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The Long-Term Economic Plan continues...

8 July 2015

“Britain has turned a corner and left the age of irresponsibility behind”. This was the triumphant opening assessment of a continuing Chancellor, buoyed by the boisterous backbenches as he set out the next steps in his much-vaunted long-term economic plan.

The “bold” vision of the 2015 Summer Budget represented “the new settlement for a one nation Government”, George Osborne declared, launching into a series of fresh policies to bring the books further into line.

Conjuring visions of past profligacy now thankfully defeated, he led with a reminder of the Charter for Budget Responsibility, though he earned a rebuke from Labour’s Harriet Harman that one must deliver on such promises rather than merely legislating for them.

This came alongside a confirmation of the promised “tax lock” – later dismissed as a gimmick by the SNP – and a continuation of the phased upward trajectory of the Income Tax Personal Allowance, both populist measures designed to win approval among voters feeling the change in their pockets.

Not without foundation was the Chancellor’s claim to present “a Budget for working people”, as, in addition to now-traditional rhetoric on low taxes, Mr Osborne also unveiled several measures to expand the tax take at the expense of income from non-employment sources.

Causing ripples among the financially-minded was the announcement of a radical shakeup of the dividends taxation regime, billed as a tax cut for the majority but – like the Stamp Duty rises at the 2014 Autumn Statement – containing the potential to hit certain wealthy individuals with a tax increase. The measure also saw some instant disapproval from business representatives, who suggested that it had the potential to discourage entrepreneurial ventures.

The Budget also contained a bold appropriation of the territory of Labour’s election campaign, as the Chancellor announced a clampdown on non-domiciled tax status. While he rejected going so far as to abolish the principle – even citing a defence of its rationale from former Shadow Chancellor Ed Balls – he declared his intention to set right “some fundamental unfairnesses” by ending the right to be a permanent non-dom.

Cuts to welfare and further reform of student finance to replace grants with loans was framed in now-familiar rehabilitative terms – sternly-administered medicine for an ailing and unsustainable system, with a focus on fairness.

Indeed, the Chancellor scored some notable successes against his detractors by managing to appear magnanimous on social rent and proposing a new National Living Wage, though the Opposition was swift to point out that despite its “grown-up” desire to assess the Budget with a sober eye, it would scrutinise all areas of injustice and unviability.

As Acting Labour Leader Harriet Harman observed, the Summer Budget was also notably light on infrastructure announcements, containing little succour for the energy sector, and only a few references to transport. Indeed, it was over the temporary derailment of track electrification projects and the delayed decision for the future of Heathrow that Ms Harman got a couple of good jabs in.

And there was one other elephant in the room at the Budget, which the Labour Leader got to her feet to point out with gusto – the increasing salience of the Chancellor’s Priministerial ambitions, and his proclivity for what she termed “political”, rather than economic measures.

“The Chancellor should be ambitious not just for himself, but for the country”, she declared.

Read DeHavilland's Summer Budget roundup

DeHavilland gathered all the Budget announcements and responses, from the opposition and industry stakeholders, in one handy roundup. Download your free copy now.

Anna Haswell, Senior Political Analyst and Content Marketer
Anna Haswell
Senior Political Analyst and Content Marketer

As Senior Political Analyst at DeHavilland, Anna Haswell leads on financial services policy, as well as covering media issues. In her capacity as Content Marketer, she is also responsible for DeHavilland's briefings and analysis output, working across teams to ensure relevant messages reach current and prospective clients alike. She is a graduate of the University of Oxford and Goldsmiths, University of London.