8 Jul 2015

Summer Budget 2015: topsy turvy politics

There’s a topsy turvy quality to this budget.

You tell the voters in the election that you’re going to be tougher with austerity than you actually are. And for good measure you hold back an eye-catching voter-friendly triangulating policy – the living wage – until two months after the election.

On the austerity measures, not for the first time, the Chancellor’s eased the tough talk.

George Osborne is now implementing his welfare cuts over four years not two. At one point in his speech the Chancellor dismissed with a curl of the lip the “rollercoaster ride” line graph of planned cuts seeming to forget that it was a line graph he had authored.

It’s not quite clear whether the living wage – in effect a minimum wage for over 25s – will make people that much better off than they would have been without this budget.

Those welfare changes allow George Osborne to start unpicking what he regards as the welfare bind that Gordon Brown wrapped round the vast majority of the working population.

It’s also not clear what impact that new floor for wages could have on EU migration.

Overall, with the sanctity of older peoples’ benefits maintained and the axe falling on working age claimants, the trend continues towards a welfare state that is increasingly skewed towards the older section of the population.

Add in the NHS funding increases and that trend is added to.

On taxes, there’s a move planned on pension relief which the Tories had signalled they wouldn’t touch at one point in the election.

There are a couple of tax hikes – a premium on insurance policies and a hike in tax on share dividends which the Treasury says will only impact on people with portfolios of more than £140k – that Gordon Brown might have come up with.


Iain Duncan Smith looked excited out of his skin by the Living Wage announcement. It’s not clear what the other changes in welfare have done for incentives in his beloved universal credit.

Labour is rubbishing the living wage announcement as small beer, but the party would’ve killed for a policy like that in its manifesto.

The silence on the Labour benches as the Tories shrieked their approval of the chancellor’s budget told its own story.

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