Few surprises were expected from George Osborne’s fifth Budget, and yet when it came the Chancellor managed to pull a plump-looking rabbit out of his hat after all.
By the time he got to his feet in the Commons, there was much we already knew: that the personal income tax allowance would rise to £10,500 from April 2015, that a garden city would be built at Ebbsfleet in Kent, and that there would be an all-new threepenny bit-style £1 coin. There was also much for business, as might be expected from a Government desperate for growth after six years of stagnation. Thus the doubling of export finance, the measures to ease manufacturers’ energy bills, the hike in investment allowances. All are welcome, as indeed is the broad message that British industry is to be supported.
But the fireworks, such as they were, came in the shape of savings reforms. Taken in isolation, it is difficult to fault the Chancellor’s proposals. The extension of Isa allowances, the shake-up of rules governing defined-contribution pensions, and – perhaps most radically – the elimination of enforced annuities are changes that are long overdue. Most immediately, they offer a semblance of relief to the financially cautious who have been hit hard by post-crisis rock-bottom interest rates. By improving the incentives to save, the reforms are also a nod towards the problems of the ageing population.
Such changes are not made in isolation, however. And against the backdrop of squeezed living standards and a cap on welfare spending, the political message could hardly be more deafening. The election may be more than 12 months off, but Mr Osborne is in no doubt about whom he is wooing. Having long claimed to be on the side of the hard-working, the thrifty and the responsible, this was the Budget in which he aimed to prove it. It was also, of course, carefully crafted to catch the eye of the middling-prosperous elderly – a group who are not only the most likely to vote, but are also the core Tories most likely to be susceptible to the siren calls of Ukip.
In setting out his electoral stall, Mr Osborne will hope that the wider economic picture will help. Buoyed by swathes of new forecasts from the Office for Budget Responsibility, all of them revised in a positive direction, the Chancellor set out his vision of an economy on the mend, steered by a Government committed to tilting the balance in favour of those who do as they should. But he has two problems here. One is the economy itself: growing it may be, but the medium-term prospects remain far from certain and, with structural problems still unresolved, austerity is far from over. Today’s handful of populist measures – the penny off beer duty, for example – are hardly recompense for living standards not recovering until 2018.
It is here, in fact, that the second issue arises. As Ed Miliband pointed out in his Budget reply, the least well-off got barely a mention. Even the rise in the income tax threshold will not touch those at the very bottom. For all Mr Osborne’s warm words about “the makers, the doers and the savers”, in its focus on business and the elderly this was, in fact, the most narrowly Tory of Budgets. Perhaps the biggest conjuring trick of all, then, was the attempt to make naked politics look like sober economics.