As Budgets go, Wednesday’s was one of the most unexciting and uneventful of recent times. There were no ‘rabbits out of the hat’ that Brown performed as Chancellor, or nothing like the excitement of Budgets by Healey, Lawson and Ken Clarke. This was a budget thin of economics and big on politics.
The only real significant changes that were announced in the budget was the abolition of stamp duty for houses below £250,000, This change was paid for by the introduction of stamp duty at 5% on homes worth more than £1million. This got the Labour benches cheering and put the Tories in another sticky situation.
During the budget the Chancellor is allowed to have a tipple of his choice – Ken Clarke chose sherry and Lawson, whisky, but Darling and Brown only ever have mineral water. It was good that Darling did not choose cider which will saw its duty increase by 10%.
What the budget did not do was greater than what it did. It did not announce the quantitative measures to restore the budget balances. There were no radical decisions made on spending or on taxation that the markets were calling for in the build up to the budget. The Red Book does include some measures that will reduce spending in some departments. But these measures, such as cutting £555m from the department of Health ‘through reducing staff sickness’, do not represent a credible long term strategy for restoring the government deficit.
This budget, economically at least, may not have happened as it did not actually do anything. All of the decisions that it did not take will be taken either immediately after the General Election or at the Comprehensive Spending Review.
Politically this budget has several ramifications. It was a sensible budget and has done much to shore up Alistair Darling’s status as a sensible, if sober, Chancellor. It put the ball firmly in the court of the Conservatives and their plans, which are, in the words of David Cameron, ‘to get the economy moving’. It is clear that although the Tories must have this plan, they are not yet putting it in the public domain.
The Conservatives have been the main losers of this budget. It was a neutral budget, presenting Cameron with a problem. What to cut, how to do so and, most importantly when to inform the electorate of his party’s intentions. His response to the Budget was a good parliamentary performance, while Clegg’s speech was not; the Chamber got less and less populated during the Lib Dem leader’s speech. However in post-Budget appearences, Cameron has appeared agitated and not comfortable when answering questions on economic issues.
Another thing to notice about this budget, from a Tory viewpoint, is the conspicuous absence of George Osbourne. One would have expected a possible future Chancellor to lead the Conservative response to the announcements. Osbourne has only appeared in front of a few media outlets, and those that he has graced with his presence have only seen him toe the party line that they had before the Budget statement. Is Osbourne now become a political liability? Clarke’s own label of him as inexperienced, his previous membership of the Bullingdon and his trips to Russian magnate’s yachts have seen him grow into a political liability. If the Tories win, will he be the next Chancellor?
This political budget leaves the Tories with all the work to do. It is they who have been most affected by the Budget and the way that they respond will be of crucial importance to their electoral fortunes. Even the Belize tax agreement (remember a certain Lord Ashcroft?) caused yet greater embarrassment for them. Who is the second biggest loser? Those enjoy a nice pint of Cider and are about to buy a one million pound house.
