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

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

Ashdown Group: Senior Accounts Assistant - Accounts Payable - St. Albans

£26000 - £28000 per annum + benefits : Ashdown Group: Senior Accounts Assistan...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Recruitment Genius: Installation and Service / Security Engineer

£22000 - £40000 per annum: Recruitment Genius: This company is part of a Group...

Recruitment Genius: Service Charge Accounts Assistant

£16000 - £18000 per annum: Recruitment Genius: Are you a a young, dynamic pers...

Day In a Page

Read Next
A Gold Ferrari sits outside Chanel on Sloane Street  

Sunday Times Rich List: We are no longer in thrall to very rich people

Terence Blacker
David Cameron was openly emotional at the prospect of Scotland leaving the union before the referendum  

Remember when David Cameron almost cried over Scotland because he loved it so much?

Matthew Norman
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions