The Budget: Osborne Nails It
While Joe Root was sashaying his way to a glorious century in Cardiff yesterday, George Osbourne was unleashing a barrage of cuts and pulls (to the Centre) of his own in Westminster. As the Capital grumbled about the inconvenience of yet another unreasonable Tube strike - cue multiple newspaper references to the fabled ‘Blitz Spirit’ of Londoners - the Chancellor methodically went about his business, laying out plans to continue the work he started in the coalition by supporting businesses, backing them to ‘grow and create jobs,’ and marching onwards to a Britain that has higher employment, higher wages, and less reliance on the outdated, failing welfare state. To drive a tube requires a handful of GCSEs and enough co-ordination to successfully press a button at the correct time; to drive through a budget brimming with fiscal conservatism, whilst keeping mostly to the centre, requires a boatload of political dexterity and economic know-how. There were few surprises in the budget, but it’s worth touching on a handful of points and their various repercussions.
The obvious place to start is with the reduction in the benefits cap from £26,000 per year to £23,000 in London, and £20,000 everywhere else. This is a welcome sight, in both reducing the welfare bill for UK taxpayers, as well as motivating people to get back into work - less claimants will feel they are better off suckling at the teat of the state than earning an honest wage. Osborne also unveiled plans to limit Child Tax Credit to two children, starting with births in April 2017. This is a barnstormer of a move. As the excellent Julia Hartley-Brewer summarised in The Telegraph: “If you want more kids than you can afford, it’s not my job to pay for them.” For too long we have seen huge sprawling families continuing the cycle of benefits dependancy (for colour on this, take a look at the Mail website on literally any day of the week). By capping the Tax Credit at two children, Osborne is telling welfare-receiving families that they too have to be responsible members of society, and that if having additional children is often, in part, a financial decision for middle class families, then it certainly should be for those supported by their taxes.
The Chancellor also announced stricter measures for social housing and housing benefit. Social housing beneficiaries who earn more than £40,000 in London, or £30,000 elsewhere, will have to pay full market rate for their properties, and quite rightly so. If you’re able to pull in comfortably more than the national average salary then you categorically should not be entitled to have taxpayers assist the funding of your abode. The other bold move by Osborne was to scrap housing benefits for under-25s. Whilst this may initially seem harsh, it is, in reality, utterly reasonable. For too long teenagers have been able to leave home at 18 and immediately fall into the benefits-dependancy cycle. Thanks to this budget, that systemic failure of the welfare state will occur no more, and young adults will be pushed into finding jobs - of which there are now plenty, by the way - or entering into one of the increasingly available apprenticeships championed by the Conservatives.
Given the issues that the then wet-behind-the-ears Chancellor had with Liam Fox at this juncture in 2010, it was heartening to see some semblance of unity between the Treasury and the MoD this time around, with Osborne committing to spend 2% of GDP on defence. This is in keeping with NATOs defence spending targets, as well as being a move instantly praised by the US and other allies. It is fitting timing for such a reinforcement of Britain’s arm forces, coming the day after the ten year anniversary of the disgusting 7/7 attacks on London. With the turbulence of ISIS wreaking havoc in Iraq and Syria, and Putin’s Russia looming ominously to the East, it cannot be overstated how important it is to see a commitment to the defence of our nation.
Osborne also set out a string of rewards for hard-working people. The 40% tax bracket entry point (ironically good news for scores of striking tube drivers) will rise by nearly £1,500 over the next couple of years, and the tax-free allowance will have increased by almost £2,000 by the general election in 2020. With that double-whammy of breaks, the Chancellor reinforced the Tory claim that it is the Conservatives who are the all-inclusive party, helping the middle class, as well as those in minimum wage jobs, with welcome tax relief. The inheritance tax threshold will rise to £1 million, rewarding those who have saved, and already been taxed, by allowing them to pass on a sizeable sum of money and assets to their loved ones - another bonus for the hard working middle class. Osborne’s pièce de résistance, though, was a strident occupation of the middle ground vacated by Labour. By implementing a National Living Wage (read Minimum Wage) of £9 an hour, he is not only showing the British working class that the Conservatives are serious about wanting to improve their way of life and helping them achieve fiscal autonomy, but he is also delivering a shot across Labour’s bows. No longer can they yammer on about the ‘Evil Tories’ and their ‘hatred of the impoverished’, when in Ed Miliband’s campaign they only wanted to deliver a minimum wage of £8 per hour. In a political masterstroke, Osborne not only delivered for the working class of Britain, but he also punted Labour into touch.
The Left’s reaction so far has been mixed. The extremists have been working themselves up and whinging about the Tories ‘targeting the young’ while the more sensible types, such as Shadow Chancellor Chris Leslie, have publicly stated that they don't want to be the party that opposes everything, while privately probably agreeing that the budget will do an awful lot of good for the country. When so much of Osborne’s budget stands in the central ground of British politics, with numerous policies that Labour have previously fought for, it is churlish and pretty pathetic for them to try to twist what is an ostensibly fair, positive budget, into some sort of class terrorism. The British public are wise to the tiresome line that the whining Left takes on Conservative policy, and it would do them good to grow up and realise that they will never win by being so constantly negative, especially when the current government is doing an exceptional job of clearing up the mess Labour left them in.
In summary, this was a budget about legacy. The Prime Minister has recently reiterated his main goal of eradicating the deficit by the time he stands down: that will be his legacy as the great rescuer. For Osborne, it leaves a standing financial and social legacy. By servicing all parts of the electorate, he is now in poll position for the 2020 leadership race - after all, who could argue with a man who saved an economy while creating more jobs with better pay? That is the underlying theme of his budget, and he deserves the plaudits bestowed on him by the majority of commentators over the last 24 hours. The sun is blazing down on the house of Conservatism, and Osborne is up on the ladder, economical toolbox in hand, doing a damn fine roofing job.