Everything's coming up, George's.
What the Office for Budget Responsibility giveth, the Office for Budget Responsibility taketh away. Last November the OBR's forecasts gave George Osborne a £27bn windfall, more than enough for him to backtrack (somewhat) on the highly unpopular cuts he had previously announced to tax credits. Fast forward 4 months, and the OBR has done an dramatic reverse ferret: they've now taken £52bn away from the chancellor, as well as lowering their forecasts across the board, with growth and productivity hit the hardest.
And yet, somehow, despite this significant deterioration in the public finances, one that will see an increase in borrowing between now and 2020/21 of £38bn, Osborne still claims he'll hit his fiscal mandate of reaching a budget surplus by the time of the next election. This is even more eyebrow raising when the OBR forecasts there will still be a budget deficit of £21bn in 2018/19. Somehow, in the space of only 12 months, this will turn into a surplus of £10bn. This is meant to be achieved by further cuts that year, a raid on public sector pensions, bringing forward infrastructure spending that was pencilled in for then to now, and deferring changes to corporation tax. It won't be. I can say with near certainty that the cretinous plan for a surplus will be abandoned almost as soon as Osborne moves on, whether to Number 10 or to the backbenches.
For this was a budget that made clear George is now only in it for the short-term. The usual idea with budgets is you make the unpopular decisions as soon after winning an election as you can, then time the giveaways as the next round of voting approaches. Osborne instead has produced a giveaway budget only a year into a five year parliament. Everyone apart from the disabled and poorest are getting soaked. Another rise in the personal allowance? Why not? A significant increase in the 40p income tax threshold, to £45,000? Sure, go on. Free money if you're under 40 and you're lucky enough to have a parent that can give you £4,000 a year to save? The man from HMRC he say yes! Yet another cut in corporation tax? Cheers, say all those multinationals who do their utmost not to pay it anyway. Small business rate threshold to rise by £9,000 just as the power to spend the revenue it brings in is devolved to local authorities? Fuck knows how councils are going to pay for services, but that's to worry about another day. A massive cut in the capital gains tax rate to 20% from 28%, excluding properties? What better way for a chancellor to thank the hedge fund managers and masters of the universe who funded the Tories to a majority?
Except of course there are a couple of votes on the horizon. First there's the EU referendum, and so any small chance there was of a rise in fuel duty was spiked lest it vex further any Tory backbenchers yet to make up their minds on remaining or leaving. Far more important to George though is the Tory leadership contest, likely to happen fairly swiftly once the referendum is over, whatever the result. Today's budget was effectively his swansong: sucking up to every core constituency he believes he needs to, and doing so before it's too late. Should he still be chancellor for the autumn statement or next year's budget, he'll tinker around the edges a bit, knowing his work proper has been done already. Hence why Cameron handed over to him the announcement that schools still under local authority control will be forced to become academies, backed up by the rabbit of the sugar tax on soft drinks, helping to fund an additional hour of the school day and more sports.
Ah yes, the sugar tax. Not a tax on sugary food all told, just sugary drinks. Those people you know who stick four sugars in their tea, they'll be fine, but anyone who prefers cold drinks or just the occasional burst of sugar is about to get their wallet felt. It's impossible not to see this as a judgement tax, however many doctors claim that it'll massively reduce obesity; who are always pouring energy drinks and cans of Coke down their throats? Those people, and they're costing us a bomb. The estimate that it will raise £520m, a more than considerable sum, gives the lie to the idea drinks companies will change their formulations or that people will switch to sugar free brands as a result. How else would it directly fund that extra school hour? Anti-nanny state Tories be damned, Osborne couldn't let childhood obesity be on his conscience. Child poverty, taking money from disabled people who need help to go to the toilet or dress themselves, they don't trouble him anywhere near as much.
All this was designed to mask how once again Osborne has failed by the standards he's set himself, as Jeremy Corbyn in his fairly strong response to the budget outlined. That supposed welfare trap he set for Labour? Osborne is set to wander into it every year. Debt coming down as a proportion of GDP? Nope, that's not happening either. Keeping to the fiscal mandate? In theory yes; in practice, knowing full well as he does that all these freebies are not going to be made up by further cracking down on tax avoidance and other stealthy tax grabs, there isn't a cat in hell's chance of a surplus come 2019/20. All this, while at the same time still going on with the cuts to frontline spending, not to forget borrowing more, the jibe thrown at Labour every time they say they would borrow to invest as bond yields are historically low. Osborne is the epitome of a chancer, making it up as he goes along. He and Boris are remarkably alike in the regard, only Boris at least can tell a joke.
Osborne's hope seems to be this: he's perfectly aware that his surplus will turn out to be fictional, and yet he also knows that Labour is hardly going to make a song and dance about it. His real difficulty is going to be in paying for all the lucre he's thrown around today, only that will be the responsibility of the poor sod who takes over from him. Unlike with Gordon Brown, his belief is that none of it will stick to him, and why would it? He's breached every target he's put down, and no one's called him on it. Sure, it's going to look really bad if his successor has to raise taxes just before an election, but who else are you going to vote for? Labour, under the stewardship of Corbo 'n' McDonnell? The right-wing press might tear him a new one for it, but again, where else are they going to go? To quote Joylon Maugham, Osborne is "giving the most to those who need it least and the least to those who need it most", which is exactly what he came into politics to do. Everything's coming up, George's.
