Grayling Blog

Osborne’s Debut

Posted on 22.06.2010 by Unknown User

It was budget day (again) today and a chance for the fresh-faced new Chancellor of the Exchequer George Osborne take centre stage.

Osborne is an opera fan and was spotted at Covent Garden’s first complete performance of the twentieth century of Wagner’s Ring Cycle. That was back in October 2007 when young George was still languishing on the Opposition Benches. Mr Osborne is now embarking on an epic of his own, seeking instead of a golden ring a healthy national bank balance. And a few weeks ago he gave us the overture, culling a number of quangos and programmes, ranging from the beloved (Child Trust Funds) to the unloved (ID cards). Individual government departments have been given their notes to hit – Education has to find £670m of savings, Business, Industry and Skills an eye-watering £836m – and there’s a freeze on civil service recruitment. A seemingly innocuous ‘efficiency and reform group’ at the centre is to determine the painful detail of these initial £6bn worth of savings.

Today the overture gave way to the full performance and as widely predicted, it was a sombre performance. This hardly came as a shock given that the fiscal deficit is the biggest in Britain’s post-war history and is equivalent to over 11% of GDP. Mr Osborne signalled curtain up on the steps of 11 Downing Street, clutching the battered red box first used by William Gladstone a century and a half ago and today having its last outing. This was a small victory for the Chancellor, as the National Archive was initially reluctant to let it be used again.

As Mr Osborne got to his feet in the Commons, the ingénue Danny Alexander sat with his eyes cast down, looking as though he wished he was back in the understudies’ corner. This was the Chancellor’s big aria and he began by declaring that this was a Budget which “pays for the past and plans for the future…the unavoidable Budget”. Cue cheers on his front bench and behind him in the cheap seats. He hit a further top note by pointing out that the last government had broken their own ‘golden rule’ by £485m and trilling that under them, “past prudence was the excuse of future irresponsibility.” The unsurprising revelation that Britain wouldn’t be joining the Euro any time soon led to the announcement that the hitherto unknown Euro Preparation Unit in the Treasury would be no more.

And the Treasury will need all the strength it can muster. Mr Osborne announced the death knell of 25% of every government department’s budget, apart from health and international development, in keeping with the Conservative manifesto. Allowing no time for the news to sink in, the Chancellor continued apace to detail the high and low notes of £11 billion of welfare cuts and £8 billion of tax rises. Some had been heavily trailed with favoured journalists but still came as a shock and sparked roars on different sides of the House: Capital Gains Tax up to 28% from midnight tonight (allowing minimum time for helicopter-owners to abscond to Switzerland), a steady decrease in corporation tax, the link between earnings and the basic state pension restored, and VAT up to 20% from 4 January.

This was indeed a non-fiction saga of epic proportions. And as the curtain fell on what Mr Osborne declared was a “progressive Budget”, the audience was still struggling to absorb its impact. The leading man was assuring them it was “tough but fair” but snappy sound-bites belong only in programme notes. In the long run only the figures will tell the true story.