Lucky George. In something of a bravura performance, the Chancellor made the most of the genuine improvements in the economy seen in recent months – jobs, growth, and a very modest improvement in living standards. True, it is all overdue, and there have been plenty of disappointments along the way, and many of the poor simply left behind, but there is good news around, and Mr Osborne capitalised on it.
So it was a skilful parliamentary turn – but he is undoubtedly lucky with it. The global trend to lower inflation gifted the Chancellor an effective windfall gain of something like £6bn a year. He also has substantial funds arriving through sales of shares in the banks. As a deeply political operator, he has used the room for manoeuvre shrewdly. He has targeted the very voters the Conservatives have been consistently pursuing these past few years – savers, principally, who are of course predominantly older people who, in turn, usually turn out on polling day.
At a stroke, he has significantly reduced taxation on savings, as well as making Isas more flexible, and introduced a new subsidy to first-time buyers, probably unwise in the long run, but, again, a smart political tactic aimed with precision at another crucial group of swing voters.
The lower paid, too, and higher-rate taxpayers will see the benefit of a welcome rise in tax thresholds. The goal George Osborne set himself of a £12,500 threshold for income tax and a £50,000 threshold for the higher rate injected a genuine element of excitement into the Budget, and just a whiff of the sorts of dramatic tax cuts made by one of his predecessors, Nigel Lawson. Of course, there is no date set for these new allowances to be introduced, which confirms that, behind all the voter-pleasing, headline-grabbing announcements lurks a rather cautious and prudent Budget.
This, then, is the Budget’s dirty secret, effectively laid bare by Ed Miliband, who, mercifully for his own prospects, was also on excellent form, and held his nerve commendably after Mr Osborne’s whizbangs.
Mr Miliband seized upon Table 2.4 in the “Red Book”, which sounds dry, but in fact contains the juicy meat of the Government’s spending plans. And it shows that, far from this being the giveaway the Osborne rhetoric suggested, it is in fact rather a mean affair. Yes, the deficit will now be reduced at a slower rate than promised in the Autumn Statement – blunting the Labour attack line on “1930s” levels of public spending. But we can nevertheless expect more cuts, more assaults on the very poorest – who rely on state benefits to be able to eat, keep a roof over their heads and stay warm – and more inequality if the Conservatives win the election. For those fortunate to be able to take advantage of the new jobs being created, times may not be so bad; for those unable to do so because their local economy is still depressed or they suffer ill-health or disability, times will be even tougher.
With more than a little chutzpah – given that he forgot to mention the economy in his last conference speech – Mr Miliband seized on the fact that the Chancellor hardly discussed the NHS. The Labour leader exposed the truths that the nation’s books were supposed to be balanced by now; that there is a broad programme of “extreme cuts” laid out in the Treasury’s own plans; and that the UK’s greatest economic weakness – poor productivity – remains unresolved (as indeed it was during the 13 years of the last Labour government). The Leader of the Opposition repeated his pledge to cut tuition fees, abolish the “bedroom tax”, bring in a “mansion tax” and boost the minimum wage. Wise or not, these are easily understood policies that Labour candidates can sell on the doorstep. Mr Miliband had fewer good gags, but took unseemly pleasure in sideswiping the Liberal Democrats, who had made a big and beneficial impact on today’s events.
So Mr Miliband and Mr Osborne helped the voters understand the very real choices that face them at the election in 49 days’ time. It may not have done much for the economy, but today was a good day for politics.