Osborne’s Budget was a political triumph
With many of the spending cuts announced in the Comprehensive Spending Review not even in effect yet, we knew this was always going to be a Budget that was a bit short on radical changes. With the public mood already sceptical on the way the cuts are being implemented (see Andrew Hawkins from last month for more on this) Osborne had a careful balancing act to perform to stay within the parameters set by the CSR while avoiding the appearance of more unpopular cuts.
And he did it. As our word cloud version of his speech demonstrates, the word ‘cuts’ was barely to be seen. Instead, we had ‘growth’, ‘stability’ and ‘jobs’, backed up by the announcement of eleven new enterprise zones (one of which will be conveniently located in the vicinity of Nick Clegg’s Sheffield constituency), a further increase to the personal income tax allowance and a voter-friendly reduction in fuel duty.
The high profile areas where Labour could have made some inroads where neatly dodged, too. He cut corporation tax to 1% to make the UK more attractive for businesses, but compensated by increasing the banking levy to make sure that the banks don’t benefit, something that the Eds Miliband and Balls had definitely been hoping to attack him on.
Merging income tax with national insurance, a potentially very controversial measure, was mentioned and a consultation launched, but no further action taken. On fuel, a topic that the Balls camp has been relentlessly pushing for the past few weeks, he introduced a ‘fair fuel stabiliser’ and instead of implementing a planned rise in fuel duty, he cut it by 1p.
This last move epitomises the cunning success of Osborne’s Budget. Through judicious leaks and confident delivery, he’s managed to make abolishing a price increase that hadn’t actually happened yet seem like a singularly generous and positive move while simultaneously removing some of the shadow treasury team’s best ammunition. All they were left
The fuel duty cut will no doubt dominate the media coverage tomorrow, meaning that more complex, less populist measures slide past relatively unnoticed. For instance, he didn’t announce anything that would prevent oil companies upping their prices to accommodate the increased tax burden they will now face – Danny Alexander was on the BBC straight afterwards telling Stephanie Flanders that they would “keep an eye on it”. Also, as Sky’s Sophy Ridge has rightly pointed out, linking the tax thresholds to CPI rather than RPI will catch more taxpayers in the higher rate, generating more revenue for the Treasury.
Most of all though, as Ed Miliband's Twitter feed pointed out shortly after the Budget statement, this was a 'growth' budget in which the Chancellor had to announce that the growth forecasts have had to be revised downwards - something he managed to bury relatively successfully.
Osborne couldn’t resist wrapping up his speech with a cheesy pun, vowing “to put fuel into the tank of the British economy”. And why not? Today he managed to turn what could have been a defensive damage-limitation exercise into a political victory.