When he delivered his Autumn Statement back in November, George Osborne bestrode the political stage. His political and economic strategy had delivered a Conservative majority earlier that year and he appeared almost unassailable as the heir apparent. Moreover, a surprising £27bn uptick in the public finances allowed him to abandon previous cuts to tax credits and implement cuts far less severe than anticipated.
Well five months is a very long time in politics. Today’s Budget was an altogether more difficult affair and both the political and economic context is very different. The improvement in the public finances proved to be a short-term one, and today the Chancellor was forced to downgrade UK growth estimates and announce that the deficit is in fact rising again as a proportion of GDP, leading many Conservatives to question whether a true Tory Chancellor would have saved November’s windfall rather than spending it. This exacerbates the political problems caused by the backdrop of the EU referendum which means that by the day Osborne is leaking support to Boris Johnson in the battle to replace David Cameron. After policies like the Living Wage and the Stamp Duty increases which drew more from the Labour playbook than the Tory one, today was the day Osborne desperately needed to show the right that he is truly ‘one of them’.
Politically, that was the objective the Chancellor seemed to set himself today. Usually, George Osborne makes a deliberate play to the political centre, but today’s speech struck a more right-wing rhetorical tone. He seemed to take pleasure in announcing further spending cuts and enjoyed announcing further Corporation Tax and SME Business Rates cuts even more. He went on to announce more generous ISAs, the retention of higher rate tax relief on pension contributions, and moving all schools out of Council control. Finally, in his piece de la resistance, he announced further increases in the tax free allowance for both the 20p and 40p rates of income tax.
It wasn’t all red meat for the right though. The long-discussed Sugar Tax on soft drinks was finally brought forward and some themes are eternal in any George Osborne speech. Significant resources were allocated to big infrastructure projects including Crossrail 2 and HS3 – the latter being a particular favourite of the Chancellor as it allows him to talk of his “Northern Powerhouse” pet project designed to eventually deliver a Conservative political recovery in the north.
It is likely, when we look back on the political year that this year’s Budget will look more like a footnote than it usually does. In part because the poor public finances gave Osborne so little room for manoeuvre, but mostly because the main event of the year will happen on 23 June. If Britain remains in Europe, the Prime Minister probably survives and George Osborne has two years to rebuild his support. But if the referendum is lost, we say ‘adios’ to Prime Minister Cameron and probably Chancellor Osborne too. And, despite all of his efforts, no amount of tacking to the right in today’s Budget changes any of that.