SIMON HEFFER: On your marks - the election starts here
George Osborne didn’t just deliver his autumn financial statement yesterday.
He launched his party’s campaign for the general election in just five months’ time — and, given the constraints he was under, he did a pretty good job.
His plan to eliminate the deficit, the keystone of the Government’s credibility, relies largely on further spending cuts of £30billion a year by 2017-18.
He went into no detail yesterday — that may have to wait until the Government is re-elected, if it is — but his statements of intent were unequivocal, as those from a Tory Chancellor should be.
George Osborne launched his party's general election campaign with his autumn statement yesterday, giving his backbenchers some of the Conservatism they have been longing for
But in case anyone has forgotten, Mr Osborne isn’t just Chancellor of the Exchequer: he is his party’s main election strategist.
And his announcements yesterday on reforming stamp duty, raising tax thresholds, boosting infrastructure, giving £2billion more to the NHS and scrapping Air Passenger Duty for most children betrayed the fact that the key — indeed, almost the only — consideration for him now is to maximise his party’s vote on May 7.
He seemed to have raised morale on his backbenches, where scepticism about him had been hardening in recent times. He outlined measures that, by reducing state interference in people’s private financial affairs and encouraging thrift and aspiration, smacked of a Conservatism many of his colleagues have longed for.
Indeed, after a decade-and-a-half in which there has often seemed little to choose between the main parties on their economic ideas, he has at last delivered definitively Tory proposals that put clear blue water between him and the post-New Labour party of Ed Miliband and Ed Balls.
Mr Osborne was intensely aware that yesterday’s statement would be his last big economic showcase before Britain votes.
The next Budget will be too near the election for any big reforms to be enacted, but will be a wish-list of what might be done should the Tories win.
This was his last chance to make concrete changes.
The economy is in a far better state than the rest of Europe, and - as Osborne pointed out - far better than Hollande's basket-case France which Ed Miliband wants to emulate
It was also astute to operate strictly within the constraints of an economy far healthier than any in the EU (and, as he pointed out, far better than Francois Hollande’s basket-case France, whose economic model Mr Miliband said he dearly wished to emulate).
The Chancellor made an ambitious promise of an economy freed from deficit by 2019, and therefore with its awesome public debt — currently over £1.45 trillion, and rising — at last under some control.
Convincing his party that, despite taking twice as long to eliminate the deficit as he had promised, the sun-lit uplands are now in sight is crucially important with the election imminent.
His fellow MPs cheered him yesterday — but he must still convince the electorate.
Two of his proposals had dramatic appeal, notably for the Tory core vote among the middle classes. This was a tacit admission that the party has neglected its own during the past four years.
Most obviously, the first proposal, saying that 98 per cent of house purchases will attract lower stamp duty will cheer hundreds of thousands striving to realise the dream of home ownership.
The 2 per cent who will pay more — on properties worth more than £937,500 — would in many cases be victims of Labour’s proposed mansion tax.
Mr Osborne was careful to point out that the stamp duty, though steep, is a one-off, whereas the mansion tax would be annual.
Estate agents were quick to predict a price correction that would drive down the purchase price at the top end of the market by way of compensating for the increased stamp duty.
The other proposal that will resonate with his core vote was the ability to pass on Isas to a spouse without attracting tax liabilities.
Many middle-class people have invested steadily in these tax shelters for many years, and this enables them to provide more extensively for a widowed spouse.
Osborne's promise to create a ‘northern powerhouse’ is intensely significant. It isn’t just that the north of England is Labour’s heartland, it is also where Ukip have proved that they are doing exceptionally well
While these were eye-catching headlines, this was a purposefully political performance, with electoral arithmetic figuring strongly in Mr Osborne’s other calculations.
His much-trailed roads programme is especially helpful to marginal seats, and his plan to reform business rates will encourage small firms everywhere, and renew them as engines of growth and as creators of employment and wealth.
Above all, his promise to create a ‘northern powerhouse’ is intensely significant. It isn’t just that the north of England is Labour’s heartland, it is also where Ukip have proved, in a succession of by-elections where they have come second, that they are doing exceptionally well.
In the campaign for which he has now fired the starting gun, Mr Osborne must harry Messrs Balls and Miliband about their part in the economic debacle that preceded the 2010 election.
He and his party must press home the charge that in taxing wealth creators more, and borrowing more to appease the trades unions, Labour would put growth into reverse, create hardship and sacrifice our international credibility.
Every Labour administration has left the economy in a far worse state than it found it. Mr Osborne’s job now is to convince Britain that a Miliband/Balls one would be no different.
On yesterday’s showing, with the economic indicators relatively favourable — despite his failure to reduce the deficit as quickly as he’d hoped — the Chancellor has made the best possible start to that campaign.
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