Budget 2015: George Osborne seeks to be a progressive, but he's still in thrall to Thatcherism

Osborne’s biggest ambition is to reduce the size of the state and that limits him when he hails other more innovative proposals

George Osborne walks out of number 11 Downing Street before delivering his budget (Reuters)

In a Budget, a Chancellor’s language often obscures the impact of the policies. A Budget that a Chancellor proclaims to be “bold” turns out to be cautious. A Budget that is presented as cautious is seen later as historically courageous or reckless. In contrast, George Osborne’s language helps to cast light on the mountain of policies unveiled in his Budget.

At the start of his speech, Osborne declared he would present a “one-nation” Budget. With the symmetry of a political artist he made a dramatic policy announcement at the end that appeared to match the tone of the opening. Osborne proclaimed a compulsory living wage, seemingly moving faster than a nervy Labour Party had even dared to contemplate from the safety of Opposition. As with the legalisation of gay marriage in the last parliament here was a policy to parade as an example of progressive modern Toryism. The term “progressive” recurred several times, too, during Osborne’s address.

But before very long Osborne was deploying the language of the 1980s, a decade during which Margaret Thatcher strode away from one-nation Toryism. When reflecting on his plan to slash spending Osborne stated that “there can be no turning back”, a double whammy that echoed Thatcher’s defiant declaration that she was “not for turning” in relation to her economic policy and paid homage to the Thatcherite “no turning back group”. Later Osborne proudly declared that he was raising more cash from privatisations than at any point since 1987, when Thatcherism was at its height.

The discordant language – self-proclaimed, one-nation Toryism and reverential references to the 1980s – is matched by a clash between Osborne’s declared policy ambition and reality. The living wage is an emblematic example. Over the Parliament the new living wage is unlikely to be much higher than Osborne had planned for the minimum wage. It will not apply to those under 25. For many low-paid workers the increases will not compensate for the loss of tax credits. Gordon Brown introduced those credits, not to subsidise the lazy, but to ensure work pays. Osborne is being theoretically consensual and radical in a one-nation tradition by placing the burden on the employer rather than the state, but his 1980s-style hunger to cut spending undermines the scale of the self-proclaimed ambition.

The clash between “progressive” ambition and 1980s Thatcherism is a recurring motif. In advance of the Budget the Treasury briefed that Osborne had developed into a Michael Heseltine-type of Tory, gripped by the power of government to make a difference, passionately resolved to rebalance power with his Northern Powerhouse project and animated by the impact of big infrastructure projects. None of the measures in these areas equalled the scale of theoretical ambition and were challenged by the Chancellor’s hunger to cut spending or not spend where there is an obvious demand.

The so-called Northern Powerhouse is another emblematic example. Here is a genuine radical idea being pursued with enthusiasm. In Manchester, the city that is targeted most assiduously, there is some excitement about new possibilities opening up. At least there was until the Government “paused” the modernisation of the Manchester-to-Leeds railway line. I was in Manchester the day after the announcement and the sense of betrayal was palpable. Osborne’s big idea is undermined by his “economic plan” that assumes cuts in spending will improve services and creaking infrastructure.

This theory will be tested most severely in relation to the NHS. The nightmarish challenges of meeting the demand for health and elderly care will be a running theme in this parliament. In the Budget, adopting one-nation language, Osborne declared that the NHS was only safe with the Conservatives and promised to increase spending in real terms by £8bn. But Osborne added that he would meet the spending commitment by the end of the Parliament. Senior NHS managers insist the rise is needed well before then. 1980s-style Osborne will not move faster.

There were references to new right-to-buy schemes and tax hikes for those who buy to let. There was less ambition on the need for an urgent house-building programme, although, when in one-nation mode, Osborne recognises the urgency. Again, like Chancellors in the 1980s, Osborne seems more interested in changes of ownership, tenants becoming owners, easy access to mortgages, than the more arduous task of building homes.

When he breaks free from the 1980s he becomes interesting. Wisely, he has slowed the pace of deficit reduction, although the pace is still speedy. His innovative plans to encourage the election of more mayors outside London were an early ambition of Tony Blair’s. Typically cautious, Blair offered referendums on whether there should be a mayor. Osborne is bolder, linking the new post to the adoption of specific responsibilities. Without much fanfare Osborne announced a hypothecated tax – cash from vehicle excise duty will go directly towards a road fund. Earmarked taxation is a good idea and one that is loathed by the Treasury.

But overall, Osborne’s biggest ambition is to reduce the size of the state and that limits him when he hails other more innovative proposals. For once follow the language. He seeks to be a one-nation progressive, but is still in thrall to Thatcherism.