Forget this Budget: it's last year's that counts

A cut in the top rate of income tax was a terrible mistake, and the damage is done

Share

Prepare for D-Day: Disaster Day for the coalition. Not tomorrow, when the Commons vote on press freedom will divide Conservative MPs from their Liberal Democrat partners. D-Day arrives in 20 days' time, on 6 April, when the top rate of income tax is cut from 50p in the pound to 45p.

This time last year, I wondered what on earth George Osborne thought he was doing, and wrote that the announcement, in last year's Budget, had probably made the difference between the Conservatives winning and not winning the next election. Nothing has persuaded me since then that this was an exaggeration. For 12 months, the Labour lead in the opinion polls has been solid, and David Cameron has been unable to gain a hearing for his centrist message.

The Prime Minister remains the pre-eminent politician in his party and beyond, even if I did make the case for Theresa May last week. It is telling that our ComRes opinion poll today finds that only 28 per cent agree that "the Conservative Party would have a better chance of winning the next election if it replaced David Cameron as leader", while 38 per cent disagree.

He has a good sense of the tempo and tactics of politics. His promise of a referendum on Europe was a judo moment, pre-empting the inevitable, and done well. Some big pro-Europeans of the Blair government praise his speech highly.

Last week, he caught Ed Miliband and Nick Clegg off balance by pulling out of talks about how to put Lord Justice Leveson's proposals into practice, and calling tomorrow's vote. I suspect that Cameron, convinced that the Labour leader would use the difference between them to pull out of the talks and denounce him, went for his gun first. The Prime Minister was in a tight corner and has played himself out of it with some skill. If he loses tomorrow's vote, he impresses the defenders of free speech (who happen to include some newspaper owners) and many of his own backbenchers (for standing up to the Liberal Democrats). If he wins, he is in a stronger position to face down his opponents in the Lords who want tougher press regulation.

He handles these moments well, albeit at the expense of a consistent message on the core economic theme of aspiration, to which he tried to return ("the aspiration nation") in yesterday's speech to the Tory spring conference.

Everything that he does well or cleverly is drowned out by a simple story of nasty rich Tories looking after their own and being horrid to ordinary people. That was why Cameron retreated on minimum alcohol pricing last week. It was reported as if it were the result of the Home Secretary's leadership bid, because May is one of the ministers in the Cabinet known to be opposed to it. But Cameron's decision was nothing to do with fending off a leadership challenge, and everything to do with not wanting to be seen as bent on denying the low paid their cut-price pleasures.

Ed Miliband's response showed how deadly he can be at small-p politics. His opening question in the Commons on Wednesday – "Is there anything the Prime Minister could organise in a brewery?"– was so effective that Cameron never recovered. I am not sure it was suggested by Alastair Campbell, but it was good enough to have been. Before Cameron could get on to his lines about rewarding hard work and responsibility, he was asked by a Labour backbencher if he would benefit personally from "the millionaires' tax cut". He replied awkwardly: "I will pay all of the taxes that I am meant to."

So why cut the top rate? A year after the decision was made by the Quad of Cameron, Osborne, Nick Clegg and Danny Alexander, we are hardly the wiser. Osborne, in particular, believes that the 50p rate suppresses enterprise and repels foreign entrepreneurs. He believes it so strongly that he discounted the extent to which it would allow the Tories to be painted as hostile to the interests of ordinary working people.

We have learnt since that Cameron and Clegg made common cause at the last moment to prevent Osborne cutting the top rate from 50p to 40p. This allows them to say that the top rate will still be higher than it was under Labour, and is important because Cameron and Osborne are usually united. I am told, incidentally, that the ideological alignment of the Quad is unexpected, with Cameron and Osborne often in the centre mediating between Alexander on the right and Clegg on the left.

All we know is the cut in the top rate of income tax was a terrible mistake, and although Osborne may try to raise other taxes on the better-off in the Budget this week – we can't rule out a clever wheeze to make the best of the revenue-neutral occasion – the damage is done. The Tories could still pull back, through persistent discipline and a relentless focus on the choice between Cameron and Miliband. But with two years to go, they are close to being in the position where they need what Damian McBride, Gordon Brown's former spin-doctor, calls a Massive External Event to have a chance at the next election.

This week's Budget probably doesn't matter. Last year's Budget matters more than ever.

twitter.com/@JohnRentoul; independent.co.uk/johnrentoul

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Business Development Manager / Sales - OTE £45,000

£35000 - £45000 per annum: Recruitment Genius: This company is a solutions / s...

Recruitment Genius: Sales Executive - OTE £45,000

£18000 - £45000 per annum: Recruitment Genius: A Sales Executive is required t...

Recruitment Genius: Test Development Engineer

£35000 - £40000 per annum: Recruitment Genius: Are you inspired to bring new a...

Recruitment Genius: Trainee Motor Engineer

£14000 - £18000 per annum: Recruitment Genius: This is an exciting opportunity...

Day In a Page

Read Next
Kennedy campaign for the Lib Dems earlier this year in Bearsden  

Charles Kennedy: A brilliant man whose talents were badly needed

Baroness Williams
Nick Clegg (R) Liberal Democrat Leader and former leader Charles Kennedy MP, joined the general election campaign trail on April 8, 2010  

Charles Kennedy: The only mainstream political leader who spoke sense

Tim Farron
Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific