Brian Monteith: Chancellor comes in on time and Budget

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Is “Britain walking tall again”? In a Budget that was all about creating some positive mood music in advance of a general election that is hanging in the balance, I think it only right to ask what is the truth of that statement.

It is generally held the world over that Napoléon Bonaparte was a small man. Why, we even have a psychological term named after him – the Napoléon complex – to describe people that compensate for their small stature by adopting an aggressive or domineering social behaviour.

And yet the truth is quite different, Napoleon was 5ft 6in tall – the average height for a man at that time and often taller than many Frenchmen. Being at war with France, the British propaganda machine of the time loved to make fun of Bonaparte and scurrilous articles and cartoons established the false cultural image of a petty tyrant.

It has stuck ever since despite records showing it as untrue.

So is Britain walking tall again, or is it British propaganda; the Chancellor skilfully inverting the Bonaparte ruse to make us think we are doing better than we are? We need to clear the fog of electoral war to find out.

There is a great deal to commend in this budget. If we take the context of Osborne’s Autumn Statement last year – where he had to eat humble pie and admit that the public finances are not improving as fast as he had said they would – and that the Office of Budget Responsibility (OBR) has “revised down the growth of the World economy, revised down the growth of world trade, and revised down the growth of the eurozone” – meaning we should expect a weakening UK economy – he was still able to come to the House and announce good news.

Despite such a pessimistic landscape the OBR has revised its predictions for UK economic growth UP and Osborne was able to say, “Unemployment is down, [public] borrowing is down in every year we forecast” and “national debt [is] now falling as a share of national income” while “Compared to five years ago, inequality is lower, child poverty is down, youth unemployment is down, pensioner poverty is at its lowest level ever, the gender pay gap has never been smaller.”

Indeed “Britain has the highest rate of employment in its history. A record number of people in work. More women in work than ever before. And the claimant count rate is at its lowest since 1975.”

These are the sort of statements past chancellors would have given their best arm for, so how on earth is that possible?

Firstly let me say that Osborne’s creation of the OBR has been a master stroke – for it means that we now have independent statistics that tell us the good and the bad news coming from government statistics.

In the past, chancellors had a very bad habit of massaging or adjusting figures. That is far harder now and what we see can, therefore, be taken as the best information available at the time. We desperately need an OBR for the Scottish Government.

The full answer is that by a combination of a number of policies in trimming back the size and role of the state (administrative costs of central government down by 40 per cent); cutting personal taxes that encourage economic growth (while raising others that tax consumption) and reforming the benefits system, more people are now working, and importantly – in private sector employment.

While tax revenues have been disappointing they are now going in the right direction and the deficit is coming down.

Bonaparte famously said “give me lucky generals” and Osborne has also had some luck. Falling oil and world food prices have driven down inflation resulting in a massive saving of £35 billion on government interest and this, together with the sale of assets in the banks that were bailed out, left him with a choice of what to do with the savings and proceeds. Should he provide some election sweeteners by bribing the electorate just before an election – the sort of cynical jape we’ve seen in the past, only to pay for it later?

Amazingly the answer was No – instead he decided to use it to pay down the national debt.

Hosanna! For this must mark a turning point in British politics. Plain and simple, public debt is deferred taxation.

It means taking state services, freebies and benefits now – that we cannot afford – and expecting our children and grandchildren to pay the taxes to write off that debt in the future. It’s like taking a bank loan for a car, knowing that you have no intention of paying it back, but leaving the debt in your will for your kids to pay. Frankly, it is politically immoral.

That Osborne turned away from this approach is all to the good.

That he has also found room within the improving economy to take practically all savers out of taxation of their deposits was the icing on the top.

Sure, there were some announcements I would quibble with but when we start to pay back our debts and look to live within our means then I think it fair to say “Britain is walking tall again”.