Interest payments – oh lord, what a quagmire we have here. The little five percents make the world go round. You wouldn’t be reading this without it. Oxford wouldn’t exist. It would be devoid of Daddy’s city money and most of its endowment. Yes, interest payments are positively festooned with joyfulness. Except – and Philip II would agree with me here – when you’re the one paying them.
When governments borrow money they have to pay back the interest on the debt. The more they borrow the greater the payments. And so Osborne, when he rose Gladstonily to make a less Gladstonily hour-long sermon on tax, had in mind to cut the debts to cut the payments. And to cut the debts he had to cut public spending. Or make the economy grow.
Not that you’d know that from the left-wing papers. These normally inestimable bulwarks of good sense have converted to a particularly virulent form of lunacy when confronted with The Oz. They are unable to understand that the Tories do not wish to permanently reduce public spending. Thatcher didn’t. Reagan didn’t. Osborne won’t. It is impossible to reduce the size of government spending in the long term. Saturday’s protestors in London also fail to grasp this – most of the cuts they protest against were planned by the Labour government. There is a consensus on the issue, blighted only by spin, propaganda and fudge.
So in focussing on cuts people are missing the point of this Budget. It’s a business Budget. The aim was to increase growth by bolstering companies. Hence the cut in corporation tax. This Budget has the Tory stamp on it. There was only one obvious Lib Dem concession – to raise the level at which people have to start paying tax. Otherwise in the end, it was helping businesses, with a bone to the tabloids chucked in. This – the fuel subsidy – is a determined snub to the environment, balanced, I suppose, with the investment in a green bank.
But these were merely sidelines. By investing in business subsidies and tax cuts the Chancellor’s pulled off a brilliant ploy. He hopes to avoid the heavy state investment needed to boost recovery by simply getting the private sector to do the job for him. From a right-wing perspective this is excellent. People are set free to grow businesses AND the economy improves. It is actually a brilliant idea, spoilt only by the fact it might very possibly not work at all.
Anyway, this won’t be the storyline. Cuts will dominate for the next few months, probably the next few years. However, it gives an idea of the Osborne strategy. This intriguing little man is the Ringo of the Tories – somehow essential, but it’s hard to work out exactly why. He is, we’re told, marshalling legions of followers for a leadership fight. This budget does not just determine the future of the country. It determine who will succeed as Prime Minister. And for millions waiting for the axe to fall, that is more important than they might think.
