Leading article: A Budget for the short term, paid on the never-never

Mr Darling revives the politics of envy to postpone public sector reform

Related Topics

The Chancellor's Budget speech is a set piece of the political year as keenly awaited as the State of the Nation address in the United States. The Commons is full, the mood anticipatory, verging on raucous – and yesterday was no exception. But with the dire forecasts for the public finances and the depth of the global downturn, there was an added frisson of trepidation. How would the Chancellor respond to an economic climate at its most inclement since the Second World War?

The answer was disappointing, but should not have been unexpected. Radical, exciting, visionary, this Budget was not. Workmanlike is the word that comes to mind; workmanlike, but strangely old-fashioned and finely attuned to the concerns of voters who might be tempted to stay at home at the next general election.

Its headline, one of the few surprises in an otherwise mundane landscape, was the decision to bring forward the tax rise for the highest earners and increase the new top rate to the highly symbolic figure of 50 per cent. On the face of it, such a move – breaking a New Labour promise and revising upwards a tax rise already announced in the Pre-Budget Report – could offer proof that the public finances may be in even more trouble than they appear. But the politics were as transparent as the economics.

There was a sense in which Mr Darling was presiding at the obsequies for New Labour, and Peter, now Lord, Mandelson's "intensely relaxed" attitude to people becoming "filthy rich". As an attempt to raise revenue for the Treasury, the 50 per cent rate is likely to yield less than forecast, if anything at all. It looks much more like a nod to public anger over high salaries and banking failures – a regrettable and depressing sign that the politics of envy are back. It was clearly, too, a trap for the Conservatives, which they deftly sidestepped with their non-committal response. In essence, it was a pre-election gambit, albeit the most eye-catching, among many.

There was the long-discussed "scrappage" scheme for the car industry (and hesitant car-buyers), part of which will be funded by the car-makers. There was a concession for grandparents looking after grandchildren, but only those carers of working age. There was a similarly small consolation prize for pensioners with modest savings, and an even smaller one for tax-paying savers in a higher ISA allowance which will cost the Treasury almost nothing so long as interest rates stay low. And the VAT reduction and stamp duty holiday are to remain at least until the end of the year – in other words, they are being given more time to have the desired effect.

Small business was another beneficiary, with lesser sweeteners handed out for housing, employment and green causes: anything that might foster, or at least not deter, those elusive green shoots. Given the anxious public mood, even those voters not directly wooed by the Chancellor yesterday probably felt cheered by his decision to leave basic tax rates and allowances alone. Besides the hardy perennials such as alcohol and tobacco taxes, average earners emerged, in the very short term, relatively unscathed.

But there is another side to the burial of New Labour and it was exploited to such lethal effect by David Cameron in his response. Three terms of a government that started out committed to prudence and sound economic stewardship are ending in a catastrophic deficit that bespeaks the very opposite. Mr Darling's projections for a return to growth may turn out to be less utopian than they seem today, but the levels of debt that are forecast to persist until 2017, even by his – presumably best-case scenario – threaten to impoverish into the next generation a country that should be rich. Without a coherent and rigorous plan to cut borrowing, it is hard to see how investor confidence will return. The Government's sensitivity to IMF figures illustrates its concern on this score.

Mr Darling had a difficult task – not to dash timid hopes for recovery, to gird Labour for an election, and to rebuild trust in the Government's management of the public finances. But failure in the third could thwart the other two, and the best Mr Darling had to offer here were further – unspecified – "efficiency" savings.

The Government's reluctance to prune the public sector at a time when claims on its resources are increasing is understandable, but the Budget cannot be the last word. Mr Darling has promised new financial regulation. He should couple this with a similarly far-reaching review of what central government does and how it does it. If he cannot bring himself to grasp this nettle, the Conservative leader should do it for him. Mr Cameron could seize the initiative by making root-and-branch reform of the public sector central to his election manifesto.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Graduate Web Developer

£26000 - £33000 per annum: Recruitment Genius: A Web Developer is required to ...

Ashdown Group: PeopleSoft Developer - London - £45k

£45000 per annum: Ashdown Group: PeopleSoft Application Support & Development ...

Ashdown Group: PHP Developer - Buckinghamshire - £29,000

£25000 - £29000 per annum: Ashdown Group: Junior PHP Developer - Milton Keynes...

Recruitment Genius: Online Sales & Marketing Assistant

£22000 - £25000 per annum: Recruitment Genius: This UK based B2C and B2B multi...

Day In a Page

Read Next
Teenagers make a request to vote at a polling station in Stanwell Village, west of London in the 2005 General Election  

If teenagers were keen to vote, it could transform Britain

Peter Kellner
Crocuses bloom at The Royal Botanical Gardens, Kew  

From carpets of crocuses to cuckoos on the move, spring is truly springing

Michael McCarthy
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003