Coffee House

Osborne, the caring chancellor

3 October 2011

8:54 AM

3 October 2011

8:54 AM

George Osborne is pursuing the Tesco strategy: every little helps. In his conference
speech today, he will announce that he has found £805 million to freeze council tax next year, which will save taxpayers £72. Not a
lot, you might think – and that’s
Labour’s view
– but the chancellor is adamant that he won’t “stand on the sidelines” while living standards contract. Substantial tax cuts have been ruled out by Osborne, but he is expected to make further announcements on benefits. Last week,
it was rumoured that he would reverse changes to child benefit for a parent who earned around
£42,000 per year. (There are also rumours that the income tax threshold might be increased at some stage, fulled by IDS’ comments at a fringe event last night.) If those rumours prove
true, then there is little doubt that Osborne is pitching his camp in Middle England, among those C1 and C2 voters who have remained tepid about the Cameroons thus far.

Osborne is an inveterate schemer and he has not limited himself to one tactical ploy. His proposed council tax cut will not be automatic, but councils that choose to implement the cut will receive
extra funds to spend, providing they have restrained spending increases to less than 2.5 per cent. Similar strategic logic inspired Eric Pickles’ weekly bin collection policy: reward councils that take the decision, blame those that do not. The coalition has tried
to make councils responsible for their spending decisions in era of constrained public finance. Put crudely, Pickles gave councils a choice: save public libraries or hire diversity
officers. Voters would, it was thought, blame local government rather than central government for choices that cut "frontline services". It’s not yet clear if the ploy has
worked and perhaps Osborne has raised the stakes with his latest proposal: daring councils not to adopt the freeze.       

Finally, the chancellor will concentrate on defending his deficit reduction plan, drawing a contrast with the vacillating Eurozone. He will also bolster his growth agenda. He told the Today
programme that he will reinvest "underspend" in infrastructure projects, such mobile phone coverage and scientific research. Osborne’s immediate challenge is to convince
sceptics in the hall and the country that these piecemeal initiatives will be sufficient to
deliver Britain from disaster.

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Show comments
  • ToMTom

    “it should result in less collected in income tax “

    Wrong again Trevor. Tax CREDITS work as Negative Income Tax reducing tax REVENUES…..ironic that, Benefits paid out as Tax Credits do not show as Spending but as reduced Revenues…… if raising tax thresholds reduces eligibility for Tax Credits it INCREASES tax revenues

    On the other hand Child Tax Allowance is no longer a tax reduction but a Benefit paid out as Child Benefit.

    Such is the topsy-turvy world of British political lunacy

  • TrevorsDen

    increasing thresholds is part of coalition policy.
    its not a tax cut as the rate stays the same – all other things being equal it should result in less collected in income tax but possibly more collected in say VAT.
    Equally higher thresholds might (might) encourage more off benefits and into work. So its impossible to say with any certainty if tax actually collected might decline.

    Freezing council tax was a conservative manifesto pledge

  • salieri


    Absolutely. La Montague positively stamped her little foot when, after repeated attempts, she was unable to trap him. She wanted Osborne to commit himself to tax cuts only in order rhetorically (a) to ask how they could possibly be afforded and (b) to contrast ‘tax cuts for the rich’ with ‘savage cuts in services’. She’s like a trainee barrister with a pre-programmed line of attack and no interest whatever in addressing the answer she’s given.

    And when is she gonna stop saying ‘gonna’?!

  • PayDirt

    My council has spare cash, it stated as much when it pushed through proposals to add speed humps in local roads in face of local protests. The reason was it had to spend the allocated budget. This is solid LibDem council by the way.

  • Christopher Bowring

    Increasing income tax thresholds is of course a tax cut. George Osborne has ruled out tax cuts. Can you explain what you mean please?

  • oldtimer

    You conclude:
    “Osborne’s immediate challenge is to convince sceptics in the hall and the country that these piecemeal initiatives will be sufficient to deliver Britain from disaster.”

    He has not got a hope of doing this. Why not accept it for what it is? It is a trivial measure designed to catch the eye and distract attention from more serious issues that face consumers. There are two prime examples: the relentless rise in inflation and the government mandated scandal of extra energy charges for useless renewable energy schemes that only benefit those in receipt of the subsidy that finances them.

  • RKing

    Osbourne, Cameron et al…….. all we have had from them so far are a few moderate tax changes….. some good some not so good.
    Lots of promises!
    We don’t want tinkering we need ACTION and a good place to start is the EUSSR.

    Left unchecked it will bleed us dry.

    Get started on it Cameron and Osbourne and stop dodging the real issues!!!!!

  • Swellpedal

    Tell me more about this concept of ‘spare cash’…

  • ToMTom

    “pursuing the Tesco strategy:”

    What, of falling sales and customers walking away ? Council Tax should be CUT. It has risen every years since introduction in 1993 which shows Voters have NO control over it. It is regressive, payable without regard to means, and enforced with Extra-Judicial powers delegated from courts to Council officials and in breach of due-process rights of the HRA

  • Nick

    Dreadful interview by Sarah Montague with Osborne this morning. She just didn’t let him finish a single sentence before jumping in again on the attack.

    Why doesn’t she just ask the question “many Tories think tax cuts will pay for themselves through higher growth, why do you seem to disagree ?” and allow the Chancellor time to answer properly.