Leading article: Mr Osborne's eye is on his legacy

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The Independent Online

There is not much new that George Osborne can say in his Budget speech tomorrow. We can assume that figures he has been given by the Office for Budget Responsibility will show that last November's forecast for economic growth was too optimistic, which is why he will promise more apprenticeships and other measures to relieve youth unemployment.

On the other hand, the latest independent forecasts suggest that the Government has borrowed less than anticipated, so the Chancellor can afford a few small measures to ease the household budgets of those voters whose support the Government is in danger of losing. For example, there is the decision not to increase airport duty, which saves £1 on the price of a cheap flight to Europe. Expect a similar concession for motorists shaken by how much it now costs to fill the petrol tank. But these small measures are not going to make or break a political reputation. And Mr Osborne has already warned that there will be no retreat from the regime of cuts that will cost the jobs of thousands of public employees this year, nor any substantial reduction in tax.

It might be this absence of anything else for the history books that has drawn the Chancellor to the idea of merging income tax and National Insurance. There is logic to this measure. No one really thinks that NI is a genuine form of insurance. It is obviously a tax on income. Following through this logic will establish George Osborne as a bold, reforming Chancellor.

But there is a huge pitfall. Pensioners who now pay income tax but not NI would suffer a grievous drop in their incomes if the reform were pushed through without some protective measures. The over-55s are the one age group on whose support the Conservatives can rely through thick and thin, and are particularly conscientious about turning out to vote. Mr Osborne cannot afford to sacrifice their support.

So we cannot expect the reform to come about overnight, or to be as simple as it sounds.

An interesting idea all the same.