Five Things We Learnt: The Budget

Five Things We Learnt: The Budget

Sam Oakley

Have we just witnessed the final act of the Osborne Era? The Chancellor of the Exchequer has just given his final set-piece speech to Parliament before the General Election and it was entirely in-keeping with all of his fiscal announcements post-Omnishambles in 2012; duty freezes, help for pensioners, overtures to the working poor and tough talk on tax evasion. Of course, with it being George Osborne, it was also a deeply ‘political’ budget (is there any other kind?) as he looked to torpedo some of Labour’s key fiscal announcements in the run-up to the election.  Here are five things we learnt.

 

The Comeback Kid

Osborne closed his speech by calling Britain the “comeback country” but, in reality, he is the ‘comeback Chancellor’. From the deep low of 2012 (lest we forget his being booed at the Paralympics in front of his children), this was a staggeringly confident budget. This was a valedictory vindication for the Chancellor who feels he can now proudly boast that the recovery is, in essence, complete and all under his guiding hand. This budget, he crowed, was one taking Britain from “austerity to prosperity” as he revealed that (by his measurements) living standards will finally be higher than when this Government came to office. He boasted that Britain is “walking tall again” – but, in reality, it is the Chancellor who will be walking tallest of all this afternoon as he was finally able to deliver the budget of economic good news with tax cuts, perks for savers and the infrastructure and tech investment that he has spent five years waiting to give.

 

The Perks of Being In Power

There must rarely have been a budget that has been so specifically targeted at policy announced by the Opposition or at minor gaffes – the like of which are mostly only noticed by those in Westminster. It is already been lauded on the rolling news channels and Twitter as the Government ‘bringing back fox hunting’ – the foxes in this case being Labour Party proposals and rhetoric. As ever with Budgets, it depends entirely on the metrics you employ, but the Chancellor in one sentence undid the entirety of Labour’s winter messaging that the Tories will take Britain ‘back to the 1930s’, suggesting that in actual fact public spending will look more like 2000 (although neglecting to mention the state of public services at that time…). He put serious pressure on Labour’s sums by removing relief on pensions – a significant element of Labour’s funding for a tuition fees cut – and by revealing that the north is, in fact, growing faster than the south. There were also plenty of gags at the Labour Party’s expense masquerading as policy announcements; closing Inheritance Tax loopholes that Ed Miliband benefitted from, an Internet of Things policy to help the Labour leader control ‘both of his fridges’, £1m for Agincourt commemorations seemingly entirely for the purpose of a joke about the Miliband brothers (uncannily similar to his Magna Carta gag from the previous year) and, of course, a #pinkvan reference.

 

Savers and Strivers

Osborne has been pilloried throughout this Parliament for remorselessly punishing savers (as the bottom has fallen dramatically out of real interest rates), but today he was finally able to reverse the trend and through the most Tory of measures, too: a tax cut. A tax cut for savers is almost the ultimate Conservative economic policy. It is only if you, say, throw in a new savings account that will specifically benefit those looking to buy a property for the first time that you could beat it – Osborne rose to that challenge with glee (however, we shouldn’t ignore the glaring fact that a Help-To-Buy ISA will be rendered somewhat toothless if house prices continue to soar owing to diminishing supply). For the Strivers, Osborne was able to reward them with another increase in the personal allowance (although he left the National Insurance rate the same, which would have been the real boon to the low-paid), an above-inflation rise in the 40p rate and, for five million pensioners, access to their annuity.

 

Giveaways and Gimmicks

Despite promises that this year’s Budget would include ‘no giveaways, no gimmicks’, with an eye on the election, the temptation to include more populist measures to appeal to marginal voters proved too hard to resist for the Chancellor. In terms of giveaways – plans to invest in the ‘Northern Powerhouse’, improve northern transport links and allowing Manchester (and potentially other regions) to keep its extra business rates revenue was a clever excursion into Labour territory. North of the border, plans to support the North Sea oil industry via tax cuts worth £1.3bn were more generous than expected and the Chancellor’s claim that such relief would not be provided under an independent Scotland was a clear dig at the SNP.  Other populist measures included a third successive cut for beer duty, a cider duty cut by 2%, Scotch whisky by 2% as well as ‘£10 off a tank with the Tories’, with regards to fuel duty. The gimmick turned up in the form of the new 12-sided pound coin designed by 15-year-old David Pearce as part of a national competition. The new design is trailed as the most secure in the world against counterfeiting – although a number of businesses have already expressed concern about the extra costs of introducing a new pound coin.

 

What’s the plan, Dan?

Despite claims that the influence the Liberal Democrats have had on the Conservatives has created a more resilient and fairer economy, the Lib Dems have taken the unprecedented step of announcing that their man in the Treasury, Danny Alexander will tomorrow announce an alternative economic plan for the next parliament – thereby signalling the divorce of the two parties and their coalition agreement. The plans, which will be set out in a parliamentary statement and supported by Treasury papers, are an unashamed attempt by the Lib Dems to distance themselves from the Tories and move into electioneering mode 50 days away from the General Election. The ‘Budget’ which will be presented in Alexander’s very own yellow box promises to ‘secure the recovery’ and get the budget balanced. In particular they have promised to ‘make tax dodging as unacceptable as drink-driving’ increase the personal tax allowance to £12,500 and ‘target the wealthy instead of cutting spending’. Yet, the Lib Dems have insisted that today’s Budget is very much a coalition occasion. Indeed, the Budget did include clear concessions for voters in traditional Lib Dem heartlands – plans to average farmer earnings over a five year period for tax purposes and a duty cut on cider will play well to those in those precious south west constituencies.

 

Reporting by Sam Oakley (@samoakley91) and Lucy Holbrook (@lucy_holbrook)