And yet, somehow, despite this significant deterioration in the public finances, one that will see an increase in borrowing between now and 2020/21 of £38bn, Osborne still claims he'll hit his fiscal mandate of reaching a budget surplus by the time of the next election. This is even more eyebrow raising when the OBR forecasts there will still be a budget deficit of £21bn in 2018/19. Somehow, in the space of only 12 months, this will turn into a surplus of £10bn. This is meant to be achieved by further cuts that year, a raid on public sector pensions, bringing forward infrastructure spending that was pencilled in for then to now, and deferring changes to corporation tax. It won't be. I can say with near certainty that the cretinous plan for a surplus will be abandoned almost as soon as Osborne moves on, whether to Number 10 or to the backbenches.
For this was a budget that made clear George is now only in it for the short-term. The usual idea with budgets is you make the unpopular decisions as soon after winning an election as you can, then time the giveaways as the next round of voting approaches. Osborne instead has produced a giveaway budget only a year into a five year parliament. Everyone apart from the disabled and poorest are getting soaked. Another rise in the personal allowance? Why not? A significant increase in the 40p income tax threshold, to £45,000? Sure, go on. Free money if you're under 40 and you're lucky enough to have a parent that can give you £4,000 a year to save? The man from HMRC he say yes! Yet another cut in corporation tax? Cheers, say all those multinationals who do their utmost not to pay it anyway. Small business rate threshold to rise by £9,000 just as the power to spend the revenue it brings in is devolved to local authorities? Fuck knows how councils are going to pay for services, but that's to worry about another day. A massive cut in the capital gains tax rate to 20% from 28%, excluding properties? What better way for a chancellor to thank the hedge fund managers and masters of the universe who funded the Tories to a majority?
Except of course there are a couple of votes on the horizon. First there's the EU referendum, and so any small chance there was of a rise in fuel duty was spiked lest it vex further any Tory backbenchers yet to make up their minds on remaining or leaving. Far more important to George though is the Tory leadership contest, likely to happen fairly swiftly once the referendum is over, whatever the result. Today's budget was effectively his swansong: sucking up to every core constituency he believes he needs to, and doing so before it's too late. Should he still be chancellor for the autumn statement or next year's budget, he'll tinker around the edges a bit, knowing his work proper has been done already. Hence why Cameron handed over to him the announcement that schools still under local authority control will be forced to become academies, backed up by the rabbit of the sugar tax on soft drinks, helping to fund an additional hour of the school day and more sports.
Ah yes, the sugar tax. Not a tax on sugary food all told, just sugary drinks. Those people you know who stick four sugars in their tea, they'll be fine, but anyone who prefers cold drinks or just the occasional burst of sugar is about to get their wallet felt. It's impossible not to see this as a judgement tax, however many doctors claim that it'll massively reduce obesity; who are always pouring energy drinks and cans of Coke down their throats? Those people, and they're costing us a bomb. The estimate that it will raise £520m, a more than considerable sum, gives the lie to the idea drinks companies will change their formulations or that people will switch to sugar free brands as a result. How else would it directly fund that extra school hour? Anti-nanny state Tories be damned, Osborne couldn't let childhood obesity be on his conscience. Child poverty, taking money from disabled people who need help to go to the toilet or dress themselves, they don't trouble him anywhere near as much.
All this was designed to mask how once again Osborne has failed by the standards he's set himself, as Jeremy Corbyn in his fairly strong response to the budget outlined. That supposed welfare trap he set for Labour? Osborne is set to wander into it every year. Debt coming down as a proportion of GDP? Nope, that's not happening either. Keeping to the fiscal mandate? In theory yes; in practice, knowing full well as he does that all these freebies are not going to be made up by further cracking down on tax avoidance and other stealthy tax grabs, there isn't a cat in hell's chance of a surplus come 2019/20. All this, while at the same time still going on with the cuts to frontline spending, not to forget borrowing more, the jibe thrown at Labour every time they say they would borrow to invest as bond yields are historically low. Osborne is the epitome of a chancer, making it up as he goes along. He and Boris are remarkably alike in the regard, only Boris at least can tell a joke.
Osborne's hope seems to be this: he's perfectly aware that his surplus will turn out to be fictional, and yet he also knows that Labour is hardly going to make a song and dance about it. His real difficulty is going to be in paying for all the lucre he's thrown around today, only that will be the responsibility of the poor sod who takes over from him. Unlike with Gordon Brown, his belief is that none of it will stick to him, and why would it? He's breached every target he's put down, and no one's called him on it. Sure, it's going to look really bad if his successor has to raise taxes just before an election, but who else are you going to vote for? Labour, under the stewardship of Corbo 'n' McDonnell? The right-wing press might tear him a new one for it, but again, where else are they going to go? To quote Joylon Maugham, Osborne is "giving the most to those who need it least and the least to those who need it most", which is exactly what he came into politics to do. Everything's coming up, George's.
Labels: budget-2016, Conservatives, economics, George Osborne, Labour, politics
| Permalink
Post a Comment