Budget 2013: Osborne downgraded – but not out
George Osborne tried to present a Budget which appealed to ordinary people today, while confirming the UK economy is expected to grow at half the rate predicted in December.
The chancellor deployed big announcements about extended mortgage guarantees, a cut in beer duty and a new employment allowance helping small businesses as he underlined his message of an "aspiration nation".
"This is a Budget for people who aspire to work hard and get on," he began.
"It's a Budget for people who realise there are no easy answers to problems built up over many years."
But Osborne faced accusations of having made no progress at all after the Office for Budget Responsibility (OBR) confirmed growth in 2013 was being downgraded from 1.2% to just 0.6%.
Ed Miliband responded with an unusually pugnacious response targeting the Tory front bench's personal tax changes, dismissing Osborne as a "downgraded chancellor" whose only upgrade had been a legitimate boost from a second- to first-class ticket.
"After all the misery, all the harsh medicine, all the suffering by the British people, three years, no progress – deal broken!" he declared.
Osborne had repeatedly blamed Labour for the bleak legacy left to the coalition, but mixed his partisan attacks with excuses based on the struggling global economy and eurozone.
"I will be straight with the country," he said. "Another bout of economic storms in the eurozone would hit Britain's economic fortunes hard again."
The OBR concluded the coalition remained "on course" to meet its fiscal mandate of eliminating the deficit by 2015. Osborne said the deficit had been cut by a third, although both borrowing and debt figures had deteriorated since the autumn statement.
He announced a fiscally neutral package which was being paid for largely by extending one per cent cuts in government departments. Only spending on schools, the NHS, local government and aid were spared.
Plans to increase capital spending by £3 billion a year from 2015/16 were also announced. Osborne firmly rejected calls from some, including business secretary Vince Cable, to increase borrowing to boost growth now. "Tax cuts in this Budget aren't borrowed, they're paid for," he insisted.
The one-year comprehensive spending review for 2015/16 will now see the government aim to achieve spending cuts of £11.5 billion, not the £10 billion previously slated.
Osborne will hope his focus on helping with the cost of living, in what Policy Exchange's deputy director David Skelton has labelled "the Boddingtons Budget", will distract from the bleaker economic big picture.
In addition to the 1p cut in beer duty, the chancellor announced he was abandoning the scheduled September increase in fuel duty altogether.
His fourth Budget received a mixed reaction from those concentrating on the cost of living.
"George Osborne has announced welcome relief for people struggling with the high cost of living," TaxPayers' Alliance chief executive Matthew Sinclair said.
"The cut in beer tax, the freeze in fuel duty and the higher personal allowance will all ease the pressure on family budgets. Lower employers' national insurance and corporation tax will also be passed on to workers in higher wages."
But the Joseph Rowntree Foundation's chief executive Julie Unwin said the Budget had failed to take steps to address problems faced by the poorest in society.
"The chancellor faced a test: he needed to boost households incomes and help cut the cost of essentials," she said. "Neither were forthcoming and this Budget failed to do enough for low-income households."
Osborne's rhetoric was targeted at those in work, however, who are struggling through a time of acute difficulty for the economy.
The chancellor concluded: "If you want to own your own home, if you want help with your childcare bills, if you want to start your own business or give someone a job; if you want to save for your retirement and leave your home to your children; if you want to work hard and get on, we are on your side," Osborne finished.
"This is a Budget that doesn't duck our nation's problems, it confronts them head on. It is a Budget for an aspiration nation. It is a Budget for a Britain that wants to be prosperous, solvent and free."
It remains to be seen whether he will succeed in avoiding the omnishambles of his last Budget. Privately, the chancellor has been heard to say his principle aim this year has been "to avoid f***ing up".
