The politics of the Budget are clear – and the holes are becoming clearer too
Posted on 21 March 2012 | 2:03pm
If the frontbench had accepted Ed Miliband’s invitation to raise their hands if they were going to be better off as a result of the Budget, we’d have seen an awful lot of fingers in the air. I understand why instead they squirmed and, in George Osborne’s case, sank a little deeper into the green leather.
Nick Robinson rightly made the point to Danny Alexander just now that the vast bulk of people who will benefit from the top rate tax cut will NOT be affected by the other measures designed to bring in money from the rich. So Labour’s line that a lot of wealthy people are going to be made substantially wealthier as a result of the Budget is sound.
And Stephanie Flanders rightly made the point to Mr Alexander that as a result of benefit and other changes, the poor (I paraphrase) are going to get hammered. It is worth adding here that many of the benefit cuts already in the pipeline have not yet come into effect, and that cuts to tax credits take away for many any gains from the raising of personal allowances.
His MPs clearly thought Osborne presented his case well, but as often with Budgets, the things he did not focus on are likely to become as politically potent as the things he deliberately highlighted. The hit on pensioners will be chief among them.
Labour MPs were clearly cheered by Ed Miliband’s performance, and with good reason. He looked confident, and had a clear message exposing what many people suspect does indeed lie at the heart of the Cameron-Osborne philosophy – namely that they think the rich work harder if made richer, and the poor work harder if made poorer.
Compare and contrast, for example, the language and the policies to deal with welfare cheats with the fact that his main argument for reducing the top rate of tax is that the rich with their sneaky accountants managed to avoid paying the tax they should have paid. And of course his much vaunted HMRC report focused on the year of change – the accountants could not have done the same trick twice. It was also a year when the economy was particularly sluggish, and tax revenues low in any event. Therefore the argument for the reduction he made, alongside his claim that his changes will raise five times more money, are pretty spurious.
It is also worth bearing in mind that if it is possible to lose so much money through tax avoidance, it is risky that he is resting a lot of his hopes for raising the money he needs for all his ambitions — on tax avoidance.
And though he tried to make something of a slightly higher OBR growth forecast, it is still well short of what Plan A was meant to deliver; and not even his best friends or speechwriters would describe Osborne’s Budget as a plan for growth.