With the general election just 50 days away, the Chancellor announced his sixth and final Budget of the Parliament, on Wednesday. There were a number of pre-election giveaways (although fewer “rabbits from the hat” than expected) with tax cuts for first-time buyers, workers and savers and cuts to duty on beer and spirits with duty on fuel and wine frozen; funded largely by further bank fines and efforts to clamp down on tax evasion.
But what has been the fallout from the Budget and who has made the most progress this week? Osborne’s performance has been praised by some commentators with general consensus that core Labour fund-raising ideas – in the form of increasing the levy on banks and cutting tax relief on pensions – have been undermined by his Budget announcements.
However, the Chancellor has been forced to deny accusations (from both the Opposition and the IFS) that austerity will need to return arguing that public service cuts can be balanced by welfare savings and action against tax avoidance. Ed Balls had ruled out a reverse of any announcements in the “pretty empty" Budget, but has warned that the Tories would be forced to cut NHS spending or increase VAT to balance the books.
Perhaps conscious it would be his last opportunity with his party’s slide in the polls and the precarious position of his own seat, the Chief Secretary to the Treasury, Danny Alexander, yesterday unveiled the Lib Dems’ own unprecedented alternative yellow Budget.
We were told that the Budget had cross-Coalition agreement, but, after announcing new Government measures to tackle tax evasion, Mr Alexander outlined the Lib Dems fiscal plans. He told MPs that the Lib Dems would not cut as much from public spending as the Tories – or borrow as much as Labour – if they had a free hand, suggesting that his vision for the future of Britain was not the Tories return spending levels reminiscent of the era of Cathy Come Home and associated poverty and homelessness. The Lib Dem proposals would allow the next government to reach balance on the current account by 2017-18, and impose higher tax rises and slower cuts in spending than those set out by the Conservatives. The plan also allows for spending to rise faster than under Tory proposals.
Cue Labour accusations of misuse of ministerial position to make party political points, and Tory accusations of betrayal. This could be the definitive moment signalling the end of the Coalition Government, as both parties go their own way during the election campaign, keen to lay claim to some policies and distance themselves from others.
It’s all shaping up for a battle of the Chancellors after Ed Balls challenged George Osborne to a head-to-head TV debate ahead of the general election. This has been shaken on and with Danny Alexander also likely to want to be involved, and continued uncertainty over the leaders debates, this may in fact be the one to watch – if it ever actually happens!