Leading article: It is time to show some imagination, Chancellor

Mr Osborne has been talking about growth for months. Now he must do something

If George Osborne wants to be remembered as a successful Chancellor, he will need to do more than prune public spending. Important though that may be, it will not be enough for him simply to ensure Britain no longer routinely overspends. He must also ensure that, cuts or not, the economy continues to grow.

That the Prime Minister used this week's cabinet meeting to grill ministers on the progress of economy-friendly reforms suggests the question is finally receiving the attention it deserves. But primary responsibility still lies with the Chancellor. Mr Osborne will, therefore, need to do more than talk about growth in his Budget this month. He has been talking ever since GDP started to flag. Now he must do something.

The acknowledgement that squalls in the eurozone can largely be blamed for Britain's most recent economic dip does not let the Chancellor off the hook. Neither do the hints of improvement in the past month. One need look no further than the latest convulsions over Greece, let alone Europe's still-declining economic metrics, to temper too much optimism.

What, then, should Mr Osborne do? His freedom of action is indeed constrained. The risks of reneging on commitments to cut government debt rightly rule out extra borrowing. But that does not mean there is no money at all. There may be something of a windfall from this year's below-target borrowing. In the circumstances, that is money better spent than saved. More important, however, are fiscal tweaks to maximise the economic bang for the government buck. There is no shortage of options – if the Chancellor can be sufficiently brave.

An unlikely consensus is forming on the notion of higher taxes on wealth in order to cut levies on income. Nick Clegg raised Treasury hackles with his call for the Chancellor to raise the income tax threshold to £10,000 immediately, rather than by 2015 as planned. But the idea has found favour with a constituency of the Conservative right looking for ways to both boost growth and prove the Tories are in touch with ordinary folk.

Not only that, but the Liberal Democrat pitch to pay part of the £9bn price tag with a "mansion tax" is also gaining ground. Both proposals are sound ones. Mr Osborne should make the most of his rare political opportunity, at the same time heeding Liberal Democrat calls to abolish top-rate tax relief on pension contributions, worth an eye-watering £7bn per year.

Neither are the Chancellor's options restricted to the tax system. The Government has talked up fairly meagre plans for large-scale public projects. It must go further, bringing forward future capital spending to create jobs and upgrade Britain's creaking infrastructure, not least our woefully inadequate housing stock.

Mr Osborne should also look hard at the recommendation that he expedite the £15bn-a-year austerity measures scheduled for the next parliament and spend the £50bn proceeds in this one. Other proposals from the Social Market Foundation – such as abolishing the winter fuel allowance for wealthy pensioners – also merit careful consideration.

Any money raised from areas of the economy that do not stimulate growth can then be channelled to those that do, reducing national insurance on new hires, for example. And rather than cutting corporation tax further – with savings likely to end up in shareholder dividends rather than investments – Mr Osborne should adjust capital investment tax breaks to unlock the £60bn-odd sitting on the balance sheets of companies too nervous to spend.

Fiscal levers are, of course, not all there is to economic growth. Labour laws also play a central role, as does the planning regime. But there is a great deal Mr Osborne can do with his Budget, not least in proving he has the imagination his job requires.