THE day after the Budget is when the real analysis begins. This year, the early consensus from analysts is that Chancellor George Osborne has put together a Budget targeted at the Conservatives’ “core vote” with policies and incentives aimed at Britain’s “greying voters” as well as the country’s “makers, doers and savers”.
Ian King, writing for The Times, said the central theme of yesterday’s Budget was “the largesse targeted at older and better-off voters”.
A new Pensioner Bond, paying market-leading rates, will be available from January to all people over 65, with interest rates of 2.8 per cent for one-year bonds and 4 per cent for three-year bonds. Older people will also be freed from the “stultifying choice” of having to buy an annuity at retirement.
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Some analysts said that the measures were devised simply to “soften up older voters”. But King says that in his view they were more than just political. A real “ideological undercurrent” is discernible in them, King said. By allowing people to keep their pension savings for longer, or begin spending them as they please, the chancellor is trying to provide older voters with a “psychological boost”.
Jonathan Freedland, writing in The Guardian, disagrees – the measures had nothing to do with ideology and everything to do with winning the next election: “George Osborne is political down to his cuticles”, Freedland writes. “He makes no move without first considering the electoral calculus; for him, economics is simply politics by other means… Whoever can win over [the older vote] takes a large stride towards winning the general election of 2015”.
The chancellor also reeled off some “headline grabbing measures”, the Guardian notes, including “populist” moves such as a penny off a pint of beer, tax reductions on bingo, a fund of £200m to repair potholes, and inheritance tax exemptions for emergency workers who lose their lives. But most analysts said that these should not distract from the overt political manoeuvring of the 2014 Budget.
The other significant aspect of the Budget was the measures it introduced to address Britain’s “historic weaknesses” in manufacturing, exports and business investment, the Financial Times says.
Britain’s leading industrialists hailed the budget as “as a huge stride towards making manufacturing competitive with Germany and other leading nations”, the Times says.
The newspaper carried quotes from the chairs of an engineering firm and a chemical group in support of the Budget’s multibillion-pound package to help manufacturers with rising energy costs and environmental levies.
The head of the Confederation of British Industry (CBI) told The Times that the intervention had come at a crucial stage in the economic recovery. “The Budget will put wind in the sails of business investment, especially for manufacturers,” John Cridland, the Director-General, said. “The economy needs to rebalance and this Budget will help businesses hungry to invest and export.”
Changes to income tax will also benefit “everyone who earns less than £100,000”, The Telegraph’s Andrew Oxlade noted. This will leave “the vast majority of workers”, some 25.4 million people, better off. The newspaper, with the assistance of business consultancy Grant Thornton, has put together a collection of “at-a-glance” tables to demonstrate how the Budget’s changes will affect most incomes.
The BBC’s political editor Nick Robinson said that through all the Budget’s initiatives and changes, one thing shone through: the fundamental economic news – both the good and the bad.
“The economy is recovering much faster than expected”, Robinson said, “but many still aren't feeling it and Britain's borrowing and debt is still stubbornly high and years away from being dealt with.
“Nothing George Osborne said is likely to shift those fundamental facts.”
