Expert Comment on Budget 2016: The War of George’s HaircutThursday 17 March 2016
Tony Bradley, Professional Tutor in Business Management at Liverpool Hope's Business School, reviews George Osborne's latest budget and what it really means for taxpayers.
It may be apocryphal, but the story goes that Nick Clegg (then, Deputy PM in the Coalition) attended a meeting shortly after George Osborne had announced the Northern Powerhouse. Clegg had been concerned that Sheffield, where he is an MP, didn’t get a sufficient look-in. He told George this. At the end of the meeting Clegg emerged to say “George is hilarious! I asked him to place Sheffield on the NP map – he did so and crossed-off Leeds!”
Yesterday, Osborne announced £300M in improvements to Northern transport linkages, as part of the Budget package. But, this doesn’t even move the pointer on the infrastructure dial, compared to the £32BN being spent on Crossrail 2 – the newly planned North-South London rail link. As Joe Anderson, Mayor of Liverpool, said: “The name of [Osborne’s National Infrastructure] Commission should be the Southern Infrastructure Commission. The announcement today once again clearly shows a lack of desire to rebalance the economy of the UK at the speed that is required”.
So, there are all sorts of crossings, going-on and off, in relation to this Budget. And, of course, the Chancellor had very little room for manoeuvre regarding announcements and cuts – hardly a hair’s breadth. Which seems fitting, given the level of attention paid to Osborne’s latest haircut, since last Autumn, when he was revealed as a sort of latter-day Roman Emperor, fiddling the figures as Britain failed to burn-up the economic top-gear track. You could say that Matt leBlanc made more of an impact in Westminster, in that way, than George did, yesterday.
In fact, we might even (shock, horror!) accuse Osborne of having engineered another massive U-turn in both policy and rhetoric. He is, after all, the most political Chancellor we’ve had since, well, Gordon Brown. But, this Budget, was less about Britain as the Northern Powerhouse of Europe or, even, the global economy. It was all about Project Fear – fears for the future, fears for the European family, fears for the financial markets and fear, most-of-all, for the fragile economy. All of which Jeremy Corbyn, the Labour Leader put together under the ‘F-word’ – failure.
So, there was a haircut in writing-down the deficit. This is market jargon for saying that planned cuts were being, put simply, cut. Although this may not be the way that some of the most vulnerable in our society see it. The briefed reduction of £120M in personal independence payments for the disabled did emerge, but not as stridently (another Downing Street, ‘fake shake-up’?). But, there are, buried in the figures, some bodies that have fared worse than fairly.
The announcement of a further £3.5BN in spending cuts, in the run-up to the next General Election, was designed to show that the Tory Government still favoured affluent, middle-aged, middle England over the poor, minorities, the young and the economically and geographically marginal. Whilst the emphasis was on beneficiaries: large corporations, house-buyers, small businesses (two cheers there) and top-rate taxpayers, these winners could not hide the fact that there must be losers, if the Chancellor is to retain his one remaining fiscal red line of a budget surplus by 2020.
And, then, there was the biggest surprise of all – the antithesis of a sugar-coated pill for families. The imposition of a sugar-tax on fizzy drinks, which was immediately cheered by Jamie Oliver, clearly is aimed at addressing the parlous state of many young peoples’ waists and teeth. But, it represented yet another consumer-based spending stealth tax, which will disproportionately take from the poorest households.
Overall, the cracks in Osborne’s previous budgetary plans are far more than hairline. He is risking a huge amount on the economy turning good again before 2019. Yet, what is clear is that the fizz has gone out of his rhetoric; there are few sweeteners left to give; and the war of attrition on the deficit has been lost. This was a budget not only for a haircut, but for one with a bald message: the good times are over. What, you never noticed them arrive? Well, that is the economic war-torn warning; that George may not, after all, be the heir apparent.