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Osborne is setting himself up for another economic failure

ByHarrison Worrell

Mar 21, 2016

Last week George Osborne delivered his eighth budget. A common feature of these occasions has been the announcement of budgetary targets.  Equally as recurrent has been his failure to meet these targets. However, this time the aspiration was not financial, but personal. The fact that George Osborne covets David Cameron’s job is an open secret; his announcements were about keeping this ambition on track. He has failed to reach every fiscal target he has set himself; it is looking likely he will fail this one too.

In terms of new policies, the budget is relatively bare. A number of the announcements are changes to older policies. Fuel tax frozen for another year, corporation tax reduced again, the personal allowance threshold increased and increases to taxes on tobacco, but not beer or cider. These measures produced little fanfare, and even Labour largely ignored the cut on corporation tax.

What Osborne really wanted to garner publicity for were his policies for the ‘next generation’. The most prominent of these was the new sugar tax. This largely united the House and medical experts, as well as an ecstatic Jamie Oliver. The proceeds of the tax will fund sports at schools offering a double-pronged solution towards tackling childhood obesity. It is a smart policy, and by focusing on social issues it allows Osborne to demonstrate a softer side – perhaps a more prime ministerial side.

George Osborne’s stock has fallen sharply since last summer, when he announced the increased minimum wage. Last summer, there seemed to be nothing that could stop his trajectory towards becoming Prime Minister. He has since rediscovered the ability to hasten the fall of his own unpopular policies by handling them so badly.

The public display of defiance following the furore of child tax credits damaged him when the Government subsequently backed down. Likewise, he managed to impress nobody but himself with the pitiful sweetheart tax deal he arranged with Google. The latest controversial policy, which will undoubtedly backfire, is the cut to disability benefits.

Personal independence payments exist to ease the financial burden of long-term health issues or disabilities. It helps people complete everyday tasks such as cooking for themselves, bathing, getting around and communicating. Around 370,000 disabled people who rely on these payments will face a reduction of up to £3,500 in their income.

In the days following the announcement, Tory opposition to the policy grew, culminating in the resignation of Ian Duncan Smith. This will certainly erode the Government’s small parliamentary majority, precipitating another avoidable defeat for Osborne.

While cutting disability benefits is distasteful, it becomes positively repulsive when acknowledging the money saved will help cut taxes for the well off.

The rate at which individuals are liable for the 40p tax rate has risen to £45,000. This was wholly focused on natural Tory supporters while serving as some red meat for the party’s grassroots. Osborne will continue to wield the power of the Treasury in this way to destabilise the opposition.

Of course, the opposition he faces is not Jeremy Corbyn, but Boris Johnson. Since throwing his weight behind Brexit, Johnson has enjoyed increased support amongst Conservative party members, making him the new front-runner in the race to succeed David Cameron.

A new tax on sugary drinks will not distract the public from George Osborne’s economic failure forever. He has failed two of the fiscal tests he set himself before the election, and the odds of him failing his third are 50:50. Boris Johnson, who has shown no complacency in his posturing over Europe, could make sure he fails his target to reach Number 10 as well.

Image credit: Altogetherfool

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