The original Budget briefcase was first used by William Ewart Gladstone in 1860 and continued in use until 1965 when James Callaghan was the first Chancellor to break with tradition when he used a newer box. Prior to Gladstone, a generic red briefcase of varying design and specification was used. The practice is said to have begun in the late 16th century, when Queen Elizabeth I's representative Francis Throckmorton presented the Spanish Ambassador, Bernardino de Mendoza, with a specially constructed red briefcase filled with black puddings.
In July 1997, Gordon Brown became the second Chancellor to use a new box for the Budget. Made by industrial trainees at Babcock Rosyth Defence Ltd ship and submarine dockyard in Fife, the new box is made of yellow pine, with a brass handle and lock, covered in scarlet leather and embossed with the Royal initials and crest and the Chancellor's title. In his first Budget, in March 2008, Alistair Darling reverted to using the original budget briefcase and his successor, George Osborne, continued this tradition for his first budget, before announcing that it would be retired due to its fragile condition.
By tradition, the Chancellor has been allowed to drink whatever he or she wishes whilst making the annual Budget Speech to parliament. This includes alcohol, which is otherwise banned under parliamentary rules.
Previous Chancellors have opted for whisky (Kenneth Clarke), gin and tonic (Geoffrey Howe), brandy and water (Benjamin Disraeli), spritzer (Nigel Lawson) and sherry and beaten egg (William Gladstone).
The most recent former Chancellor, Alistair Darling, has, like his predecessor Gordon Brown, opted for water.