Budget 2013: Your guide to key terms
On 20 March, Chancellor George Osborne will deliver his fourth Budget to parliament.
This will set out the government's financial plan of action for the next few years.
Its content - and that of the hundreds of pages of documents that are released alongside it - will affect everyone in the UK in some way and will be analysed for weeks to come.
In six steps from B to T, here is our guide to the Budget, its peculiarities, and some of the terms you will hear uttered most often.
B: Budget and its box
In his Budget, the chancellor will give an update on the state of the country's finances and set out how much the government plans to spend and how much it intends to raise in taxes over the next few years.
By law, the chancellor has to present a Budget once a year. This can happen at any time, but it now tends to happen in March, so that changes to taxes or benefits can take effect at the start of the financial year in April.
There is also an update towards the end of the year which is currently referred to the Autumn Statement, and was previously known as the pre-Budget report.
The word Budget comes from bougette, an old French word meaning a small leather bag.
That brings us on to box: Every minister is entitled to a red leather briefcase for transporting their papers around in. But the chancellor's is probably the most famous.
It is traditional for the chancellor to pose holding it aloft outside Number 11 Downing Street before heading off to parliament to deliver his Budget.
Legend has it that this began in 1869, after George Ward Hunt opened his box in the Commons only to find that he had left his speech at home.
U: (Allow us some artistic licence here, please)
U is for, well, you. Your finances and your services.
Changes already due this April
We already know about some big changes coming in from the beginning of the new tax year on 6 April. They include:
- Benefits such as income support and Jobseeker's Allowance will rise by 1%, less than the rate of inflation
- A cut in the top rate of tax from 50% to 45% for those earning more than £150,000
What the chancellor says on 20 March will determine how much tax you pay, the level of any benefits you may receive and the amount of duty that is added to the price of petrol or cigarettes.
His decisions on how much money government departments are allowed to spend may also affect whether new schools are built or how much millions of government workers earn.
However, we are likely only to get aggregated figures for total government spending in the Budget. Individual departments will not learn how much they will be allowed to spend in coming years until the Treasury's next big event, the Spending Review, in a couple of months' time.
D: Debt and deficit
D is for deficit and for debt. We'll hear a lot about those two, and many people, including politicians and journalists get them mixed up.
The deficit is the amount of money the country borrows from the financial markets every year because its outgoings are more than what it receives in taxes. Ministers are fond of describing it as the amount put on the national credit card.
Debt is the stock of all borrowing, the total amount built up over many years that needs to be paid back.
Governments do not like running up big debts. It currently costs the UK tens of billions of pounds a year in interest that ministers think would be better spent elsewhere.
The government is currently trying to cut the UK's large deficit, which was brought on by the drop in tax revenues and increase in benefit payments during the economic downturn.
This means that it is aiming to reduce the amount it puts on the country's credit card every year. Cutting the deficit means the total amount the UK owes, the debt, will still keep rising, but less quickly.
The UK's deficit is the reason why growth - or rather the lack of it - will be a central issue in this Budget.
Economic growth tends to generate higher tax revenues and lower benefit bills, which help erode the deficit.
But if the latest growth forecasts contained in the Budget are reduced yet again, then the chancellor will need to find extra savings by cutting spending or raising taxes.
Some argue, however, that for the long-term health of the economy the government should actually be increasing its borrowing, not cutting it.
This is the main debate going on in political and economic circles at the moment. The question is:
Does the UK:
- Keep on with the plan to cut the deficit, because if it doesn't, the money markets will believe that the UK's finances are out of control. Everyone from the government to banks to businesses to mortgage borrowers will then be charged a much higher interest rate to borrow. This is the prime minister's argument.
- Borrow more in the short-term to fund projects that create jobs and generate economic growth such as new roads and rail lines, because cutting spending in vital areas of investment is stifling growth and preventing recovery. This is Lib Dem Business Secretary Vince Cable's argument.
This debate will no doubt be had again in the Commons on Budget day.
Which brings us on to E for Ed: In this case Miliband, not Balls.
Normally, in our adversarial political system, ministers are pitted against their opposite number when in action in the House of Commons. So Mr Osborne would normally go head-to-head with shadow chancellor Ed Balls.
However, it is the Leader of the Opposition, Ed Miliband, who will have the job of responding to the chancellor's Budget speech.
We get a sense of the scale of the task from Mr Balls' description of having to dissect the last Autumn Statement, which, like the Budget, no-one gets to see in advance.
It was like "doing a wedding speech when you don't know either the bride or the groom", he said, following criticism of his performance.
T: Taxes, time and tipple
T is for taxes, of course. But we'll end on two rather less serious Budget staples.
Time: You can bet on a myriad things related to the Budget, from the colour of the chancellor's tie and how many times he will take a drink (more on which below), to how long the speech will last.
The longest speech in Budget history, which lasted a marathon four hours and 45 minutes, was given by William Ewart Gladstone in 1853. It included plans for phasing out income tax over seven years (which, of course, never happened). It also brought in tax deductions for the cost of keeping a horse for work purposes.
Nowadays, speeches tend to wrap up in under an hour.
Incidentally, Ladbrokes is offering odds of 16-1 that former Chancellor Ken Clarke will fall asleep during the speech. Perhaps that will depend on how long it lasts.
Tipple: The drinking of alcohol is normally banned inside the Commons chamber. But an exception is made for the chancellor during his speech. Gladstone used to drink sherry mixed with a beaten egg - maybe he thought the protein would give him stamina.
The current chancellor sticks to water.