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LSBU's Dr Stephen Barber on the Budget 2015 announcement
"Good economics can be bad politics" warns London South Bank University public policy expert Dr Stephen Barber after Budget 2015Following Chancellor George Osborne's final Budget before the general election, political scientist and economist Dr Stephen Barber at London South Bank University evaluates the announcement.
"There are two types of pre-election Budget: the politically clever but economically irresponsible and those economically questionable but politically powerful for the party in office. Chancellor Osborne has never shied away from unpopularity during his five years at the Treasury and despite the pressures on him now ahead of the general election, has delivered a Budget largely in keeping with the tone of his tenure at the Treasury.
"Of course he's been helped by a set of 'better late than never' economic statistics and a collapse in the oil price that few predicted and these have allowed him to throw some crumbs at voters but it is notable he has largely used this cash to shrink the deficit. Of course, he couldn't resist some politicking - for instance hoping to neutralise Labour's attacks by taxing that old bogeyman, the banks, even more.
"History is littered with Budgets designed to wrong-foot the opposition. Gordon Brown made a career out of them and not only at election time. The stand-out for irresponsibility remains Norman Lamont's in 1992; a Budget widely credited with winning the election for the Conservatives. Lamont introduced a new 20p tax band forcing Labour into pledging to increase taxes for lower and middle earners and gifting the government an over stretched programme of spending. Many commentators thought the Chancellor should have focused on the effects of a devastating recession.
"Economically responsible Budgets are maybe rarer. But Roy Jenkins statesman like performance in 1970 can be counted amongst their ranks. And then there is the Alistair Darling whose tenure at the Treasury in the run up to the last election was notable for its integrity, a stance which caused friction with Prime Minister Brown.
"For Osborne, economic responsibility is fundamental to the story he wants to tell. The electorate might buy that but it remains to be seen if it's enough to see the Conservatives edge ahead of Labour in the polls. It's perhaps why there have been a series of modest announcements aimed at shooting Labour foxes. There was not much of a giveaway today and a public feeling tender after a period of 'austerity' might still be tempted to 'vote themselves richer' if it's on offer.
"For this Chancellor, scarcity of money has meant the need to be creative and whether it's underwriting infrastructure or liberalising pensions he has shown the power of policy adjustments without the need or ability to throw cash at a problem. Devolving power to London and the North must surely count as a legacy too. In the long term empowering the North has the potential to feature as one of his great achievements. Future Chancellors will learn from this.
"Osborne is still a young man and has an eye on his legacy. He has patently failed over the past 5 years to irradiate the deficit, sticking to his spending plans rather than deficit reduction as the economy took time to recover. In fact as he announced today that the deficit has halved, it means he is precisely on track to deliver Alistair Darlings' plan as set out in the Fiscal Responsibility Act rather than his own much more ambitious target. But he has largely refused to play fast and loose with public monies to win votes and for that he will win plaudits.
"If the Tories do badly in May, the fingers might be pointing at Osborne for not pushing hard enough at the popular conservative agenda: tax giveaways, welfare slashing and boosting defence. If they do well, the Chancellor will see it as a personal mandate and will be hoping for a sympathetic assessment when the history of this government comes to be written."
Dr Stephen Barber, LSBU Reader in Public Policy