Osborne — the Master Strategist?

George Osborne – Britain’s Chancellor of the Exchequer – is meant to be a fine political strategist, the Conservative’s super-hero, all realist and machine politician. Conservative commentator Tim Montgomerie described him once as the coalition government’s “chief executive”, who not only is masterminding the coalition’s deficit and growth strategy but is overseeing the Conservative’s election strategy, he argued.

In an article in The Times, Montgomerie noted that sources had told him that at roundtable meetings involving senior Conservatives and Liberal Democrats heads rise and look to him” and not Prime Minister David Cameron “when anyone makes a controversial statement.”

Well, if Osborne is the man the Conservatives are relying on to maneuver them into a position to secure a majority at the next election, they may find they are banking on the wrong man.

In the past few weeks, he has managed to anger pensioners and the elderly with his so-called “granny tax” and provoke outrage with his proposal to cap how much money the rich can give to charity. It is to say the least pretty extraordinary to have united the charity world in one huge rebellion – and, of course, all those charities will grouse to all their donors about the meanness of the government. The cap would also seem to have undermined totally Cameron’s Big Idea of the “Great Society.”

As master strategist Osborne has been pushing recently a series of measures and airing proposals that seem to be anything but sure-footed and several seem designed to irritate the hell out of natural Conservative voters, an odd way of going about building an electoral majority.

Even small strategies aimed at wrong-footing the Labour Opposition have backfired – this week his wheeze of suggesting that all Cabinet ministers should reveal their tax details backfired when Labour endorsed the idea to the horror of many Conservative politicians and the Tory press.

As Graeme Archer noted in the Daily Telegraph, before long every candidate for public office will be pressured to disclose their tax arrangements. “No one who builds a business and arranges their tax accordingly will want to face the scrutiny of standing for public office, or the ordure entailed in making money and legally reducing the tax you pay on it,” he writes.

So when will Osborne start losing his reputation of being a master strategist?

 

Yes, Precisely

 More Budget woes for Britain’s Coalition government. Tory MP David Ruffley on the BBC today warned that “pensioners are going to be bellyaching about this for a while. The grey vote is powerful and [Osborne] could have thought better of it and found the money elsewhere.”

According to the Daily Mail, the Chancellor, George Osborne, blames the Liberal Democrats for the row over the “granny tax” on the grounds that if they hadn’t leaked all the popular measures before the Budget, then no one would have paid much attention to the phasing out of the age-related tax allowance. Keep telling yourself that George.

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Further Thoughts On The UK Budget

Hardly surprising but the backlash on the “granny tax” George Osborne announced in yesterday’s UK Budget dominates the British newspapers today with both the Daily Telegraph and Daily Mail choosing that angle to lead their coverage.

Presumably Osborne decided to phase out the age-related benefit that dates back to 1925 in order to gain some revenue to pay for the giveaways – to pay for the raising of the salary ceiling for receiving child benefit and for increasing the personal income tax allowance.

Osborne claims the move is merely a tax simplification but he appears to have decided to favor the young –or at least the younger – over the older here, a curious move when it comes to electoral strategy as pensioners cleave more to the Conservatives than to Labour. Of course, Osborne is meant to be the Tories’ electoral strategist, so maybe he knows something here that others don’t. Maybe he’s banking on pensioners dying off!

Aside from the “granny tax”, the Budget is disappointing on two broad fronts. It doesn’t do enough to encourage enterprise and provide incentives for aspiration, and it doesn’t cut public spending, which as a proportion of Britain’s GDP has continued to rise under the Coalition government, along with Britain’s net indebtedness, a development that accounts for Fitch’s recent warning that Britain risks losing its Triple A rating in the next couple of years.

Despite the Chancellor’s claim that this was a Budget for enterprise, it wasn’t. Yes, Osborne has reduced the top rate of tax from 50 percent to 45 percent. That is not a brave or radical move, though. The higher rate wasn’t bringing in much revenue and there were signs that it was deterring the rich and entrepreneurial from settling in the UK. But is 45 percent low enough? The rich will still be paying over 50 percent when local taxes and social security contributions are taken into account.

The reduction in corporation tax is also a good thing and will help business. One hopes it will attract more companies from overseas to set up shop in the UK and encourage others thinking of leaving to remain.

But the Budget was devoid of any creative thinking in terms of using tax breaks and favorable government treatment for setting up business in enterprise zones, for example, a point well made by Alex Brummer in the Daily Mail today, who asked why the government is not offering “VAT and National Insurance breaks in enterprise zones.”

“There is virtually nothing in the Budget, either, to beef up a recovery that’s being driven by increased exports (a result of the 20 per cent devaluation of the pound against foreign currencies) or to place real muscle behind the kind of technological and research-based enterprises that are giving such a lift to the economies of America, China and India,” Brummer writes.

Overall, Osborne seems to have no faith in the proven tactic of cutting spending to allow tax cuts in order to stimulate the economy. And that is really dismaying.