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PLMR Analysis: Budget Statement 2015

18/03/15
PLMR Analysis: Budget Statement 2015
With the closest General Election for decades just 50 days away, PLMR’s cross-party team of consultants have been assessing what George Osborne's Budget statement signals for the Conservatives, Liberal Democrats, Labour and Scotland.

PLMR ANALYSIS: Budget Statement 2015 

18 March 2015

Today, Chancellor George Osborne delivered not only the final Budget before the General Election, but also the narrative upon which the Conservatives will be pinning their hopes for re-election.

On the back of positive figures from the Office of Budget Responsibility, a confident and buoyant Osborne repeatedly referred to the government, and particularly the Tory cohort within the coalition, “delivering a truly national recovery” and making good on the promises made in the dark days of 2010.

While there may not have been quite the same catchphrase as that afforded by last year’s “Beer and Bingo” Budget, the Chancellor made sure he peppered his speech with sufficient sound bites and quips to energise the party faithful ahead of the long slog to the 7th May.  Unsubtle digs at the Leader of the Opposition’s "two kitchens" and his Deputy’s "pink vans" were balanced by positive rhetoric such as “a tenner off a tank with the Tories”, “Britain taking one more step from austerity to prosperity” and “a budget for Britain – the Comeback Country”. 

Expect your Twitter feed and Britain’s billboards to be plastered with these sound bites in the weeks leading up to the election.  The Conservatives have clearly set out their stall and it echoes that coined by James Carville for Bill Clinton’s US presidential campaign way back in 1992 – “It’s the economy, stupid”.

Conservative: It’s the election, stupid: “an economy stronger in every way from the one we inherited”

James Ford James Ford is a Senior Consultant at PLMR. He is a former aide to Mayor of London Boris Johnson (2010-12) and was a public affairs manager at the London Chamber of Commerce and Industry (2004-10).

With just 50 days until polling day, Osborne faced a delicate balancing act when presenting his sixth Budget today: delivering a deeply political Budget without appearing to be political, and trying to dispense largesse without undermining either his economic credibility or the core Conservative message that the UK has a long term economic plan that it should stick to. (The long-term economic plan was mentioned four times in total).

Ultimately the Chancellor erred on the side of caution. There was no massive, populist rabbit to be pulled out of the hat (or red box) and most of the large announcements - ending paper tax returns, more powers for the Mayor of London, a big tax cut for savers, a further rise in the tax threshold, a review of business rates - had all been trailed in advance. There were nods to the public’s economic pet peeves - further restrictions on corporate tax avoidance, a small hike in the bank levy, and LIBOR banking fines to be used to help veterans - as well as the almost obligatory slashing of the duty on beer by a penny and freezing petrol duty.

The creation of "Right to Buy ISAs" - where the government will contribute £50 for every £200 saved towards a deposit on a house - served as a helpful reminder of one of the Chancellor’s flagship policies, and effectively threw down a gauntlet to Labour to come clean on whether or not ‘Help to Buy’ would continue if Ed Balls enters Number 11. The most brazen political ploy was a review of inheritance tax avoidance through "deeds of variation" - the mechanism through which Ed Miliband is alleged to have avoided a big bill on his father’s estate. (A Budget measure for the sketch writers and Tory backbenchers rather than the economists, one suspects).

To some extent this Budget was less about the next financial year than it was about the economic policies of the past five years. The Chancellor seized every opportunity to remind voters about the parlous state of the economy and public finances that he inherited and the hard-won improvements that could be jeopardised if a Labour government was elected.  It may not produce a sudden surge in the Conservatives’ poll ratings, but this Budget projected an air of confidence and continuity that George Osborne hopes will keep his party in office.

Labour: Past and future – tense

Lauren Milden Lauren Milden is an Account Manager at PLMR, a Labour Party member and an active Young Fabian.

Today the Chancellor told the electorate that "The critical choice facing the country now is this: do we return to the chaos of the past? Or do we […] go on working through the plan that is delivering for you?" Shortly afterwards, Labour sought to remind voters that while Osborne might be painting a rosy picture of successfully halving the deficit, he had, in fact failed on his original pledge to eliminate it.

Ed Miliband found himself in the eternally difficult position of responding to the Budget and he quickly sought to evidence the distance between the Chancellor’s speech and the reality on the ground – ‘a Budget that cannot be believed’, he billed it. In his Commons response, he spotted the glaring omission of substantial support for the struggling NHS, one of the top issues on which voters base their decision. It’s comfortable territory for the Labour Party, and relevant given today’s coverage around Circle pulling out of Hinchingbrooke Hospital.

Indeed, given that the Chancellor had just announced that the economy had grown faster than any other major advanced economy in the world, the Leader of the Opposition looked to the past to remind us of the pain that the Coalition has inflicted.

Osborne had promised to refrain from gimmicks in the last budget of this Parliament and argued that no short term giveaway could help people as much as the benefits of a recovering economy. As ever, he targeted savers and pensioners – those most likely to vote and the most likely to support the Tories.

Labour told its party faithful this morning that the Budget would only be a cover for the Chancellor’s failures and the slowest economic recovery ever. But Osborne has already neutralised some of Labour’s ammunition. By revising their surplus goal for 2020, the Conservatives were able to negate Labour’s lines on a return to the 1930s. Indeed, BBC Economics Editor Robert Peston calculated that the spending-cuts gap between the Conservatives and Labour had shrunk from £50bn to somewhere between £20bn and £30bn – a partial victory, perhaps. 

