Johann Hari: This Budget took from the rest to give to the rich

Yesterday the process of redistribution away from you was supercharged by the Tories

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There was a moment in the speech when it seemed for a second George had glimpsed where he has been going so badly wrong; and why every time he announces his policies Britain's growth rate collapses further. He held up Ireland as a warning, an example of a nation descended into disaster.

Could it be? Had he learned? Until now Osborne had held up Ireland as the "shining example" that he wanted Britain to emulate. Before the Great Crash of 2008 he said we should copy its model of tossing regulation for the rich onto a bonfire and reducing taxes on corporations so dramatically that the country was classed by some as a tax haven. "Look and learn from across the Irish Sea," he boomed.

And his admiration didn't end there. After this model collapsed into rubble, instead of becoming wary, he held up Ireland's response to the recession as his next great lodestar. The Irish government responded to the Crash by making slashing their debt their first, second and third priorities. They massively cut public spending, at the same time as increasing taxes on the middle-classes and the poor. (This may sound familiar). The result? Ireland is now enduring the worst economic collapse of any developed country since the Second World War.

But as the speech went on it hit me. Osborne can note Ireland's collapse with sadness but he is still religiously following their example, as if it all worked out beautifully over there. the Budget was an enthusiastic mash-up of pre-Crash and post-Crash Irish policies. From before the Crash he took the idea of dramatically slashing restrictions on corporations and the super-rich in the belief that this unleashes the magical power of the market rather than implosion. From after the Crash he took the idea of making a panic-payoff of our debt his over-riding purpose. Never mind that our national debt has been higher as a proportion of GDP for 200 of the past 250 years. We don't need to guess where this leads. We can simply, as Osborne recommended once, "look and learn from across the Irish Sea".

The primary effect of this Budget will be to dramatically redistribute wealth. That sounds good until you realise the wealth is being taken from the middle-class and the poor and handed to the only people Osborne has ever really known: the super-rich. This trend has been going on for a long time. Since the election of Margaret Thatcher the value of wages has declined from 65 per cent of GDP to 55 per cent. Where did it go? The rate of corporate profit – given to wealthy shareholders – has increased from 13 per cent to 21 per cent. The money has gone from people like teachers and small business owners, to people like George, who stands to inherit the proceeds of a very large company.

Yesterday that process of redistribution away from you was supercharged by the Tories. The Budget was "fiscally neutral", meaning the overall level of tax in the economy remained the same. But money was reshuffled – from one class to another. The huge cut to corporation tax is being paid for by you in higher VAT and, worse, public services. You pay more so Tesco and Sainsbury's and Philip Green can take more. This isn't about attracting inward investment – countries with higher corporation taxes than us attract more by having highly trained and skilled workforces. No: it's about an inward transfer of wealth.

I doubt there was a single person who woke up yesterday, looked out across Britain, and thought: "I know what's wrong with this country. Vodafone pays too much tax." But Osborne has acted on this belief – in part because he genuinely seems to have no idea what life in Britain is like. He said recently that his former school, St Paul's (annual fees £30,000) was "incredibly liberal. It didn't matter who your parents were. Your mother could be the head of a giant corporation – or a solicitor in Kew". That's his internal vision of the social spectrum in Britain, with those pauper solicitors in Kew begging at the bottom. No wonder he doesn't understand that (say) slashing Housing Benefit will turn 200,000 poor people out of their homes in London alone. He thinks they can take it: the rich need more.

Osborne tried to mask this naked class interest with a few distraction-baubles. Private jets will have to pay tax on their fuel – a cost so small the super-rich who own them will barely notice. Megarich non-doms who have been here for 12 years will have to pay £50,000 – a rate of tax far lower than that applying to their secretaries. Hilariously, Osborne then started talking about charity and said: "We will encourage the rich to give more." As the Times journalist Caitlin Moran tweeted: "I know a brilliant way to do that – taxation."



The rest of the budget was marked by naked dishonesty. David Cameron promised to lead “the most family-friendly government in Europe”, but he has jacked up the cost of childcare, stripped tax credits from a million families, and now taken away the right to even request flexible working. He promised “the greenest government ever”, but he just made it even easier to run a gas-guzzler today, while his Green Investment Bank can’t act until 2015. Osborne promised a crackdown on tax avoidance, but in reality he is sacking 25 per cent of our tax inspectors – even though each inspector on £50,000 a year brings in £1.5m for all of us.

Through it all, Nick Clegg sat there like James Caan in the film Misery, awakening from unconsciousness to find his legs are broken and he is held captive by an axe-wielding maniac.

This was a Budget that abandoned everything we have learned about economics since the Great Depression of the 1930s. We discovered then that in a recession, consumers – quite rightly – cut their spending and save more. But if the Government does the same thing at the same time then nobody is spending and the recession gets worse. George is cheerfully doing just that while humming a rare old Irish ditty. What's that terrible sound? It's John Maynard Keynes spinning and howling in his grave.

Click here for the Johann Hari podcast

For updates on this issue and others, follow Johann on Twitter at www.twitter.com/johannhari101

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