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Does Brown have any surprises in store?
By Les Gibbard

Budget Defeats for Chancellors

When 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:

  • On July 17 1975 the Government was defeated by 108 votes to 106 on an opposition amendment to the Finance Bill to reduce VAT on TV sets.
  • On March 10 1976 the Government was again defeated (by 284 votes to 256) on a motion approving its spending plans.
  • An amendment to reduce the standard rate of income tax from 34p to 33p was carried against the Government on May 8 1978 by 312 votes to 304.
  • Two days later the Government was again defeated, this time on an amendment to raise the threshold for higher rate tax rates from £7,000 to £8,000. The Government lost by 288 votes to 286.

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.

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