Budget Defeats for ChancellorsWhen Kenneth Clarke's proposal to increase the rate of VAT on domestic fuel and power was defeated by a backbench rebellion in December 1994, this was not the first nor the most dramatic of the times when a government has seen its plans thwarted by parliamentary pressure. The battles over the 'People's Budget' of Lloyd George in 1909 plunged the nation into a constitutional crisis which eventually resulted in the removal of the power of the House of Lords over finance legislation.
In more recent times, defeats have been less momentous and Chancellors of the Exchequer have often had more trouble from their own side in the Commons. Sometimes also they have judged discretion to be the better part of valour and amended their plans before a prospective defeat. Even so defeats on the Budget are a particularly painful form of political embarrassment.
James Callaghan (Chancellor 1964-67)Mr Callaghan suffered three defeats on the 1965 Finance Bill and was forced to table 243 amendments of his own to ward off further defeats. The opposition to the bill from the Conservative benches was led by Edward Heath.
Denis Healey (Chancellor 1974-79)The 1974-79 Labour government suffered several budget defeats. The Chancellor, Denis Healey, lost the following votes:
Geoffrey Howe (Chancellor 1979-83)
In 1981 , Geoffrey Howe avoided a Budget defeat by making certain concessions to backbenchers. Sir Geoffrey had planned to increase VAT on diesel and petrol.
However, having been warned by the then Chief Whip, Michael Jopling, that backbench opinion was such that the increase was unlikely to be passed, Howe decided to limit the increase to petrol only. Duty on fuel for diesel engined vehicles was increased only in line with inflation. The lost revenue was recouped by adding a further 3p duty to a packet of 20 cigarettes.
Kenneth Clarke (Chancellor 1993-97)
Kenneth Clarke suffered a defeat in the Commons on December 6 1994 over his plans to increase Value Added Tax on fuel from 8% to 17.5%. A technical motion relating to the planned increase was defeated by 8 votes.
The increase in VAT on fuel was seen by many Conservatives as a clear breach of the 1992 general election pledge not to raise VAT.