The Budget 2014: Balls to Osborne - I trust you with my son, but not the British economy as opponents hold brief backstage truce

Chancellor babysits opposite number’s young son in the ‘green room’ at the BBC
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George Osborne, who has been described as being both “heartless” and like “a vampire”, did an unusual good deed as he and Labour opponent Ed Balls argued over what should be in this week’s Budget.

While Mr Balls was being interviewed on Radio 5, the Chancellor was spotted in the BBC’s “green room” looking after Mr Balls’s young son.

It was a momentary truce in a war of words during which Mr Balls alleged that “George Osborne is only ever tough when he’s having a go at the weak and the voiceless” and Mr Osborne suggested that if voters allowed Labour back into government, it would be equivalent to giving the car keys back to the driver who crashed it in the first place.

Mr Osborne has indicated that while he is prepared to lift the tax burden off the low paid, those on benefits are going to feel another squeeze after Wednesday’s Budget.

Writing in the Sun on Sunday, the Chancellor warned: “Our government still borrows more every year than we spend on educating our children. We shouldn’t burden them with our debts. That’s why, this week, we’ll set out the plans to cap total welfare bills.” Asked by the BBC’s Andrew Marr what happens when the cap is reached, Mr Osborne replied: “You can either come to Parliament; try and win a parliamentary vote, explain to the public what you’re doing, or take the difficult measures to reduce the welfare bill.”

Mr Osborne has been urged by two former Tory Chancellors – Nigel Lawson and Norman Lamont – to adjust the tax bands so that thousands of people who now pay 40p on the top slice of their income will go back onto the basic rate of 20p.

The current threshold above which the 40p rate kicks in is £41,450, which is lower than in the previous year.

At the same time, the Chancellor has pushed up the limit below which no income tax is due at all. From April, it will be £10,000. In the Budget, he is expected to raise it again to £10,500. With a hint of irritation at the Liberal Democrats, who have claimed credit for raising the lower tax threshold, Mr Osborne said yesterday that “taking the low paid out of tax has always been a longstanding Conservative ambition”.

He added: “That is what I have done in budget after budget. What that means is: yes, you are taking the low paid out of tax, but you are also helping those on middle incomes. It is only people right at the top; people on incomes of over £100,000, who don’t get the benefit.

“I think it is a very effective instrument for making sure that hard-working people keep more of their money.”

Ed Balls attacked the Chancellor for introducing a tax break for married couples and cutting the 50p tax rate for high earners, while not restoring the 10p tax band which was brought in by Gordon Brown in the early days of the Labour government and abolished in 2007. Mr Balls said that getting rid of it had been a mistake and that he had advised Mr Brown at the time not to do it.

“A 10p rate would help all lower- and middle-income families and we say that’s a better way to use the money than the marriage tax break. We would do a mansion tax over £2m as well,” he told the BBC.  “George Osborne is only ever tough when he’s having a go at the weak and the voiceless. Labour is willing to face up to people on the highest incomes and say: ‘I’m sorry – justifying a big tax cut at this time for people on higher incomes is not fair’.”

Meanwhile Mark Carney, the Governor of the Bank of England, is expected to use Budget week to shake up the organisation’s structures, moving staff who now work exclusively for one department, such as the Monetary Policy Committee or the Prudential Regulation Authority, into cross-departmental roles.

The Financial Times said the proposed changes mirror reforms that Mr Carney introduced when governor of the Bank of Canada.