The Conservatives made three fiscal promises to the British public at the election: to find £12bn in savings from the welfare budget, to bring down debt as a proportion of national income, and to produce a surplus by the end of the parliament.
But, as Osborne continues to break his rule on reducing debt, his attempts to meet the two remaining ends of his self-created economic 'credibility' has produced a budget of truly perverse means. Despite claiming that Britain is paying down its debts and that the deficit is falling, the economic outlook is not as bright as Osborne or Cameron would have us believe.
At the autumn statement in 2015, the Chancellor declared it was time to "fix the roof while the sun is shining" on the UK economy, but barely four months later, with the economy slowing and debt continuing to rise relatively unabated, "storm clouds" are apparently gathering in the global market, with China's engine losing steam and oil prices plummeting.
As the Office for Budget Responsibility revises its forecast of the productivity growth potential of the UK economy downwards, the "cocktail of risks" of which Osborne warned us appears to have given the government a hangover; thanks to the budget's new tax on soft drinks, a can of Irn-Bru to alleviate it has just gone up by 10p- and they need more than just the one.
Although the Tories' self-imposed 'fiscal mandate' to run a surplus by 2019-2020 is more of a political stunt than an economic necessity, the downgrade in estimated tax revenues means more cuts are needed to meet it. It is here where the Chancellor's budget is at its most pernicious and has met its staunchest criticism from campaigners, opposition MPs and even some of his own party. After the government's U-turn on tax credits at the last budget in response to public outrage and concerted protest, this budget set the target of its welfare cuts elsewhere, with a plan to cut £4.4bn from disability benefit.
By changing one simple component of the formula used to calculate the daily living component of the personal independence payment (PIP)- with those who use aids and appliances, such as specialist toilet seats or grab rails, now receiving only one point instead of two during the eligibility assessment-, the Treasury expects to make an enormous saving. But at what cost?
With hundreds of thousands of disabled people getting less money, £350 on average, or losing the benefit altogether, the trend in Osborne's budgets where the cumulative impact of cuts continues to be felt by those it will affect most acutely and the wealthiest are exempted or even rewarded, is becoming unmistakable, although it has not perhaps been as flagrant as on this occasion.
The incomes of the poorest 10% is set to fall by 7% by the end of the parliament, the Institute for Fiscal Studies estimates, and 9% for the second poorest decile- an annual loss of £1300 and £1600 respectively-, while the average income of the richest 10% of households will rise £600 a year by the end of the decade.
When Osborne announced at the dispatch box on Wednesday that the threshold at which the higher rate of income tax rate becomes payable would be increased, he lauded it as "social justice delivered by Conservative means". Could there be anything more 'Conservative' than giving a tax cut to people earning over £42,000 whilst cutting disability benefit and proclaiming it as social justice? With their manifesto committing them to eventually raising the rate to £50,000, the top of the income distribution is in for more of the 'handouts' that are so scarce when it comes to affording disabled people or poor families with three children the dignity that is their right.
As if that chutzpah was not enough, the decision to reduce the main rate of capital gains tax, which is only payable on gains above £11,000, making those who are already making money the likely, if not only, beneficiaries, from 28% to 20%, is difficult to stomach for its deplorable affront on the values of fairness and justice; it will also cost the Treasury an estimated £735m
If Tory policies were increasing the number of children growing up in poverty, cutting critical support for disabled people and widening income inequality while treating the richest to multiple tax breaks, but actually repairing the economy sustainably as they purport to, austerity would still be a political choice to broaden the shoulders of the wealthiest as the poorest and most vulnerable bear the brunt and public services are slashed to make room for markets. But when they are failing at their own self-imposed economic imperatives, how can they be defended at all?
This budget will, like the last, undoubtedly see some U-turns on its most callous and unpalatable elements, which will probably be enough to satiate growing public anger and satisfy the small number of Tory MPs who threaten the government's slim majority. But the foundations of an economic recovery, built on the political expediency of a Chancellor looking to move next door and the backs of those who can afford it least, will inevitably be one built on sand.Suggest a correction