Political Commentary: Budget realism is thin on the ground
The noises coming out of the Treasury on next week’s Budget do not not bode well. Steady as she goes; let nature do the heavy lifting; don’t rock the boat, just about sums it up.
The Chancellor seems to have deserted the field of battle. For his first three years at Number 11, he has tinkered and trimmed while the national debt has continued its inexorable rise skyward.
More than half of public-sector activity is ring-fenced, while what’s left bears the brunt of “cuts”. The natives, including senior Cabinet ministers, are either loudly protesting or plotting revolution.
With just two years to go until the General Election, George Osborne can’t do very much now without admitting his grand strategy has failed to deliver results within the timescale required.
Only one priority should be on his desk for Wednesday week: increase demand in the economy, while not adding to the deficit. How can that best be achieved?
The Budget should be aimed relentlessly at releasing significant funds into the hands of those who will spend it, while simultaneously balancing up by reducing public expenditure. In other words, a neutral, but expansionary Budget.
What the economy urgently needs now are tax reductions for the “Thrivers”, people with mid-to-high incomes up to £70,000. They can be almost guaranteed to spend it. This group has been hammered by the Coalition since it came to power, yet they are the only demographic with the weight of spending power to relaunch the economy.
The “Strivers”, just below the Thrivers, are not quite in the same league and lack the firepower of those who have made it, but a little nudge to them would bring dividends economically as well as electorally.
Politically, both Labour and the Lib Dems will howl like banshees at the “unfairness” of it all. It’s even possible the Libs will refuse to support the measures in Parliament, although it’s hard to see how they could remain in the coalition under such circumstances.
This really should have been done three years ago. Labour’s vicious tirade against “the rich” (meaning the hard-pressed upper-middle class) has made it difficult to push easy spending power into the economy. Same old socialists!
Given that the Budget has become a political statement these days, mainly to avoid Labour taunts of “Same old Tories,” some real grit will be required to make the case. So far the Cameroons have chickened out of this.
Overall, that is the only medicine that stands a chance of delivering results before the election. Osborne’s planned rearrangement of the deckchairs is an admission of defeat.
In the absence of such measures, we can write off this Parliament economically. Whether the Government’s radical social measures already enacted will be mature enough to make a difference is also debatable. They will cost money and do little for demand.
Confirming what I wrote in my last column here, Barking lurchers: an ICM poll for The Guardian finds that by a majority of 67% to 25%, voters agree “the Conservatives would be more appealing if they took a tougher line with Europe”. That applies even more to immigration and support for traditional families.
Cameron and Osborne should try climbing aboard this victory train before it’s too late. Nothing else matters right now.
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Coming up: Mystology: A different way of looking at the world. Also a website, mystology.com.