The Pennies Are Dropping as the UK's Deficit Falls

05/12/2012 15:05 GMT | Updated 04/02/2013 10:12 GMT

To govern is to choose and in his autumn statement today setting our the governments tax and spending priorities, it's clear that George Osborne has not only fixed his economic strategy, but set in train the Conservative Party's approach to the 2015 general election.

The big debate now remains over the government's strategy to reduce the budget deficit and the overall levels of debt. Britain has a credible plan in the eyes of the world's financial markets (the people we are required to borrow money from) to reduce our debts. That's why they are prepared to lend to us at the lowest rates we have seen in over 80 years. But, getting rid of the annual budget deficit is hard work; largely according to the independent Office of Budget Responsibility because of the low rates of economic growth in Europe, our major market for exports. The deficit is down by 25% now as a result of the government's strategy, and will have more than halved by 2015. Labour can remind us that this is taking longer than planned, but does anyone really believe that we can accelerate this process by borrowing more at higher rates and putting taxes up further, which would be the consequence of their proposals, such as they are.

George Osborne was also pretty clear whose side he is on; "in everything we do, we're helping those who want to work hard and get on." By this he means targeting support in tough economic times to the people who get up early in the morning to go out and work. Despite the need for spending reductions to get down the national debt, a full time worker earning the national minimum wage has seen the amount of income tax they pay halve under this government.

Unemployment is falling and job creation in the manufacturing sector is rising at record levels. Petrol is 10p a litre cheaper than it would have been under the plans left by the Labour Party and the proposed 3p increase in fuel duty for January has been scrapped altogether; this is important for the many families who currently spend as much on fuel each week as they do on food.

Retired people have just seen the largest ever cash increase in the state pension and the benefits cap means that in the future a working family will no longer be worse off that one next door claiming full out of work benefits. Yes, the top rate of income tax has been cut from 50p in the pound to 45p, but the result of this is that tax avoidance rates are falling and wealthy people are actually paying more tax than they were under Labour.

There was also good news for businesses and investment. The corporation tax rate will be cut again to 21%, compared to 28% under Labour, 29% in Germany, 33% in France and 40% in the USA. Britain is already one of the leading recipients of global business investment, and his measure is an advert to the world to come and create new jobs here.

Where, you might ask is Labour on any of the above? You could hear the sound of pennies dropping amongst the glum faces on the Labour benches as the Chancellor's announcements made clear that there is no credible alterative to the government's strategy to get rid of Britain's budget deficit, and hard though the road may be, the country is on the right track.