| United Kingdom Chancellor of the Exchequer Second Lord of the Treasury | |
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| His Majesty's Treasury | |
| Style |
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| Type | Minister of the Crown |
| Status | Great Office of State |
| Member of | |
| Reports to | First Lord of the Treasury (Prime Minister of the United Kingdom) |
| Residence | 11 Downing Street |
| Seat | Westminster |
| Nominator | First Lord of the Treasury |
| Appointer | The Monarch (on the advice of thePrime Minister) |
| Term length | At His Majesty's pleasure |
| Formation | c. 1221 |
| First holder | Eustace of Fauconberg (in theKingdom of England only) |
| Deputy | Chief Secretary to the Treasury |
| Salary | £163,891 per annum (2024)[1] (including £91,346MP salary)[2] |
| Website | www |
Thechancellor of the exchequer, often abbreviated tochancellor,[3] is a seniorminister of the Crown within theGovernment of the United Kingdom, and the head ofHis Majesty's Treasury. As one of the fourGreat Offices of State, the chancellor is a high-ranking member of theBritish Cabinet.
Responsible for all economic and financial matters, the role is equivalent to that of afinance minister in other countries. The chancellor is now alwayssecond lord of the Treasury as one of at least sixlords commissioners of the Treasury, responsible for executing the office of theTreasurer of the Exchequer – the others are the prime minister and Commons government whips. In the 18th and early 19th centuries, it was common for the prime minister also to serve as Chancellor of the Exchequer if he sat in the Commons; the last Chancellor who was simultaneously prime minister and Chancellor of the Exchequer wasStanley Baldwin in 1923. Formerly, in cases when the chancellorship was vacant, thelord chief justice of the King's Bench would act as chancellorpro tempore.[4] The last lord chief justice to serve in this way wasLord Denman in 1834.
The chancellor is the third-oldest major state office inEnglish andBritish history, and in recent times has come to be the most powerful office in British politics after the prime minister. It originally carried responsibility for theExchequer, the medieval English institution for the collection and auditing of royal revenues. The earliest survivingrecords which are the results of the exchequer's audit date from 1129 to 1130 under KingHenry I and show continuity from previous years.[5] The chancellor has oversight offiscal policy, therefore oftaxation andpublic spending acrossgovernment departments. It previously controlledmonetary policy as well until 1997, when theBank of England was granted independent control of its interest rates.
Since 1718, all chancellors of the exchequer, except at times thelord chief justice as interim holders, have beenmembers of the House of Commons, withLord Stanhope being the last chancellor from theHouse of Lords.
The office holder works alongside the otherTreasury ministers and thepermanent secretary to the Treasury. The correspondingshadow minister is theshadow chancellor of the Exchequer, and the chancellor is also scrutinised by theLiberal Democrat Treasury spokesperson and theTreasury Select Committee.[6]
The current chancellor isRachel Reeves.
The holder of the office of chancellor of the exchequer isex officio second lord of the Treasury as amember of the commission exercising the ancient office oftreasurer of the exchequer.[7] As second lord, her official residence is11 Downing Street in London, next door to the residence of thefirst lord of the Treasury (a title that has for many years been held by theprime minister), who resides in10 Downing Street. While in the past both houses were private residences, today they serve as interlinked offices, with the occupant living in an apartment made from attic rooms previously resided in by servants.
Since 1827, the chancellor has always simultaneously held the office of second lord of the Treasury when that person has not also been the prime minister.
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."[citation needed]
The chancellor has considerable control over other departments as it is the Treasury that sets Departmental Expenditure Limits. The amount of power this gives to an individual chancellor depends on their personal forcefulness, their status within their party and their 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 the same position throughout his ten years as prime minister; making Brown an unusually dominant figure and the longest-serving chancellor since theReform Act 1832.[8] This has strengthened a pre-existing trend towards the chancellor occupying a clear second position among government ministers, elevated above their traditional peers, theforeign secretary andhome secretary.
One part of the chancellor's key roles involves the framing of the annual yearbudget. As of 2017, the first is theAutumn Budget, also known asBudget Day which forecasts government spending in the next financial year and also announces new financial measures. The second is aSpring Statement, also known as a "mini-Budget". Britain'stax year has retained the oldJulian end of year: 24 March (Old Style) / 5 April (New Style, i.e. Gregorian). From 1993, the Budget was in spring, preceded by an annual autumn statement. This was then calledPre-Budget Report. The Autumn Statement usually took place in November or December. The 1997, 2001, 2002, 2003, 2006,2007,2008,2012 and2016 budgets were all delivered on a Wednesday, summarised in a speech to theHouse of Commons.
