Budget 2016: Bittersweet Symphony

18 March 2016

With Budget 2016 signed, sealed and delivered, once again it looks as though trouble within the Tory ranks could de-rail Chancellor George Osborne’s attempts to get the country to “live within its means”, as his Budget looks likely to be remembered as a bittersweet symphony of policies that could hinder his personal ambition.

Osborne’s legacy

Largely, analysis of the Budget has centred on the immediate context of the Tory party split over Europe and longer-term speculation over who will be the Party’s next leader, and Mr Osborne’s cautious approach clearly attempted to satisfy Eurosceptic Tory backbenchers spoiling for a fight, whilst pitching the “Compassionate Conservativism” agenda he appears keen to advance as he embellishes his vision for a Party grounded in the centre.

So the Chancellor spun his proposals as support for the “next generation” through a surprise Sugar Tax to combat childhood obesity, a lifetime ISA, extra sports funding, and a continuation of wide-ranging education reforms, as he dutifully attempted to disguise the fact that achieving his own self-imposed fiscal-rule destiny is once again looking uncertain.

Attentive politicos have also suggested that the Budget hints toward an early election, using so-called get-out clauses in the Fixed Term Parliaments Act. But this morning, Labour was offered the upper hand as a YouGov poll showed that for the first time since Jeremy Corbyn’s election, the Opposition had pulled ahead of the Conservatives – scuppering Mr Osborne’s attempts to use the Budget to energise his bid to become Prime Minister.

Personal Independence Payments

Delivering the Opposition’s response with little advance warning of proposals, Labour Leader Jeremy Corbyn gave an agenda-setting, if falteringly delivered, speech which dug deep into the Conservatives' decision to alter how Personal Independence Payments are calculated, expected to save £4.4bn by 2020-21.   

Contrasting PIP changes with cuts to Corporation Tax, Mr Corbyn challenged the Chancellor’s implicit value calculation, stating it had “unfairness at its very core”. His take on the measures would later be bolstered by the Institute of Fiscal Studies’ damning verdict.  

Expected to bring large savings for the Chancellor, publicly-voiced concern about PIP changes from his own party suggests it could become the next Tax Credits-style thorn in his side.

Conservative MP Andrew Percy, heralding the revolt, told BBC Radio 4's World at One: "The government has a very small majority so you don't need many for this to be a problem of Parliamentary arithmetic”.

On Thursday evening, Education Secretary Nicky Morgan was selected from the Cabinet to defend Budget proposals on BBC’s Question Time, where she argued that PIP changes were a “suggestion” that were “under consultation”, despite the consultation in question closing on Friday.

By lunchtime on Friday, however, Downing Street rebuffed speculation it would climb down from altering PIP, stating it “remained committed” to imposing the cuts. The row over the change, and a perceived lack of coherent messaging, offers the Prime Minister little support as he tries to present a united Cabinet.  

Backbench pleasers

Perhaps in a bid to mask the Office for Budget Responsibility's decision to downgrade of the UK’s growth forecast, the Chancellor also used his speech to heed the demands of his party activists.

Freezing Beer Duty, Fuel Duty, and increasing the threshold at which people pay the 40 per cent Income Tax were all decisions designed to dampen demands from Tory backbenchers in an apparent strategy of appeasement as they prepare to vote in favour of Brexit.

Hopes that the Sugar Tax sweetener and policies to support the “next generation” would dominate the headlines have dwindled, leaving the Chancellor in a sticky situation over PIP changes and the impact of Business Rate cuts and efficiency savings on public services.

Mr Osborne may have hoped to lay the groundwork for a leadership bid and define his legacy as Chancellor, but as growth forecasts have been revised down and debt as a share of GDP revised up for the next five years, the disgruntled grumbling that followed the 2016 Budget suggests his position is almost certainly less than secure. 

Jasmine Mitchell
Jasmine Mitchell
Political Analyst

Jasmine Mitchell is a Political Analyst at DeHavilland, where she monitors the UK Parliament and devolved institutions. She first joined DeHavilland as a Research Assistant in January 2015. Jasmine holds a BA in Modern History and Politics from the University of Liverpool and a Masters in Conflict, Security and Development from King's College London.