THE BLOG

Drum Roll, Please, for George the Magician Chancellor

01/12/2015 16:41 GMT | Updated 27/11/2016 10:12 GMT

Magic comes in many forms. Take the autumn statement from George Osborne: Delivered by a Conservative but sounding rather Labour.

Stories in advance suggested a good old-fashioned Tory mauling to delight the Coliseum crowds. Instead, we got something that could safely be shown before the 9 pm watershed.

We had gathered to view a 10 per cent cut to police budgets, the privatisation of Channel Four, sale of the Government's £44 billion stake in housing associations, and a palming away of the Land Registry (because it's there).

In the end, nothing. It was all no more than political teasing.

But perhaps that was always the intention - to deflect attention and trigger those 'end of austerity' headlines that dutifully arrived.

Whilst we were briefly distracted by what we were not getting, we were given a range of stealth taxes. These would not have shamed Gordon Brown, the former Labour Chancellor and a master of that particular art.

As the dust has settled, the significant story from the 2015 statement and spending review is not the u-turns and privatisation bullets dodged, but the tax hikes delivered. These are expected to raise £20 billion by 2021.

Sometimes the stealth was double-edged. Although the Chancellor completely abandoned plans to cut tax credits, independent analysis quickly worked out that the new universal credit system coming soon will do the job for him. Magic.

Perhaps the most flagrant new tax is the 'apprenticeship levy', which he has set at 0.5 per cent of payroll. It will hit big and medium sized businesses with effectively a rise in their national insurance contributions and is expected to raise £3 billion a year by 2021.

This new burden comes in addition to the imminent national living wage and the continuing advance of auto-enrolment pension changes. Neither of these are good news for the retail, health and leisure sectors, or the cost base of businesses generally.

Second home owners must also be unsettled and may now have second thoughts as they face a three per cent increase in their stamp duty costs, effectively a 75 per cent hike in the tax due when buying a £500,000 property.

Another stealth tax to worry nerves is the 'social care levy', which will allow local authorities to add up to 2 per cent to council tax bills.

What George Osborne appears to have decided with these two key taxes is that if he cannot have less state, he will at least have less state spending; and he will shift the costs of keeping services going directly onto taxpayers, and where possible the political liability onto local politicians. Another neat trick.

The levies for apprenticeships and social may actually represent the start of a trend to off-load the tax burden for one thing through the Trojan Horse of another.

It is not hard to see the appeal. An announcement of a rise in employers' national insurance or everyone's council tax would have sounded politically unpalatable, but a 'levy' for a clear social good sounds almost reasonable.

Still, these tax changes will shake the confidence of Conservative supporters, even if they have nowhere to run. Corbyn Labour is hardly offering a sympathetic alternative. The Chancellor probably included that assessment, too, in his political calculations.