George Osborne’s last budget was an omnishambles that unravelled amid rows over everything from taxes on pasties and caravans to cuts for pensioners and a windfall for millionaires. But is his 2013 offering any better?
After by election defeat, a u-turn over minimum alcohol pricing, a climbdown on Leveson, the growth of UKIP support and ongoing rows over the bedroom tax, the Conservative part of the coalition government needed a strong performance from Osborne. But it simply didn’t get one.
Frankly this is a budget that the Chancellor would have cancelled if he could have got away with it. He knew that he would be forced to stand in front of the House of Commons and admit that, by every test he had set himself, his economic policies were failing badly. Despite austerity the national debt is still rising. Growth is non-existent. The AAA credit rating he so prized is gone. Unemployment is increasing again. A triple dip recession looms.
And Osborne’s answer? To propose the continuation of those exact same failing policies.
The Chancellor’s main messages were the typical Tory ones: there is no alternative and support for the strivers. But the details announced showed that even the previously modest growth forecasts have had to be cut and a further four years of net debt increases is now expected. Yes, despite all of the cuts announced on top of those already imposed there will be no reduction in the national debt until 2017/ 18.
This is the second time that the Chancellor has moved back the timescale for debt reduction. And over the next four financial years he forecast that an additional £46 billion will be added to the debt – on top of the £287 billion of new debt that he forecast in his last budget.
Clearly it is hurting and will continue to cause great pain– and it isn’t even working.
There was a little good news of course: a planned 3p rise on a litre of fuel won’t now happen – and a populist 1p fall in the price of a pint of beer will be welcomed by many. Increases to personal tax allowances will make take home pay just a little higher for most. Reductions in corporation tax and employers’ national insurance contributions will give some relief to business.
Great play was made of new tax avoidance measures. There was a lot of rhetoric but little in the way of substance – or figures for how much additional income he expected.
But George Osborne’s key failure in this budget was in refusing to plan the large scale investment that we can all see is needed to get the economy moving and to tackle unemployment.
Invest in infrastructure and build much needed houses. Much more than then £2.5 billion cut from elsewhere over two years is required. Significant new investment is now needed, not just a little sleight of hand reallocation from revenue to capital spending.
Lend to businesses to invest and you create jobs Get people into work and they will pay taxes. They will also spend money and stimulate demand. These are the types of measures that the Chancellor should have prioritised. Even Michael Hesaltine – not exactly a known Keynesian – made the case for infrastructure spending. But Osborne does not even propose to match the modest level of investment that he identified.
Instead of action to stimulate the economy now, the Chancellor proposed a subsidy for childcare – in 2015. A new pension structure – in 2016. Does he not realise that the economy is in severe trouble right now?
The Chancellor joined Twitter to promote this budget – which was rather odd as all of the details appeared in the London Evening Standard before he even stood up to speak in the House Of Commons. An embarrassing leak from somewhere within the Treasury it seems.
And Ed Miliband even summed up his budget for him within the required 140 characters: “Growth down, borrowing up, families hit, and millionaires laughing all the way to the bank #downgradedchancellor”
This was a budget that offered nothing new. More cuts and higher debt are the results of Osborne’s failed economic policies. Yet he refuses to contemplate a change of course. And his own forecasts are of worse to come. There is no good news from, to quote Milibrand, “a downgraded Chancellor.”
Instead of offering real investment and hope George Osborne continues to fiddle while the economy crashes around him. And the country is left to pay the high price for his failure.