Budget 2015: enough to save day for Tories? Don’t bank on it
OBR warns that public spending squeeze will be tougher than anything seen in past five years
George Osborne's ‘big rabbit’ – or, at least, medium-sized one - turned out to be the abolition of tax on the first £1,000 of interest earned on savings – an apparent boon to pensioners and those approaching pension age and a clear temptation to vote Tory.
But within minutes of Osborne sitting down after his Budget speech, Radio 4’s Money Box programme was calculating that to earn £1,000 from a typical easy access account paying 1.4 per cent interest, you’d have to have £70,000 in savings. In short, only the well-off would benefit.
Still, Osborne clearly tried to address the widespread feeling among voters – well put by Lord Aschroft in a pre-Budget commentary this morning – that the Conservative party is not on their side.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The Chancellor had an upbeat account of how things were going to get better – “Britain’s walking tall again” - and he had a range of small goodies aimed at various sections of society: the rise in the tax threshold to £11,800, the tax-free savings, a penny off a pint, the new ‘help-to-buy’ ISA, the infrastructure pledges for areas beyond London.
But the view in Westminster was that not one of the measures felt big and bold enough to transform voters’ perceptions and give the Tories the boost in the polls they desperately need with only seven weeks to go before the general election.
Osborne was, it transpires, labouring under at least one restriction imposed by the Prime Minister after a bruising row with Cameron, backed by Tory election strategist Lynton Crosby: he was forced to ease the cuts in public spending penciled in for 2020.
Cameron and Crosby feared Ed Miliband was doing real damage to the Tories by warning that public services would be cut to levels not seen since the 1930s. Tory insiders said Labour's attack - fuelling public fears that the Tories were looking after their rich friends but would slash and burn public services - was proving toxic.
So Osborne announced that while £30bn in cuts in public spending would go ahead, they would be achieved by reducing welfare spending by £12bn, tax evasion by £5bn and only £13bn would be achieved by cuts in the budgets of the key spending departments.
This means that the level of public spending as a proportion of GDP will be reduced to the levels when Tony Blair was in office in 2000, Osborne was able to say.
Nevertheless, the independent Office of Budget Responsibility (OBR) warned today that there will be “a much sharper squeeze on real spending in 2016-17 and 2017-18 than seen over the past five years”.
In a highly political Budget, Osborne tried to shoot a line of Labour foxes. He adjusted the figures to answer Labour's charge that most working families will be £1,600 worse off compared to 2010. He said that when measured by real household disposable income, they will be £900 better off.
He also announced the restriction of tax allowances on lifetime pension savings from £1.25m to £1m. This was a well-trailed Labour plan - Ed Balls was going to use the money to pay for cutting student fees from £9,000 a year to £6,000. Now Balls has a big hole in his own budget calculations.
The ‘help to buy’ ISA unveiled today appeared to answer the criticism that not enough is being done to help young people get on the housing ladder. It will give first-time buyers a bonus from the Treasury of up to £3,000 if they save £12,000. The trouble is, that won't go far in today’s housing market.
Ed Miliband, who for once made a good fist of his instant response to Osborne in the Commons, majored on the OBR’s prediction of tough times to come and on the glaring omission of any extra funding for the health service – or indeed any mention of the NHS - in the Chancellor’s speech.
Referring to those voters who have yet to feel the benefits of economic recovery, he called it the “Budget that people won’t believe from a government that is not on their side”.
Osborne has certainly gone some way towards to securing the pensioner vote – and given the greater likelihood of older people turning out to vote on polling day, it could be enough to make a difference.
But in the year of the 200th anniversary of Waterloo, this election still looks likely to be a "close run thing".
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
2024 race ends with swing state barnstorming
Speed Read Kamala Harris and Donald Trump held rallies in battlegrounds over the weekend
By Peter Weber, The Week US Published
-
Five things you might not know about Quincy Jones
In the Spotlight From narrowly escaping the Manson Family murders to producing The Fresh Prince of Bel-Air, his cultural imprint extended far beyond music
By The Week UK Published
-
Today's political cartoons - November 4, 2024
Cartoons Monday's cartoons - election fatigue, a different kind of cocktail, and more
By The Week US Published
-
What is the next Tory leader up against?
Today's Big Question Kemi Badenoch or Robert Jenrick will have to unify warring factions and win back disillusioned voters – without alienating the centre ground
By Harriet Marsden, The Week UK Published
-
What is Lammy hoping to achieve in China?
Today's Big Question Foreign secretary heads to Beijing as Labour seeks cooperation on global challenges and courts opportunities for trade and investment
By Harriet Marsden, The Week UK Published
-
Is Britain about to 'boil over'?
Today's Big Question A message shared across far-right groups listed more than 30 potential targets for violence in the UK today
By Sorcha Bradley, The Week UK Published
-
UK's Starmer slams 'far-right thuggery' at riots
Speed Read The anti-immigrant violence was spurred by false rumors that the suspect in the Southport knife attack was an immigrant
By Peter Weber, The Week US Published
-
How could J.D. Vance impact the special relationship?
Today's Big Question Trump's hawkish pick for VP said UK is the first 'truly Islamist country' with a nuclear weapon
By Harriet Marsden, The Week UK Published
-
The Tamils stranded on 'secretive' British island in Indian Ocean
Under the Radar Migrants 'unlawfully detained' since 2021 shipwreck on UK-controlled Diego Garcia, site of important US military base
By Harriet Marsden, The Week UK Published
-
Britain's Labour Party wins in a landslide
Speed Read The Conservatives were unseated after 14 years of rule
By Peter Weber, The Week US Published
-
Will voter apathy and low turnout blight the election?
Today's Big Question Belief that result is 'foregone conclusion', or that politicians can't be trusted, could exacerbate long-term turnout decline
By Harriet Marsden, The Week UK Published