We asked one Conservative and one Labour commentator to tell us what Osborne's first Conservative Budget means for their respective parties.
Responding to this Budget was always going to be tough for Labour, after a terrible election defeat and without a permanent leader or Shadow Chancellor in place. But the package George Osborne unveiled today made that job much harder—in part because he stole many of Labour’s pre-election clothes.
For a start, the Chancellor’s fiscal plans are far closer to those of Ed Balls than either man may care to admit. Osborne (wisely) delayed the end-point of deficit reduction by a year, deploying the sort of flexibility Labour insisted on retaining before the election. Departmental spending and investment will not suffer quite as much as expected and some of the welfare savings will come from simply freezing entitlements for longer.
Meanwhile, Osborne's new fiscal rule, to run a surplus in normal times, only comes into force in 2020 so it is of no practical relevance in this parliament. In effect it is only a political device, although it appears that most of the Labour leadership candidates recognise that, and will not be drawn into opposing it.
But the real show-stopper was Osborne’s dramatic decision to increase (and rebrand) the minimum wage. He probably didn’t realise he was adopting a recent Fabian Society proposal: to set the wage floor at 60 per cent of earnings by 2020. This was briefly Labour Party policy in 2014 but was later watered down, leaving the Tories today looking more radical than Ed Miliband. Osborne swiped Labour’s flagship policy, with a sense of self-confidence that Labour itself lacked before the election.
But the Chancellor’s neatest trick was his claim that low paid families would be better off, taking account of the net effects of the "living wage," income tax threshold and tax allowances. The budget red book showed the sums for a minimum wage worker, but it failed to note that if your wages are already just a little higher, you’ll be left substantially worse off. I suspect that in the coming days the detail regarding low paid workers will unravel a bit—not least because of the quiet £1.5bn tax rise on insurance premiums. Nevertheless Labour will struggle to portray this budget as a devastating blow to the working poor.
Perhaps, though, that does not matter, because for now no one is listening to Labour. The party’s greatest task for the next five years is to restore economic credibility, but it will be a marathon not a sprint. That job starts in earnest the day the new leader is elected.
Read more on the budget:
Osborne has learned the lessons of power
Verdict from the Prospect panel
Nice budget, George—shame about the sneer
He’s the Long Term Economic Plan, the high-vis man from the Northern Powerhouse, the slimmed-down accountant and right-hand man of the Prime Minister. Continued victory in leadership polls shows that George Osborne has never been more popular within his party. But has today’s budget cemented this position?
Osborne is the lynchpin of the Cameron concoction of One Nation social modernism and economic liberalism that brought electoral success by freeing up the lives of all "working people." That success depended on a narrative of fairness. And we’ve seen more of this today.
Further help for higher rate taxpayers was, again, balanced by an announced increase to the personal tax allowance. This shows—alongside reforms to welfare—a renewed focus on carefully limiting both state and taxation. Yet this isn’t just about equality. While cutting at the top provokes derision from some, it’s an obvious appeasement to traditional Conservatives sidelined by the progressive policies the party has come to depend upon. Family-orientated annoyance at liberalisation of Sunday trading rules is similarly placated by inheritance tax reductions, and proper commitments to defence.
Osborne’s strength is his responsiveness—the mark of a good Conservative. Some members will dislike today’s effective slowing of cuts, as well as sneaky increases to public spending, and new controls on business (including the surprise introduction of a living wage). They’ll worry that the lack of a truly "nasty" first all-blue budget shows that compassionate-yet-profligate Conservatism is here to stay.
But Osborne is, for now, still the party’s golden boy: the increasingly obvious successor to Cameron. Yet his sensible approach has been bolstered by economic luck and a strong narrative. While recovery remains the single focus, this Budget’s the right medicine for today. Will it be tomorrow?
Labour: Osborne stole our thunder
Andrew Harrop, Director of the Fabian SocietyResponding to this Budget was always going to be tough for Labour, after a terrible election defeat and without a permanent leader or Shadow Chancellor in place. But the package George Osborne unveiled today made that job much harder—in part because he stole many of Labour’s pre-election clothes.
For a start, the Chancellor’s fiscal plans are far closer to those of Ed Balls than either man may care to admit. Osborne (wisely) delayed the end-point of deficit reduction by a year, deploying the sort of flexibility Labour insisted on retaining before the election. Departmental spending and investment will not suffer quite as much as expected and some of the welfare savings will come from simply freezing entitlements for longer.
Meanwhile, Osborne's new fiscal rule, to run a surplus in normal times, only comes into force in 2020 so it is of no practical relevance in this parliament. In effect it is only a political device, although it appears that most of the Labour leadership candidates recognise that, and will not be drawn into opposing it.
But the real show-stopper was Osborne’s dramatic decision to increase (and rebrand) the minimum wage. He probably didn’t realise he was adopting a recent Fabian Society proposal: to set the wage floor at 60 per cent of earnings by 2020. This was briefly Labour Party policy in 2014 but was later watered down, leaving the Tories today looking more radical than Ed Miliband. Osborne swiped Labour’s flagship policy, with a sense of self-confidence that Labour itself lacked before the election.
But the Chancellor’s neatest trick was his claim that low paid families would be better off, taking account of the net effects of the "living wage," income tax threshold and tax allowances. The budget red book showed the sums for a minimum wage worker, but it failed to note that if your wages are already just a little higher, you’ll be left substantially worse off. I suspect that in the coming days the detail regarding low paid workers will unravel a bit—not least because of the quiet £1.5bn tax rise on insurance premiums. Nevertheless Labour will struggle to portray this budget as a devastating blow to the working poor.
Perhaps, though, that does not matter, because for now no one is listening to Labour. The party’s greatest task for the next five years is to restore economic credibility, but it will be a marathon not a sprint. That job starts in earnest the day the new leader is elected.
Read more on the budget:
Osborne has learned the lessons of power
Verdict from the Prospect panel
Nice budget, George—shame about the sneer
Tory: Osborne's plan is working—for now
Rebecca Coulson, columnist for Conservative HomeHe’s the Long Term Economic Plan, the high-vis man from the Northern Powerhouse, the slimmed-down accountant and right-hand man of the Prime Minister. Continued victory in leadership polls shows that George Osborne has never been more popular within his party. But has today’s budget cemented this position?
Osborne is the lynchpin of the Cameron concoction of One Nation social modernism and economic liberalism that brought electoral success by freeing up the lives of all "working people." That success depended on a narrative of fairness. And we’ve seen more of this today.
Further help for higher rate taxpayers was, again, balanced by an announced increase to the personal tax allowance. This shows—alongside reforms to welfare—a renewed focus on carefully limiting both state and taxation. Yet this isn’t just about equality. While cutting at the top provokes derision from some, it’s an obvious appeasement to traditional Conservatives sidelined by the progressive policies the party has come to depend upon. Family-orientated annoyance at liberalisation of Sunday trading rules is similarly placated by inheritance tax reductions, and proper commitments to defence.
Osborne’s strength is his responsiveness—the mark of a good Conservative. Some members will dislike today’s effective slowing of cuts, as well as sneaky increases to public spending, and new controls on business (including the surprise introduction of a living wage). They’ll worry that the lack of a truly "nasty" first all-blue budget shows that compassionate-yet-profligate Conservatism is here to stay.
But Osborne is, for now, still the party’s golden boy: the increasingly obvious successor to Cameron. Yet his sensible approach has been bolstered by economic luck and a strong narrative. While recovery remains the single focus, this Budget’s the right medicine for today. Will it be tomorrow?
