Budget 2012 analysis: 50p cut could cost the coalition
Politics is about perception – and as polls have shown, cutting the 50p rate is deeply unpopular with the public.
By Dr Matthew Ashton
By any standards George Osborne faced a difficult task. The success of the entire coalition rests on whether they can deliver growth over the next three years while keeping the confidence of the markets and the credit ratings agencies. The trouble is that many of the factors that will impact on the British economy during this period, such as the eurozone crisis, are out of their hands.
In many ways the Budget itself was a bit of an anti-climax; almost all of the major announcements had been flagged up or leaked over the previous week. It was a bit like a film trailer that gives away the entire plot. Perhaps a better comparison would be a pantomime. The coalition cheered every announcement while the opposition booed and sneered.
The two soundbites that seem to have been repeated endlessly over the last few days have been 'open for business' and 'fiscally neutral'. The coalition was keen to emphasise the point that this is a Budget designed to get Britain growing again while not fundamentally altering their position on deficit reduction. In many ways, then, it was a very conservative budget. The changes to stamp duty were probably the most radical announcements, but even they were more fiddling round the edges than a genuine shake-up.
So the big issue comes down to the question of whether the changes in taxation were progressive or regressive, and whether more of the tax burden would be placed on the 'have nots' rather than the 'haves'. Statistics can be quoted to support both sides of the argument but in many ways the reality will matter less than how the public view it.
Politics is increasingly about perception and recent polls have shown that the decision to scrap the 50p upper tax rate is widely unpopular. David Cameron has repeatedly claimed that "we're all in it together", and regardless of whether the changes bring in more money or not it'll be hard to shake off the impression amongst many that this is a Budget for the rich rather than the poor. Labour will be pushing the line that this was a 'millionaire's Budget' as hard as they can over the coming months. It'll be interesting to see if the Conservatives can counter it.
Probably their biggest problem in the long-term is the fact that economic growth is forecast to be only 0.8%. While this might be an improvement on the previous prediction of 0.7%, it's still a pretty dismal figure. If it turns out to be worse than that then Osborne will be under even more pressure than before to change course.
Dr Matthew Ashton is a politics lecturer at Nottingham Trent University. Visit his blog.
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