Budget 2013: Chancellor George Osborne has got the little things right - and the big things wrong

A member of the Lib Dems' Federal Policy Committee laments the Chancellor's devotion to narrow political strategy ahead of the interests of the country

George Osborne is allowing classroom spending to fall, according to the Department for Education’s document, leaked to The IoS (AFP)

This is a very different budget to its predecessors this Parliament; after the chaos of 2012 has come a tightly-focused package bearing the indelible mark of George Osborne – not as Chancellor, but strategist.

The politics of it are clearly from the hardnosed 2015 Conservative election planning unit of George Osborne. No opportunity has been missed to make populist announcements on relatively low revenue-raising excise duties.

On this, the overdue and welcome abandonment of the beer duty escalator is notable, for the victory of CAMRA and other campaigners in pointing out that the measure was actually starting to lose the Treasury revenue as well as damaging pubs. Clearly the headlines are supposed to be about matters like these rather than growth and the deficit.

Treat with caution

On the face of it a great success, the announcement of the completion of the signature Liberal Democrat policy of increasing the income tax threshold should be treated with caution, for two reasons.

The first is that Osborne wants to treat this as his triumph too, as recent Tory election literature suggests.

The second is that the wider message was obscured by yesterday's announcement of a childcare package that benefits upper earners who don't need the support, and does too little for lower earners who do. While a Liberal Democrat signature and constructive influence is unmistakeable, nobody in the party should for a moment be complacent about it being enough.

The most compelling reason is the worsening bigger economic picture. Whereas what is needed is to get banks lending and housing built, the remedy instead is an investment-free sticking plaster of old-fashioned short-termism.

Part of this is due to the continuing chasm in Coalition housing policy, with Tories blaming the planning system (conveniently forgetting about the hundreds of thousands of homes with consent) and more sensible Lib Dems advocating investment to get jobs short-term and save long-term.

The mess senior Lib Dems are in on this subject is epitomised by the only major pre-budget infrastructure announcement - to the horror of environmentalists and most Lib Dems, a new nuclear power station, announced by - of all people - a Lib Dem Minister. The seemingly knee-jerk reaction of the Coalition to side against environmental interests remains a major concern.

Unhappy grassroots

Indeed, having rejected the detailed plans of the Liberal Democrats on housing, the Coalition’s plans come endorsed not by Barratt but Elastoplast. The promise of loans to house buyers does not tackle the failure of the banks to promote advantageous rates; the investment in shared equity likewise will not supply enough oil to the wheels of the house builders.

Increasingly, this is the view of Liberal Democrats at the grassroots too. A survey of Lib Dem activists published today found that over two-thirds of them want a turning away to Plan A, mostly towards the investment approach favoured by the Social Liberal Forum and Vince Cable – Plan C.

Superficially, then, possibly with Eastleigh spooking the Tories, there is news for Lib Dems to be glad about. However, the overriding impression is that of a Budget that gets a lot of little things right, but the big things wrong.

Whereas the balance-sheet approach is finally acknowledged to have flopped by mistakenly slashing capital investment, demand remains suppressed and growth restricted, as Vince Cable's New Statesman essay set out. The political positioning of George Osborne is no substitute.

Gareth Epps is co-Chair of the Social Liberal Forum and a member of the Liberal Democrats’ Federal Policy Committee