Steve Richards: This was a sparse Budget with a big political message

There is a tangible divide: is government part of the problem or part of the solution?
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The Independent Online

Alistair Darling has delivered the thinnest and yet most politically astute Budget of his stormy reign at the Treasury. His previous economic statements were studded with mind-boggling announcements and yet projected as if they were the Treasurer's report at a local tennis club. With the election moving into view, Darling managed to tell more of a story this time, sparser and less chaotic.

The minimalism was deceptive. There was quite a lot going on, but in order to observe the full effect it might have been worth purchasing those three dimensional glasses that are worn when watching the film Avatar. I am not comparing Darling to a record-breaking film director, or suggesting that his Budget was the equivalent of a Hollywood blockbuster. There is no senior politician further away from Hollywood than the Chancellor. But Darling did deliver a package that was as unavoidably three-dimensional as the film that topped the charts for so long. His Budget was about the past, the immediate future and a bigger leap into the unknown. As such it was the perfect preview of the election campaign to come.

More explicitly and effectively than in his previous Budgets, Darling made the political case for the Government's hyper-activity in the recent past. His statement was punctuated with proclamations that "the right calls were made", and it was "no coincidence" the economy was growing. He insisted several times the Government chose "not to stand aside". In case anyone missed the point he added that the Government could have "watched from the sidelines but chose to act". On specifics the message was equally clear. A bank tax must be "internationally co-ordinated". There was no case to "go it alone" as David Cameron proposed suddenly last weekend to the surprise of his shadow Cabinet colleagues.

Darling delivered these political proclamations like a quiet assassin, as if they were bullets from a gun. All of them were aimed at Cameron and George Osborne, the duo that, almost uniquely amongst leaders in the western world, called for spending cuts at the height of the recession.

There is no guarantee Darling's bullets will hit their target. Indeed his account of the recession highlights one of several reasons why the election is proving to be more unpredictable than most. It is Labour's strongest card and one handed to them by the Tory leadership. Yesterday, Darling made clear what they plan to do with it. They will revive that old New Labour device of arguing that the Conservatives are isolated on the economy, still a whacky right-wing party out of step with the times.

But Labour's ace will have only limited impact. Voters rarely look back and express gratitude, not least when they have lived through a frightening recession and are still scared. They look ahead and wonder what will happen next.

On this, the other two dimensions, Darling was much foggier. The lenses of the 3D glasses could be polished a thousand times and the view would not be much clearer. He did not have a great deal to say about the immediate future and only provided glimpses of the more distant horizon.

This is partly because we are living through an extended Budget, one that is being implemented in several stages. In effect Darling delivered a Budget last December under the guise of a pre-Budget report. Yesterday he announced a few more measures that signalled a pre-election focus on fairness and redistribution, help for first-time buyers and an increase in stamp duty for homes over one million pounds being the most vivid example. Watch that proposal form part of a wider onslaught from Labour on the Conservatives' proposal to scrap inheritance tax on homes worth up to a million pounds.

But in truth Darling had no room for spectacular game changing announcements in this Budget, in effect the second he has delivered in the space of three months. That is why Lord Ashcroft got a look-in with the mischievous announcement that the Chancellor was targeting three tax havens, one of which would be Belize. Darling has no money to spend, but raising the profile of the Tories' deputy chairman does not cost a penny.

If Labour were to be re-elected there would be the third and fourth parts of this exercise with another pre-Budget report and the comprehensive spending review to come. These are the leaps into the unknown. Darling made much of the efficiency savings, those painless cuts that are fashionable a few weeks before an election. There will be far more painful ones after the election, but no one knows precisely what form these will take. Part of the sparseness of yesterday's Budget was a deep and deliberate evasion.

Instead, as part of his pre-election pitch, Darling warned vaguely of tough choices ahead and that the recovery was "still in its infancy". This is a delicate balancing act. He and Gordon Brown want to claim credit for the tentative recovery but not to such an extent that they cue in David Cameron with his tonally awkward package of sun shining austerity. In case there was any doubt Darling highlighted the difference. "Some demand immediate cuts to public spending, but to start cutting now risks derailing the recovery... To go faster in the face of uncertainty would be to take huge risks". Cameron responded by confirming his intention to cut immediately. Increasingly reminiscent of William Hague when he was Leader of the Opposition, in his policy agenda and as a performer, Cameron gave a witty response to the Budget, with plenty of jokes about the indiscriminate greed of Messrs Byers, Hoon and Patricia Hewitt. He has every right to do so. The behaviour of these de-politicised figures merits witty as well as worthy condemnation. But Cameron condemned once more the borrowing that prevented Britain from falling off a cliff and argued for cuts now even though the economy is only a few millimetres away from the edge. As I have suggested before, the prospect of Osborne's "emergency Budget" will be an important element in the election campaign. Will the prospect reassure or alarm voters?

The next election will be a curious affair. On one level whoever wins will have to cut spending in ways they do not dare to contemplate in public. To some extent they do not do so privately either. Almost certainly taxes will have to rise too, beyond the easy targeting of million pound homes. The task will be epic in a way that threatens to neuter real debate, one big apolitical heave.

And yet there is a real divide, one that is more tangible than in any election for a long time. It relates to the role of government and the degree to which it has a responsibility to intervene and can do so successfully. Yesterday Darling delivered half a Budget and an entire election speech, as if he was speaking to a party rally. As he put it, the Government was right about the recession and right about recovery. He claimed the Conservatives would suffocate the recovery by cuts and deliberate inactivity. Cameron argued that the level of debt and taxes was the main threat to recovery.

This is the essence of the divide and the story of the Budget. Do voters regard government as part of the solution, or the main problem as Britain staggers out of recession? The answer to that question will determine the outcome of the election and will be defined by battles over the past, the present and the future. Time to get those 3D glasses.