UK Budget 2015: Conservatives back down over austerity cuts - but only slightly

In the run-up to the announcement of the 2015 UK Budget Vince Cable, Liberal Democrat Secretary of State for Business, Innovation and Skills, stressed that Chancellor George Osborne did not have room to manoeuvre if he intended to achieve the Conservative target of a budget surplus of £21bn by 2020 (Wintour & Watt, 2015).

After accusations in autumn 2014 that Conservative cuts would take government spending in Britain back to the levels of the 1930s (Wintour & Elliott, 2015), Chancellor Osborne seems to have responded. The Chancellor confirmed in his announcement that the Conservatives were no longer aiming for a surplus of £23bn, but instead £7bn (Reuben, 2015).

That easing back on what the Conservatives are pursuing has left them with room for tax cuts, with Corporation tax falling to 20%, cuts to required national insurance contributions for under-21s and the self-employed - as well as a further extension of the Liberal Democrat's policy of taking the poorest out of tax altogether. There is also a small concession in the form of an increase in minimum wage, which offers an increase in income at a time when prices are falling, and in advance of an expected slow rise (Peston, 2015).

Big cuts are, however, still planned. £30bn will be cut by 2018, £13bn coming from government departments, £12bn from welfare, and a further £5bn from tackling tax avoidance (Osborne, 2015). But even with those concessions, that still leaves, between the Labour and Conservative spending plans, a gap of around £40bn.

And yet, the difference between Conservative and Labour positions - with the Liberal Democrats advocating something in between the two - comes down to one major difference: the balance to be struck between tackling the overall amount of debt and the amount of spending on providing public services.

That difference is primarily one of ideology. Or, at least, the perception of ideology. By spending more, Labour is able to give the perception that it is taking care of people. By spending less, the Conservatives can make themselves appear to be favouring those that stand on their own two feet.

However, whatever the party rhetoric, the budget is more about politics than finance. All sides, Conservatives, Liberal Democrats and Labour - as well as UKIP - are all committed to a general view of public finances that means more austerity cuts, and much lower public spending.

The concessions made by the Chancellor - that Vince Cable predicted that the Conservatives would have to make - did nothing to fundamentally alter the basic assumptions. The reality remains that no party is offering a comprehensive alternative to the dominant Conservative narrative.

For those on the Left, the fact that no one has seized upon those concessions by the Right - in the face of dissatisfaction with austerity - to present a more truly progressive alternative, will be a source of significant disappointment.

References

Patrick Wintour & Nicholas Watt's 'Vince Cable: Osborne has no room in budget for pre-election bonanza'; in The Guardian; 13 March 2015.

Patrick Wintour & Larry Elliott's 'Osborne moves to cut spending to 1930s levels in dramatic autumn statement'; in The Guardian; 3 December 2014.

Anthony Reuben's 'Budget 2015: Chancellor reduces surplus target'; on the BBC; 18 March 2015.

Robert Peston's 'How Generous is the Minimum Wage increase?'; on the BBC; 17 March 2015.

George Osborne's 'Chancellor George Osborne's Budget 2015 speech'; from Gov.UK; 18 March 2015.