The Chancellor of the Exchequer is the chief finance minister of the United Kingdom. The position is currently held by George Osborne. The chancellor of the exchequer is always a senior member of the Cabinet and always a member of the House of Commons because all financial measures must originate there. Control over finances is exercised by him, in consultation with the prime minister and under the control of the Cabinet, and he is given credit or blame for the overall health of the economy.
The role largely involves determining the levels and methods of national taxation, and the distribution of tax receipts amongst Government Departments. Until 1997, the Chancellor of the Exchequer also set the Bank of England's official interest rate. This responsibility was relinquished to the Bank itself by the Labour government of Prime Minister Tony Blair and Chancellor of the Exchequer Gordon Brown. The Chancellor retains responsibility for setting the inflation target in the government's monetary policy.
The Chancellor of the Exchequer is widely acknowledged as the second most powerful position in the British government (after the Prime Minister).
The Chancellor heads the department of the British government that administers the public revenue, including the receipt and expenditure of money for public services. services. In the last century the Chancellor has been the Second Treasury Lord, with an official residence at 11 Downing Street.
The Exchequer dates from the reign of Henry I (1100-1135), and was thoroughly organized under Henry II (1154-1189). Twice a year, at Easter and Michaelmas, the sheriffs and others who collected the king's revenues came to render their accounts at the Exchequer.
The name derived from the chequered cloth on the table used for calculations. At the Easter meeting the sheriff made a preliminary statement and paid half of what he owed. At Michaelmas the sheriff was expected to settle the year's account in full.
The clerk who did the work was by the mid-13th century, called Chancellor of the Exchequer, and the transition of the role from senior administrator to political leader took centuries–only in the mid-19th century under William Gladstone did the role become politically powerful. In 1787 a single Consolidated Fund was established into which all revenues were paid and from which all expenditures were made; procedure was greatly simplified by the Act of 1834; and in 1866 the control of issues of public money and the auditing of accounts were placed in one department under the comptroller and auditor general.
Many prominent leaders have been Chancellor. Gladstone (1852-55 and 1859-66) set financial policies based on free trade, balanced budgets, and limited government intervention that comprised the foundation of the mid-Victorian "minimalist" state. Liberal Party Chancellor David Lloyd George's "People's Budget" of 1909 threatened both the social and economic power of the British landed aristocracy as well as the high-tariff political agenda of the Conservative Party. The budget's rejection by the House of Lords triggered a constitutional crisis unexpected but not feared by the governing Liberals. Winston Churchill, who served 1924-29, was criticized for returning to the gold standard in 1925, to the detriment of the economy, as well as cutting the naval and military budgets.
- Richard Holt. Second Amongst Equals: Chancellors of the Exchequer and the British Economy (2001)
- David Kynaston. The Chancellor of the Exchequer (1980)
- The Prime Minister is the First Treasury Lord, with residence at 10 Downing Street, but actually has no role at the Treasury.