With only a few weeks to go before the general election, it was inevitable that George Osborne’s Budget speech would be a party political broadcast. Hailing Britain as the “comeback country”, he promised “£10 off a tank with the Tories” and had a dig at Ed Miliband’s two kitchens.
Most measures had been leaked beforehand, as usual. The only real surprise was a new “help to buy” Isa, where every £200 saved into a deposit for a house gets a £50 government top-up.
There was a small rise in the income-tax allowance (to £10,800), plus the first £1,000 of basic-rate taxpayers’ savings income will also be tax-free. The pensions lifetime allowance will fall from £1.25m to £1m, after which it will rise with inflation.
Isas will become more flexible, with savers now allowed to withdraw cash from the wrapper and then pay it back in again in the same tax year without losing their allowance.
What the commentators said
While Gordon Brown was “the famous meddling chancellor”, said Ed Conway in The Times, Osborne is the master of “piddling policies” – those costing or bringing in under £500m. This Budget was “another thin one”. At least it was “fully funded”, said Capital Economics. He balanced “election bribery” with “fiscal prudence”.
The money saved from downward revisions to debt interest payments and welfare costs (a result of falling inflation) has translated into lower borrowing forecasts rather than giveaways. The handouts were balanced by higher taxes. “Clearly he decided that it would play better with the electorate to emphasise his fiscal prudence” rather than blatantly bribe them.
Osborne has eased up on his projected spending cuts, with a £7bn surplus pencilled in for 2019/2020, rather than £23bn. The Budget forecasts £29.5bn more spending in 2019/2020 than December’s Autumn Statement did. That, as expected, “killed off Labour’s main attack line”, said Dan Hodges on telegraph.co.uk: the idea that the Tories would take spending (as a share of GDP) back to the 1930s.
Debt as a share of GDP is projected to fall marginally next year as borrowing rises more slowly than growth, but the actual sum will continue to grow as annual deficits continue. “The fiscal screw will have to stay tight” for a few more years, said Neil Williams of Hermes.
The bottom line, then, said the BBC’s Robert Peston, is “less austerity, though still more than Labour” is planning. The immediate question, however, is whether Osborne has “done enough to become a Comeback Chancellor”, as telegraph.co.uk’s Mary Riddell put it. If not, we may have to sit through another Budget before too long.