As the dust begins to settle on last week’s Budget, the Chancellor will be pleased that, so close to the election, there hasn’t been a major unravelling of his proposed measures. Supported by a range of good economic news, including a further fall in unemployment and an uprating in expected growth in 2015, the Chancellor was able to present the defence of his economic strategy over the course of this Parliament.
As was to be expected, the Budget was carefully balanced between offering a political pitch to voters in advance of May and remaining economically prudent in the face of substantial fiscal challenges. Without a huge ‘rabbit’ to unveil on the day, Osborne was nonetheless able to announce help for key demographic groups – from support for first-time buyers (Help to Buy ISAs) to older savers (Personal Savings Allowance) as well as wider measures including cuts to alcohol duties and a freeze on fuel duty.
The Chancellor’s last Budget of this Parliament also provides an opportunity to reflect on some of the wider political implications of Osborne’s time in Number 11.
The fact that two months before the 2015 election, Osborne was able to present his sixth Budget to Parliament demonstrates the surprising durability of both the Coalition (which many commentators felt would never run a full-term) and of the Chancellor himself. From the ‘omnishambles’ of the 2012 Budget, buffeted by pasty-taxes, to being booed at the Paralympics, the Osborne of 2015 is a different figure from the one we saw entering No.11 in 2010, and has been credited with delivering the beginnings of an economic revival for the UK under very challenging circumstances. Given the potential make-up of the next Parliament, the chances of either a government going the full distance – or a Chancellor seeing out a full-term – are much less certain.
The growth in stature of the Chancellor is reflected in the political and economic environment in which the election will take place. Whilst there is disagreement over the extent to which existing targets have been met, there is an acceptance (within the major parties at least) of the continued need to focus on deficit reduction going into the next Parliament.
The prioritisation and promotion of investment in infrastructure has become a central tenet of the current government. This has been increasingly led by Osborne, who has confidently articulated the need for transport investment in road and rail as well as the importance of capital expenditure to deliver a ‘Northern Powerhouse’. Again, there is a growing agreement among the parties of the need for infrastructure investment – which will likely continue beyond May.
Finally, and linked to the above, the trend for devolving control of policy to sub-national tiers of government is now in motion – most recently exemplified by the powers over housing, transport and health & social care given to Manchester. Whilst it is possible to see this in cynical political terms, namely as a way for the Conservatives to regain a foothold in Northern cities, it would be churlish not to acknowledge the dramatic shift this approach (if built upon) could deliver for the governance of the UK over the long term.
Of course, much analysis will be given to Osborne’s ‘legacy’ should he find himself removed from the Treasury in May. However, on deficit reduction, the prioritisation of infrastructure as well as city and regional devolution, the Chancellor can plausibly present a case for having set the path and begun to create a consensus on the way forward.