Leading article: It is time to show some imagination, Chancellor

Mr Osborne has been talking about growth for months. Now he must do something

Share
Related Topics

If George Osborne wants to be remembered as a successful Chancellor, he will need to do more than prune public spending. Important though that may be, it will not be enough for him simply to ensure Britain no longer routinely overspends. He must also ensure that, cuts or not, the economy continues to grow.

That the Prime Minister used this week's cabinet meeting to grill ministers on the progress of economy-friendly reforms suggests the question is finally receiving the attention it deserves. But primary responsibility still lies with the Chancellor. Mr Osborne will, therefore, need to do more than talk about growth in his Budget this month. He has been talking ever since GDP started to flag. Now he must do something.

The acknowledgement that squalls in the eurozone can largely be blamed for Britain's most recent economic dip does not let the Chancellor off the hook. Neither do the hints of improvement in the past month. One need look no further than the latest convulsions over Greece, let alone Europe's still-declining economic metrics, to temper too much optimism.

What, then, should Mr Osborne do? His freedom of action is indeed constrained. The risks of reneging on commitments to cut government debt rightly rule out extra borrowing. But that does not mean there is no money at all. There may be something of a windfall from this year's below-target borrowing. In the circumstances, that is money better spent than saved. More important, however, are fiscal tweaks to maximise the economic bang for the government buck. There is no shortage of options – if the Chancellor can be sufficiently brave.

An unlikely consensus is forming on the notion of higher taxes on wealth in order to cut levies on income. Nick Clegg raised Treasury hackles with his call for the Chancellor to raise the income tax threshold to £10,000 immediately, rather than by 2015 as planned. But the idea has found favour with a constituency of the Conservative right looking for ways to both boost growth and prove the Tories are in touch with ordinary folk.

Not only that, but the Liberal Democrat pitch to pay part of the £9bn price tag with a "mansion tax" is also gaining ground. Both proposals are sound ones. Mr Osborne should make the most of his rare political opportunity, at the same time heeding Liberal Democrat calls to abolish top-rate tax relief on pension contributions, worth an eye-watering £7bn per year.

Neither are the Chancellor's options restricted to the tax system. The Government has talked up fairly meagre plans for large-scale public projects. It must go further, bringing forward future capital spending to create jobs and upgrade Britain's creaking infrastructure, not least our woefully inadequate housing stock.

Mr Osborne should also look hard at the recommendation that he expedite the £15bn-a-year austerity measures scheduled for the next parliament and spend the £50bn proceeds in this one. Other proposals from the Social Market Foundation – such as abolishing the winter fuel allowance for wealthy pensioners – also merit careful consideration.

Any money raised from areas of the economy that do not stimulate growth can then be channelled to those that do, reducing national insurance on new hires, for example. And rather than cutting corporation tax further – with savings likely to end up in shareholder dividends rather than investments – Mr Osborne should adjust capital investment tax breaks to unlock the £60bn-odd sitting on the balance sheets of companies too nervous to spend.

Fiscal levers are, of course, not all there is to economic growth. Labour laws also play a central role, as does the planning regime. But there is a great deal Mr Osborne can do with his Budget, not least in proving he has the imagination his job requires.

React Now

Latest stories from i100
SPONSORED FEATURES
iJobs Job Widget
iJobs General

King's College, Cambridge: Stipendiary Junior Research Fellowships October 2016

£20,100 (pre-award of doctorate) rising each year to a maximum of £25,869: Kin...

Recruitment Genius: Web Developer - Back End

£18000 - £24000 per annum: Recruitment Genius: A fantastic opportunity has bec...

Recruitment Genius: Online Lettings Negotiator

£18000 per annum: Recruitment Genius: This is a fantastic opportunity to join ...

Guru Careers: Trainer / IT Trainer

£30 to £32k : Guru Careers: We are seeking a Trainer / IT Trainer to join an a...

Day In a Page

Read Next
Unlimited quantities of alcohol were served at the party. File photo  

Ohayo is the hangover cure from heaven. What will stop us from drinking ourselves into oblivion now?

Olivia Acland
From left: Yvette Cooper, Jeremy Corbyn, Liz Kendall and Andy Burnham at a televised Labour leadership debate  

Jeremy Corbyn wouldn't be so far ahead in the Labour leadership race if his rivals weren't so awful

Ash Burt
Mullah Omar, creator of the Taliban, is dead... for the fourth time

Mullah Omar, creator of the Taliban, is dead... again

I was once told that intelligence services declare their enemies dead to provoke them into popping up their heads and revealing their location, says Robert Fisk
Margaret Attwood on climate change: 'Time is running out for our fragile, Goldilocks planet'

Margaret Attwood on climate change

The author looks back on what she wrote about oil in 2009, and reflects on how the conversation has changed in a mere six years
New Dr Seuss manuscript discovered: What Pet Should I Get? goes on sale this week

New Dr Seuss manuscript discovered

What Pet Should I Get? goes on sale this week
Oculus Rift and the lonely cartoon hedgehog who could become the first ever virtual reality movie star

The cartoon hedgehog leading the way into a whole new reality

Virtual reality is the 'next chapter' of entertainment. Tim Walker gives it a try
Ants have unique ability to switch between individual and collective action, says study

Secrets of ants' teamwork revealed

The insects have an almost unique ability to switch between individual and collective action
Donovan interview: The singer is releasing a greatest hits album to mark his 50th year in folk

Donovan marks his 50th year in folk

The singer tells Nick Duerden about receiving death threats, why the world is 'mentally ill', and how he can write a song about anything, from ecology to crumpets
Let's Race simulator: Ultra-realistic technology recreates thrill of the Formula One circuit

Simulator recreates thrill of F1 circuit

Rory Buckeridge gets behind the wheel and explains how it works
Twitter accused of 'Facebookisation' over plans to overhaul reverse-chronological timeline

Twitter accused of 'Facebookisation'

Facebook exasperates its users by deciding which posts they can and can’t see. So why has Twitter announced plans to do the same?
Jane Birkin asks Hermès to rename bag - but what else could the fashion house call it?

Jane Birkin asks Hermès to rename bag

The star was shocked by a Peta investigation into the exotic skins trade
10 best waterproof mascaras

Whatever the weather: 10 best waterproof mascaras

We found lash-enhancing beauties that won’t budge no matter what you throw at them
Diego Costa biography: Chelsea striker's route to the top - from those who shared his journey

Diego Costa: I go to war. You come with me...

Chelsea's rampaging striker had to fight his way from a poor city in Brazil to life at the top of the Premier League. A new book speaks to those who shared his journey
Ashes 2015: England show the mettle to strike back hard in third Test

England show the mettle to strike back hard in third Test

The biggest problem facing them in Birmingham was the recovery of the zeitgeist that drained so quickly under the weight of Australian runs at Lord's, says Kevin Garside
Women's Open 2015: Charley Hull - 'I know I'm a good golfer but I'm also just a person'

Charley Hull: 'I know I'm a good golfer but I'm also just a person'

British teen keeps her feet on ground ahead of Women's Open
Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'