Osborne has sent a missile into six years of Tory modernisation
Published in The Guardian (March 21st, 2012)
There was much to admire when this heavily leaked budget was finally delivered: the cut in corporation tax, the lifting of personal allowances, the attack on tax-dodging wealthy homeowners.
Yet one measure will seize the headlines and percolate through to voters: the decision to cut the top rate of tax for the very richest. Yes, this may make some fiscal sense, given that it raises comparatively little and sends such a negative message to highly mobile growth creators. Yes, it may have been a trap set by Gordon Brown in the dying days of his disastrous administration. But there was no need to walk straight into it.
What is so curious is that this was otherwise a very political budget from our very political chancellor. By giving in to an alliance of the right and the rich, George Osborne has made a basic blunder that sends a missile into six years of Tory modernisation. At a time of austerity, fear and difficulty for so many people, he has sent a message that the government is – to quote Ed Miliband – more concerned with millionaires than millions of hard-working families.
This is a highly debatable claim, given the raising of tax thresholds and tinkering with other taxes on the wealthy. But income tax is the totemic tax – and a government vulnerable to charges that it is by the rich and for the rich has exposed itself to easy attack. Even the argument put forward sounded half-hearted, with Osborne saying it barely saved a billion pounds. If that is the case, why so much effort to crack down on false claimants of disability living allowances, for example, when fraud costs the exchequer just £60m?
The simple fact is the Tories did not win the last election outright, because the concept of compassionate conservatism failed to convince enough voters. In one move, Osborne has made the job of persuading voters the Tories have changed substantially harder – and the chance of winning an outright majority in 2015 significantly lower.