ANALYSIS: George Osborne's mini-budget took a little from the wealthy and a lot from the poorest
For a man facing unprecedented challenges, George Osborne looked surprisingly chirpy yesterday.
Dumping core promises is never easy, but he managed it with ease as he produced a mini-budget that took some from the wealthy and a lot from the poorest, all mixed with accounting sleights-of-hand.
For two years he has told the British public he would erase the part of the UK’s deficit caused by past mistakes, and that voters would see the total debt falling when they next go to the polls in 2015.
The first was delayed some time ago, while Osborne has now had to accept that cutting debt as a percentage of GDP will take longer to achieve, and austerity will continue until at least 2018.
Such mea culpas should have seen Osborne skewered at the dispatch box in the Commons, yet it was Labour’s Ed Balls who struggled – partly because Osborne did not repeat his Budget Day blunders of last March.
In the 1930s it took the UK two years to restore its economy. In 1973 after the oil crisis, it took three years. In 1979 it took four. This time it will take six, perhaps longer.
For now, the argument is the same as in Ireland, with Osborne attacked for imposing austerity that has hampered growth, increased welfare bills, thus provoking more borrowing.
Labour not forgiven
The Conservatives/Liberal Democrats argue the contrary: “How on earth can you deal with a borrowing problem by pledging to borrow more?” prime minister David Cameron asked Labour leader Ed Miliband.
The Conservatives have the better argument in the eyes of the public, who have not forgotten, or forgiven, Labour’s sins in its final years.
Securing that support, Osborne followed Gordon Brown’s divide-and-rule strategy. Benefits, excluding those for carers and the disabled, will rise by just 1 per cent a year for the next three years, rather than by inflation, or close to it.
Housing benefits which escape next year’s cap will rise by 1 per cent for two years, while the better-off will get fewer pension tax breaks.
Middle England, meanwhile, will see a planned three-pence fuel duty rise scrapped.
However, the near-freeze of tax credits (another of Brown’s inventions) will mean workers above minimum wage – but far from rich – will suffer some of the worst pain.
