Andrew Grice: There may be no money to spend, but don't expect the Budget to be boring

Inside Politics: Labour hopes the Budget will help it paint a line between Labour optimism and Tory austerity
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The Independent Online

A draft of Alistair Darling's Budget speech next Wednesday has just pinged into my inbox, so I thought I would share it with you: "For a decade since 1997, Britain's economy grew strongly. But the global banking crisis is a stark reminder that growth cannot be taken for granted, and the foundations of the economy must be strong.

"Our long-term economic success depends on a balanced British economy and the ability of our businesses and our people to compete for high-skilled jobs in the industries of the future.

"The Government must play a supportive role in helping business succeed. Others [ie, the Conservatives] believe that government can only get in the way. Their old-fashioned ideological rejection of any role for government in equipping our firms and people for a global economy have left them stranded with no plan for growth, and no vision of Britain's industrial future.

"We have a plan for paying down the borrowing necessitated by the banking crisis and the recession. But we also have a growth plan. Not just because growth is how you drive down the deficit. But because the economy emerging from this crisis is going to look different – and needs to look different – from the one that went into it."

OK, I admit I haven't really got the Chancellor's speech, other than in my dreams. If I had, it would be on the front page, not this one. However, these words were spoken on Wednesday by Lord Mandelson, the Business Secretary, who has developed the "industrial activism" strategy that will underpin next week's Budget. He and Mr Darling are close allies, and some of Lord Mandelson's words might just make it into the Chancellor's speech.

"It will be a boring Budget," one Whitehall insider whispered.

"Not true," snarled an ally of Mr Darling, "it will be a serious Budget for serious times." Boring but with a purpose, perhaps.

Although unveiled only six weeks before the expected 6 May general election, it will not be a traditional pre-election Budget. Sweeteners will be severely rationed. "There's no money" is the phrase Mr Darling uses most to his Cabinet colleagues. Yet he will promise not to cut frontline services, reiterating his pledge in the December pre-Budget report to protect schools, health and police numbers, allowing Gordon Brown to draw his favourite dividing line for the election, albeit more thinly than in 2001 and 2005.

The limited amounts at the Chancellor's disposal due to lower borrowing and unemployment than predicted will start to fill the massive hole in the public finances and finance measures to "secure the recovery" – such as tackling youth unemployment, helping small firms and boosting manufacturing. "There will be three themes – jobs, jobs and jobs," one minister said yesterday.

Labour strategists hope the Budget will help them paint another dividing line – between Labour "optimism" about a growing economy and Tory "austerity." While recognising the need to halve the deficit in four years, Labour believes the Tories are about to repeat a mistake they made last autumn by spelling out specific spending cuts before the election.

Labour's focus groups tell it that the "debt crisis" is more complex than it looks. Yes, people want action to cut the deficit. But they are also worried about the state of the economy and their own job prospects. Labour folk reckon the fragile return to growth could work to Mr Brown's advantage. When the campaign proper begins next month, Labour will tell us ad nauseam: "Don't take a gamble on the Tories." Firstly, because the immediate cuts proposed by the Tories would risk a return to recession and, secondly, because the Cameron-Osborne team is untried and inexperienced.

The Tories see it differently, of course. Their preferred dividing line on the economy is Labour "dishonesty" about the deficit vs Tory "honesty". Mr Brown may be experienced, but he didn't stop us getting into this mess, and he is "in denial" about cuts. The Tories insist they do have a plan for growth, citing their pledge to cut corporation tax for business. They are frantically crunching numbers so they can promise to scrap Labour's planned 1 per cent rise in national insurance contributions due to take effect in a year. That would lift a "tax on jobs" and help people on £20,000 a year and over.

"Change" is the most powerful slogan in politics, as we saw in the US presidential election. It is very hard for Labour to offer it after 13 years in power. The new industrial strategy to provide the "jobs of the future" is one way to try. For once, Labour can answer the "why haven't you done it before?" question which will be rightly posed of much of its manifesto.

The answer is that the post-recession economy will be less reliant on financial services and new industries will need nurturing to fill the gap. The Tories suspect that Labour wants to turn the clock back to the "picking winners" culture of the 1970s.

Mr Darling and Lord Mandelson argue that the dogmatic free market approach of the 1980s was even worse, and admit it lasted too long into the 1990s. Labour's "light-touch" regulation of the City of London was a case in point. So a new vision for a new era is needed. The Budget may be less boring than it looks.

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