Talking Politics

Budget 2012: Osborne’s political failure

George Osborne has two jobs. He is chancellor, a position he is rather well known for, and also Conservative chief election strategist, which he is slightly less well known for. I'll allow minds far more capable than my own to comment on his accomplishments in the former category. But today's Budget shows beyond doubt that he is spectacularly failing in the latter.

He was never as good at it as many pundits gave him credit for. He played chicken with Gordon Brown over a possible election in 2007 and won, with a promise to cut inheritance tax. This earned him a reputation for genius which he does not seem to actually possess. If he did possess it, one would expect him to have scraped a majority against a deeply unpopular Labour government in 2010.

The decision to cut the 50p top rate of income tax on incomes over £150,000 commits what the Americans call a 'rookie error'. It plays directly into the narrative that his opponents are using. Labour says the cuts are ideological, that behind closed doors the Tories break open the bubbly and use poor people as footstools. Saving the highest earners thousands while the average voter endures biting austerity is as blatant a corroboration of that suspicion as Osborne could provide. No wonder Ed Miliband had such a good day at the despatch box. He could hardly believe his luck.

Could you ever imagine Tony Blair, that great election winning machine, ever making a similar mistake? Everything New Labour did was intended to wrong foot the opposition by invading their territory. This is the equivalent of Blair nationalising something two years into his administration. It's just amateur.

Osborne's most effective political campaigns stemmed from simple messages: 'Fixing the roof while the sun was shining' is the most obvious, and irritating, example. The argument for cutting sending was equally effective and accepted wholesale by the public in a relatively short period of time. Even the government's response to Labour's attacks, that 'you can't borrow your way out of a debt crisis', had a simple, convincing ring to it.

The 50p tax cut sees Osborne wield simplicity against himself. He claims he will bring in five times as much as the estimated £100 million of the top rate by changes to stamp duty. Even if those figures stand up, and I seriously doubt they do, it exchanges something complicated for something simple. A barely interested newspaper reader on the daily commute knows exactly what it means to save £40,000 a year for someone earning £1 million. They will be less certain about upping stamp duty on properties over £2 million and closing a corporate envelope tax avoidance tactic.

If they do look into it, it makes Osborne's argument even less tenable. First of all, while "the rich", as Osborne calls them, might pay five times as much, it won't be the same people. A millionaire who already owns his expensive home won't be hit at all. He just received a massive tax cut while poorer workers continue to suffer.

Secondly, the very argument Osborne uses to justify his decision proves its fallacy. If the top rate of income tax discourages growth, then surely five times that amount of tax will discourage it five times as much. In truth, the Treasury knows people complain less about being taxed at the point of purchasing property because it hits at the precise moment when they are spending an awful lot of money, so they don't quite realise it as much. But politically, you can't sell a Budget as taking more from the rich while simultaneously saying you're cutting a tax rate to make Britain more attractive to entrepreneurs. Osborne's arguments have no internal coherence.

In Osborne's defence, coalition government is a fudge. His gift to the Lib Dems is a speeding up of the process taking those earning less than £10,000 out of income tax. Some Tory backbenchers are trying to claim that policy as their own. It's too late for that. Nick Clegg has owned it since before the general election and he's holding it close now as a sign of Lib Dem protection of low earners.

But realistically, that policy won't turn low earners into Tory or Lib Dem voters. It's aimed at a group that will invariably vote Labour at the next election. He is handing an incentive to a group that will not vote for him to dress up a move which is likely to incense groups which might vote him. Some pretty well-off middle class households will be mightily irritated by the cut to the top rate. There are polls which suggest two-thirds of Tory supporters don't like it.

It's a baffling, foolish, disastrous decision to have made. It's so bad, in fact, that Labour's line of attack — that it's evidence of class-war ideological idiocy — is in fact the best available explanation.

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