George Osborne promised on Sunday that this week’s Budget would feature “no giveaways, no gimmicks”; it will be a sober exercise in spreading prosperity to all parts of the kingdom through a series of unflashy supply-side reforms.
But a general election is just over 50 days away and behind the chancellor’s fiscally austere exterior is a mind whirring with ideas on how to turn this Budget — the last major event of this parliament — into a sure political winner.
When Mr Osborne stands up at the despatch box on Wednesday, it will be his last big chance to convince voters that they have a vested interest in a Conservative victory: that the economic recovery is more than just abstract sets of data.
Rick Nye, managing director of pollster Populus, says this is perhaps the biggest obstacle to a Tory victory: “People want to know that the recovery will benefit them.”
Opinion polls show the Conservatives and Labour neck-and-neck with no sign yet of the “crossover” moment — dreamt of by Tory strategists— when the party starts to open up a solid lead.
Mr Osborne’s task has been complicated by the fact that Nick Clegg, the Liberal Democrat deputy prime minister, has killed off some of the “showstopper” vote-winning ideas mooted by the chancellor in the run-up to the Budget.
Coalition insiders say that Mr Clegg’s insistence on a “vanilla” Budget led to a confrontation with Mr Osborne at a meeting this month, but the chancellor still has room for manoeuvre.
Danny Alexander, Lib Dem Treasury chief secretary, said: “This has to be a Budget with fiscal responsibility at its heart — that’s the hallmark of this coalition. But that doesn’t mean you can’t do things.”
While the Lib Dems have a veto on Budget measures, they are resigned to the fact that Mr Osborne will use his speech to hint at what the Conservatives would do if re-elected on May 7 free of the constraints of coalition government.
High among those would be reform of inheritance tax — one of the ideas scotched by Mr Clegg for this Budget — with a raising of the tax-free threshold to the £1m long mooted by the Conservatives.
Mr Osborne will also highlight his party’s plans to cut taxes for middle earners. He wants to raise the 40p income tax threshold to £50,000, which he aims to fund from the notional £23bn surplus pencilled in for the end of the next parliament.
But the Lib Dems have agreed to some vote-winning measures for this Budget, notably raising the personal income tax threshold to about £11,000 from April, up from the planned £10,600.
On Sunday the chancellor also confirmed plans to let 5m pensioners sell their annuities in an extension of pension reforms already under way.
Both policies were initially espoused by the Lib Dems but now form common ground in the coalition and will be central to campaigning by both parties for the general election.
Mr Osborne will also want to reassure voters that he is not on an ideological mission to slash the size of state — as Labour says he is — and he could raid the £23bn surplus to ease off on public spending cuts.
In theory, he could dip into the £23bn to increase spending on vulnerable public services, fund tax cuts and still have a surplus left over to pay down the national debt.
Ed Balls, shadow chancellor, expects Mr Osborne to do exactly that, to avoid Labour claims that he wants to shrink the state to 1930s levels, as a share of gross domestic product. But, Mr Balls adds, proposed Tory cuts would still be “colossal”.
The bottom line for Mr Osborne is that while this Budget might be fiscally neutral, politically it will be anything but.
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