The Times, 17 March 2016
George Osborne has fooled no one with his sugar tax sweetener aimed at deflecting attention from a Budget laced with his failures.
The chancellor hoped that the announcement, coupled with some tax breaks for businesses and the better-off, would secure him good headlines and get his campaign to become the next prime minister back on track. But the story behind the headlines makes grim reading and reveals the depressing outlook for millions of people who face stagnating living standards – thanks to his ham-fisted handling of the economy.
The data in the Budget Red Book confirms that he has failed to meet his own rule of debt falling as a proportion of GDP this year. Borrowing will be up a staggering £38bn in this parliament. The growth forecast for 2016 has been revised sharply downwards from 2.4 per cent to 2 per cent, as have productivity growth figures.
The chancellor has broken his promises to balance the nation’s books at a time when our economy remains deeply fragile.After failing to hit his targets time after time, the idea that he has set Britain on course for a budget surplus of £10.4bn by 2019-20 is a triumph of his hope over expectation. The “dangerous cocktail of risks” the chancellor warned us about is the direct result of the economic uncertainty he has himself concocted.
He has failed on the big fiscal targets he set. The downbeat figures he outlined are a terrible indictment of his stewardship of the economy. The budget merely continued his past form of putting short-term political objectives against the long-term interests of our country. By boosting personal income tax thresholds for the better-off and freezing fuel duty, he has put his self-interest about the national interest. He has pandered to the Tory backbenchers whose support he needs if he is to become prime minister at the expense of the living standards and opportunities of Britain’s working families.
The chancellor bottled the opportunity to encourage people to save more for retirement with a new flat rate of tax relief on pensions and failed to offer any help for the millions desperate for an affordable home. Despite his attempts to boost savings with schemes like lifetime ISAs for young people, the amount people put aside has plummeted. The savings ratio – the amount of their personal disposable income that people put away – is predicted to be even lower than it is now, dropping from 4.2 per cent in 2015 to 3.9 per cent in 2020.
We have heard his promised investments on major road and rail schemes many times. But we have seen little evidence of his commitment to the Northern Powerhouse he likes to boast about – just a litany of reissued press releases about transport schemes. Instead of delivering on his promise to rebuild a stronger and balanced economy, he chose to help the better-off at the expense of the vulnerable.
In a sign of his skewed priorities, he has sanctioned further cuts to disabled benefits to help fund a tax giveaway to those on higher incomes. When it comes to his changes to the personal allowance and the higher tax rate threshold, almost half of gains from his income tax cuts in 2017 will go to the richest fifth of households. Just like his previous seven attempts, the chancellor has squandered an opportunity in the budget to create a stronger, fairer economy.
Time will tell if it improved his personal prospects of moving from No 11 Downing Street to No 10. But, whatever happens to his career, the chancellor has left millions of people facing the prospect of falling economic growth, little prospect of a decent pay rise or an affordable home and more spending cuts. That is a bleak legacy.