WE should have guessed, as Treasury officials wandered through the House of Commons press gallery late on Tuesday night offering whispered briefings about the arrival of a new £1 coin, that George Osborne would have something more substantial up his sleeve.
A dull, “steady-as-she-goes” Budget had never seemed very likely – despite the claims of the Chancellor’s aides. Not one year out from a general election. And certainly not from this nakedly political Chancellor, who with every passing year makes Gordon Brown look positively benign in his approach to the job at Number 11.
He took his time to get there yesterday, lingering over the glowing predictions from the Office of Budget Responsibility of growth upwards of 2.5 per cent per year.
This was hardly surprising, given the dismal figures Mr Osborne was forced to trot out in every previous Budget speech.
But after speaking for nearly an hour, the rabbit he finally pulled from his hat represented the most sweeping package of changes to pensions and savings this country has seen in many years.
The Chancellor’s target was crystal clear. This was a Budget speech pitched almost entirely at one group of society – pensioners. Coincidentally, pensioners are also the group of people most likely to vote in the general election next May.
And so we saw high-interest “pensioner” savings bonds set up specifically for the over-65s; dramatic changes to annuities which give pensioners unprecedented flexibility about how and when they spend their money; greater scope for investing in premium bonds; and new Government-funded advice services for those looking to take out new pensions.
Anyone spot the theme here? For goodness sake, Mr Osborne even cut taxes on bingo. This was not a Chancellor seeking the youth vote. Two years on from his disastrous 2012 Budget – anyone remember the “Granny Tax”? – he was seeking to make amends.
And why not? Pensioners, and those approaching retirement, will insist with some justification that such support is long overdue after seeing their hard-earned savings squeezed by years of rock-bottom interest rates.
But younger families – either mortgaged up to the hilt or finding home ownership to be a distant dream – will ask precisely what is in it for them. Pensioners have, after all, already been shielded from many of the direct cuts of the past four years, with free bus passes, TV licences and winter fuel allowances all protected by the Chancellor as other benefits were hit.
The answer, of course, came in the form of yet another hike in the income tax threshold – a now annual event courtesy of the Liberal Democrats, but one which should not be overlooked despite having been widely anticipated in the run-up to yesterday’s speech.
Lifting the point at which people pay income tax to £10,500 since the start of Parliament represents an £800-a-year tax cut to millions of low and middle-income earners. This is not small beer – unlike the penny-off-a-pint beer duty cut also announced by Mr Osborne, which will inevitably capture more headlines.
The Lib Dems seem happy enough. They can now tell potential voters they have delivered over and above the increase to £10,000 which was promised in their 2010 manifesto. For once, Nick Clegg will have a broken promise he can actually boast about.
But where does all this leave Labour? Floundering somewhat, if Ed Miliband’s rather shouty and unimpressive reply to the Chancellor’s speech is anything to go by. Responding to the Budget is one of the most difficult tasks an Opposition leader must face, given no advanced sighting of the speech beyond that which has leaked to the papers over the previous days.
That, nonetheless, is Mr Miliband’s job, and he will need to do better than simply trot out the same old lines about “out-of-touch Tories” and “costs-of-living crises” if he is to reach beyond Labour’s core voters and into the centre ground he needs.
Mr Miliband will also need to find a way to sidestep the most nakedly political measure of Mr Osborne’s speech yesterday – the announcement of an imminent vote to introduce an annual cap on welfare spending.
Every future British government will be tied to spending a certain amount on welfare, or face coming to the Commons to formally request what would be a hugely unpopular raising of the cap.
Labour has already signalled it will support the cap in next week’s vote – Mr Miliband knows he would otherwise face endless taunts that Labour remains the “party of welfare”. But the vote will not be the end of the matter. By setting an actual limit on welfare spending – it will be £119bn next year – Mr Osborne is seeking to put one of his favourite issues centre stage at next year’s election.
The Tories will be delighted to tell voters precisely how much they intend to spend on welfare each year if re-elected – and will expect Labour to say the same.
This, the Chancellor hopes, will be a race to the bottom. It is one which Mr Osborne knows his party is certain to win.
• Jack Blanchard is Political Editor of The Yorkshire Post