Is the criticism of the Budget, the biggest onslaught of its kind in living memory, fair?
The answer, like most in politics, is both yes and no. Yes, if you judge the budget as a political instrument; no if you look at the budget as a fiscal tool to manage the economy. In the big picture of the country’s economic challenge, set within the aftermath of the global crash and the continuing uncertainty about the euro, a neutral budget which reduces corporation tax, increases the earnings threshold for millions, reduces the troublesome 50% rate, deals with VAT anomalies and puts charitable giving on a much more equitable footing, all makes sense.
Whether pasties cost a little more or less is neither here nor there. It is reasonable for grannies to make the modest contribution of foregoing immediate rises in the threshold at which they pay tax, and, to be frank, too many organisations are classified as charities and receiving billionaire’s dosh, which are not really charities at all. Are independent schools deserving charities of the same stripe as Cancer Research or Save the Children?
Nevertheless the government has almost sunk beneath the waves of derision and outrage. At every attempt to explain, it sinks yet deeper still. An average of the latest opinion polls give Labour a majority of 96. In the run up to the local elections this could hardly get worse. Add all the other muddles, including the shambles over the cleric and you have a picture cementing itself in voters minds of a government which has lost the plot and has become accident prone. The effect is like Major’s sleaze.
There are several explanations. The Tory side of the Cabinet is, for Tories, inexperienced and many would say detached from the grind of life where pennies have to be counted. The Lib Dems have not been in government for generations. Nobody has worked out that with the information revolution and in the Twitter age, the Treasury habit of slipping in, unnoticed, little adjustments here and there to pay for eye catching goodies is no longer viable.
Every detail can be checked, researched, calculated and broadcast to millions of phones, tablets and whatever, long before the chancellor has even finished speaking. The new dimension requires explanation, openness, clarity, simplicity and a clear sense of direction in order to gain public acceptance and media support.
All of this failed and failed big time. This failure was guaranteed by one central error of judgement; cutting the 50p rate. Whatever the perfectly valid arguments for its removal and whatever the real economic benefits which may indeed flow, the idea was, in the current climate, a political non starter. It was, as the blog has pointed out before, not introduced to raise cash. It was introduced as a political necessity to ensure that a visible sanction was imposed on the rich, large swathes of whom were widely blamed for the crisis, in order to persuade everybody else to accept devastating reductions in their standard of living. Its introduction was an absolute must. Its removal, while the economy is still in trouble, was an absolute must not.
The budget became one where money was taken from hard working families, grannies, pasty eaters, charities, et all to give to the rich and, even worse, to give to the rich in the City of London. The result has been a collapse of the consensus supporting the Coalition’s economic strategy and a complete evaporation of the government’s authority. From now on everything it does will be picked apart to find the hidden dodge. Those not found will be invented.
The government might recover. How, is not clear, nor is it certain that it will. The crisis is acute. Governments which become unpopular, do recover. Governments which are seen as incompetent, do not.