There’s a well-known political saying that Budgets which go down well in the House of Commons tend to fall apart on later inspection, writes Labour's Ipswich Borough Council Leader, David Ellesmere.
We don’t need to worry about that this year because George Osborne’s Budget fell flat in Parliament and is becoming more unpopular by the day.
Fundamentally, the big problem the Chancellor has got is that the economy is not doing as well as he pretends.
He has missed target after target for reducing borrowing. These are targets he set himself in full knowledge of the facts. The failure is his and his alone.
Not that you would necessarily get this impression from what George Osborne says. He reckons the Government is still on track to record a budget surplus by the end of Parliament.
What he didn’t say was that the only way he can achieve this is by accounting trickery and by large amounts of extra borrowing in the short term.
For example, he has brought forward around £1.7billion of capital spending – money for roads, schools and hospitals – planned to be spent in 2019. This will produce the appearance of reduced spending in the crucial pre-election year but will disappear the year after.
Another trick has been to delay changes to Corporation Tax by two years. The short term effect of this is to boost the Government’s finances by £6billion in 2019 but again the effect disappears after a couple of years leaving borrowing just as high.
That’s all very well but what does it actually mean in the real world? Here’s some examples:
Services which the Government claimed would be “protected” from cuts are going to get hit. Changes to pension rules will cost the NHS, schools, Police and the Armed Forces at least £2billion a year. The cost to the NHS is around £650million, wiping out a big slice of the extra funding it will receive.
£3.5billion of new “unidentified” savings are planned for 2019. Local Government will be in the firing line again so expect even bigger cuts to the likes of social care, children’s centres and our fire service.
The so-called National Living Wage is getting less generous all the time because it is set at a percentage of average wages, and average wages are stagnating. When George Osborne announced it less than a year ago, it was going to be £9.35 in 2020. Now it will only just hit £9. That’s a fall of over £600 a year for the workers who will receive it.
But surely the biggest failure of the Budget – and the one that has produced the biggest row – is the Government’s plans to snatch over £4billion from people who are disabled and give it to some of the wealthiest people in Britain.
This is what has provoked the resignation of Iain Duncan Smith.
He describes the Budget as “deeply unfair”. Making disabled people pay for giveaways to the well-off is “not defensible”. He goes further and says that Government policies are “political rather than in the national economic interest”.
As a minister who has not shied away from cutting benefits to very vulnerable people these comments are particularly damning.
George Osborne likes to think of himself as a master tactician. I’ve always thought that his reputation was overblown – he’s benefited more from luck than good judgement – and that his over-inflated view of himself would be his eventual undoing.
We’re starting to see this now. His reputation is unravelling as quickly as his budget.