The budget is a state secret until the chancellor reveals it in the speech given to Parliament.Hugh Dalton, on his way to giving the budget speech in 1947, inadvertently blurted out key details to a newspaper reporter, and they appeared in print before he made his speech. Dalton was forced to resign.[9]
Although theBank of England is responsible for setting interest rates, the chancellor also plays an important part in the monetary policy structure. They set the inflation target which the Bank must set interest rates to meet. Under theBank of England Act 1998 the chancellor has the power of appointment of four out of nine members of the Bank'sMonetary Policy Committee – the so-called 'external' members. They also have 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.[10] 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 officially used.
AtHM Treasury the chancellor is supported by a political team of four junior ministers and by permanentcivil servants. The most important junior minister is thechief 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 thepaymaster general, thefinancial secretary to the Treasury and theeconomic secretary to the Treasury. Whilst not continuously in use, there can also be appointed acommercial secretary to the Treasury and anexchequer secretary to the Treasury. Two other officials are given the title of asecretary to the Treasury, although neither is a government minister in the Treasury: theparliamentary secretary to the Treasury is the GovernmentChief Whip in theHouse of Commons; thepermanent secretary to the Treasury is not aminister but the senior civil servant in the Treasury.
The chancellor is obliged to be a member of thePrivy Council, and thus isstyled theRight Honourable (Rt. Hon.). Because theHouse of Lords is excluded from financial matters by tradition confirmed by theParliament Acts 1911 and 1949, the office is effectively limited to members of the House of Commons; apart from the occasions when thelord chief justice of the King's Bench has acted as interim Chancellor. The last peer to hold the office wasHenry Booth, 2nd Baron Delamer (created Earl of Warrington shortly after leaving office) from 9 April 1689 to 18 March 1690. The chancellor holds the formerly independent office ofMaster of the Mint as a subsidiary office.[11]
The chancellor of the Exchequer has no official London residence as such but since 1828 in their role as Second Lord of the Treasury they live in the second lord's official residence, No.11 Downing Street.[12] In 1997, the then first and second Lords,Tony Blair andGordon Brown respectively, swapped apartments, as the chancellor's larger apartment in No. 11 better accommodated Blair's substantial family (besides himself and his wife, he had three children under 18 upon taking office, and a fourth was born in 2000); meanwhile, Brown was then unmarried and had no children.
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 215 acres (87 ha)[13] of parkland, was allocated toDeputy Prime MinisterJohn Prescott. In 2007, it reverted to the then-chancellor,Alistair Darling.[14]
The chancellor traditionally carries theirbudget speech to the House of Commons in a particularred despatch box. The so-called 'Budget Box' is identical to the cases used by all other government ministers (known as ministerial boxes or "despatch boxes") to transport their official papers, but is better known because the chancellor traditionally displays the box, containing the budget speech, to the press before leaving 11 Downing Street for the House of Commons.
The original budget box was first used byWilliam Ewart Gladstone in 1853 and continued in use until 1965 whenJames Callaghan was the first chancellor to break with tradition when he used a newer box. Prior to Gladstone, a generic red despatch box of varying design and specification was used. The practice is said to have begun in the late 16th century, when QueenElizabeth I's representativeFrancis Throckmorton presented the Spanish Ambassador,Bernardino de Mendoza, with a specially constructed red briefcase filled withblack puddings.[15]
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 cypher and crest and the chancellor's title. In hisfirst Budget, in March 2008, Alistair Darling reverted to using the original budget box and his successor, George Osborne, continued this tradition for his first budget, before announcing that it would be retired due to its fragile condition.[16] The key to the original budget box has been lost.[17]
By tradition, the chancellor has been allowed to drink whatever they wish while 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 andJohn Major), spritzer (Nigel Lawson) and sherry and beaten egg (William Gladstone).[18]
The chancellors after Clarke,Philip Hammond,George Osborne,Alistair Darling andGordon Brown,[19] opted for water. In fact Darling drank what was named "Standard Water" in reference to, and support of, the LondonEvening Standard newspaper's campaign to have plain tap water available in restaurants at no charge to customers.[20]
The chancellor, asMaster of the Mint, has a robe of office,[21] similar to that of the lord chancellor (as seen in several of the portraits depicted below). In recent times, it has only regularly been worn atcoronations, but some chancellors (at least until the 1990s) have also worn it when attending theTrial of the Pyx as Master of the Mint. According to George Osborne, the robe (dating from Gladstone's time in office, and worn by the likes ofLloyd George andChurchill)[22] 'went missing' during Gordon Brown's time as chancellor.[23]
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Although the Kingdoms ofGreat Britain andIreland had been united by theActs of Union 1800, the Exchequers of the two Kingdoms were not consolidated until 1817 under theConsolidated Fund Act 1816 (56 Geo. 3. c. 98).[26][27] For the holders of the Irish office before this date, seeChancellor of the Exchequer of Ireland.
Chancellor of the Exchequer George Osborne gives evidence to the Treasury Select Committee.
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