This budget was striking for its grasp of the big challenges facing the countryby Bronwen Maddox / July 8, 2015 / Leave a comment
This was a clever and far-sighted Budget from George Osborne. Sure, it was tactical as ever, the Chancellor quoting Alastair Darling and other senior Labour figures in support of his points. It stole the curbing of the non-domicile tax status, one of Ed Miliband’s few campaign initiatives that was both inspired and popular, straight from the opposition script.
But it set out to do a lot more than that. The framework was still that of the austerity Chancellor, and the ambitious targets for returning national finances to the black remain the big vulnerability of this Budget, where Greece, or the patchiness of the international recovery (see China’s stock market travails this week), make his forecasts vulnerable. Those projections are this Budget’s weakest link. Nor has he fully explained why he thinks the rate of the reduction of the deficit is right, beyond asserting simply that it is.
Yet Osborne has said recently that he has come to realise the extent of government’s power to change lives (with an echo even if inadvertent of Margaret Thatcher’s saying that “economics is the method, the object is to change the soul”). Much trumpeted as the first pure Tory Budget for 18 years, this set to reshape the way that British plan their work, their families, and choose to run their government. There are reforms that will hit some people hard, particularly students and some working families hard. But it would be a caricature to call it merely an ideological attempt to slash back the size of the state, as some inevitably will.
It will also be followed by the end of the week, he said, by a White Paper on productivity. This, together with the commitment to northern investment, may prove one of the most important exercises of the start of this parliament. Britain’s stalled productivity—the amount that workers produce per hour—is arguably the country’s greatest economic problem. Without changing that, it is hard to see why wages will rise above inflation in a sustained way. Yet the answers are hardly easy, in the face of international competition; they lie in infrastructure investment, innovation and in education, which all governments love to talk about but fewer deliver on.