Many Labour supporters will be pleased that, following Osborne’s claims that ‘inequality is down’, Miliband was able to drive home the extent of the Conservatives’ planned cuts and Ed also briefly targeted the Lib Dems, promising to cut tuition fees to £6,000 and painting the picture of the Lib Dems locked in the boot of the Conservative party – an image which will hopefully counteract any visions of Ed in a pocket.

Prior to the Budget, polls showed Labour and the Conservatives neck and neck. The Conservatives will hope that the Budget provided them with a boost, while Labour will see the omission of the NHS and education as clear misses.  On balance, a competent enough performance by both Osborne and Miliband and no suggestion so far that today’s Budget will prove to be the seminal moment in the campaign.

Liberal Democrats: Danny Alexander finding reasons to be cheerful in the coalition’s last budget

Steven Gauge Steven Gauge is a Senior Consultant at PLMR and spent the last two General Elections on the road managing media events in battleground seats for Nick Clegg and Charles Kennedy. 

The Budget was packed with Liberal Democrat policies, according to the spin placed on the statement from the party’s press officers the minute the Chancellor sat down. The minor party in the coalition is particularly desperate to claim credit for the rise in the personal tax allowance to £11,000, that will benefit 27.2 million workers and lift 3.7 million people out of tax altogether. The Lib Dem Chief Secretary to the Treasury, Danny Alexander, was sharing some distinctly friendly looking banter with the Prime Minister behind George Osborne’s back on the Government benches. Meanwhile his minions over the road at the Lib Dem HQ in Great Smith Street were furiously tweeting videos of the moment in the Leaders’ Debates from the 2010 election where David Cameron declared that increasing the allowance was completely unaffordable.

The mood on the coalition benches looked remarkabley relaxed, almost harking back to the heady days of the Rose Garden press conference when the fresh faced Dave and Nick announced their betrothal back in 2010. There was a lot more nodding and hear-hearing from Danny and Nick than usual, even though the coalition is now in the conscious uncoupling phase of its relationship. The body language on the Lib Dem back-benches however was distinctly grumpy and uncomfortable, where MPs are bracing themselves for a very uncomfortable return to their constituencies in a few weeks’ time.

There were a few goodies for Liberal Democrat constituencies sprinkled around the statement and in the background papers. The Chief Secretary, who also happens to be the MP for Inverness, Nairn, Badenoch and Strathspey was nodding like a toy dog in a car’s rear window as the Chancellor announced a package of support for the oil and gas industry. Lib Dem John Leach who faces a tough fight in Manchester, took rapidly to social media to claim credit for the new deal giving his city 100% control of new business rate receipts as part of the Chancellor’s ‘Northern Powerhouse’ initiative.

So, in spite of the Lib Dems painful opinion polling position, Danny Alexander still seems to have found lots of reasons to be cheerful. He got to ride in the four-vehicle special branch security convoy to travel the 250 yards from the Treasury to Parliament for the statement. His PR aides have bought him a lovely new sunshine yellow briefcase. He is also getting to make his very own Budget statement in Parliament, with support from Treasury civil servants, setting out the Liberal Democrat plans for the economy – featuring his ‘Goldilocks’ strategy of not cutting too much like those nasty Conservatives bears and not borrowing too much like those silly Labour bears, but getting the balance ‘just right’. No doubt all of this will feature in his campaign to succeed Nick Clegg as the leader of whatever is left of the Liberal Democrats after the next election.

Scotland: Support for North Sea oil, from a United Kingdom

David Madden David Madden is Head of Planning and a Senior Consultant at PLMR.  His two decades of planning experience has seen him work with PLMR Scotland on projects in Edinburgh, and on a range of schemes across the UK, from Glasgow to Swansea to St Ives. 

Despite all of George Osborne’s talk of “delivering a national recovery” in his Budget speech, there was little evidence that this is being felt in Scotland and few announcements of specific relevance. The Conservatives know that Scotland is a lost cause for them in electoral terms, but they recognise that a resurgent SNP threatens to potentially wipe out Labour north of the border too.  The scenario they worry about, and want everyone else south of the border to worry about too, is that the SNP may hold the key to a Labour-led government in May.  They are therefore quite happy for former Labour voters in Scotland to vote SNP, but they want waverers in England to fear a Labour/SNP coalition and vote Tory instead.

Hence, the Chancellor couldn’t resist politicising the biggest announcement of relevance to Scotland and making a dig at the Scottish Nationalists in the process. By far the most notable measure for Scotland is the £1.3billion of support for the North Sea Oil industry, aimed at boosting production by 15 percent.  This is to be delivered by a range of measures, including tax allowances to stimulate investment, surveys of the continental shelf to look for new drilling opportunities and cutting the Petroleum Revenue Tax from 50% to 35% to support ongoing production in older fields.

The Chancellor was quick to state that these measures could not have been afforded by an independent Scotland. Similarly, when announcing £1million of funding for a new Agincourt memorial he referred to the battle as an occasion when a “strong leader defeated an ill-judged alliance between the champion of a united Europe and a renegade force of Scottish nationalists.”

When not seeking to make political points, the Chancellor confirmed that agreed devolution actions continue to progress, with the implementation of the Glasgow City Deal and new negotiations on similar arrangements for Aberdeen and Inverness.

Unsurprisingly, reaction to the Budget has been muted at best north of the border. Stewart Hosie, the SNP’s Treasury spokesperson, said that, in failing to address the ‘real needs’ of the Scottish people “Osborne has blown his last chance.” Jim Murphy, Leader of the Scottish Labour Party, simply referred to “a Chancellor in denial whose days are numbered.”

The PLMR “Osborne Stopwatch”
PLMR counted exactly how long Chancellor George Osborne spoke about each of the key issues in his Budget Statement.
George Osborne's Budget Statement 2015

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