The introduction of five-year, fixed-term parliaments after the 2010 general election caused considerable unease about the British political system. The run-up to this year’s budget shows that these misgivings were well founded.
The change opened the possibility for budgets to be delivered at a key moment in an electoral schedule established by law. Whatever the merits of the measures announced by George Osborne in his latest budget, this is dangerous both for economic and political reasons.
Instead of focusing on the nation’s long-term needs, chancellors will face an irresistible temptation to prioritise short-term popularity if they present their budget just weeks before an election.
This, it could be argued, is what usually happens anyway. But in the past few decades there have been some honourable exceptions. The timetable now imposed by fixed term parliaments reduces the likelihood of such outbursts of integrity almost to vanishing point.
This year, despite what seemed to be extremely unhelpful circumstances, Ed Miliband sounded robust in his response. This will have pleased his backbenchers. It remains to be seen, though, how the exchanges will play to the voting public.
Switch and bait
True to his reputation for political calculation, Osborne has used his media allies very cleverly in the past few days. Headlines predicted a giveaway budget, which made it look as though he was hoping to buy the election with barefaced bribes.
His speech, though, suggested that a recent improvement in the nation’s finances would not be exploited so brazenly. Taxes will be cut, on savings as well as earned incomes, but the lion’s share of the proceeds would be devoted to paying down the national debt.
To the political anorak this looks like the work of a master tactician, promising to win Osborne credit for being responsible as well as generous. However, it might be that this budget proves to have been too clever by half.
If Osborne was right to claim that his austerity strategy has been working and should not be abandoned, critics could wonder how he could justify a giveaway on any scale, however modest.
What’s more, the ecstatic tone of the speech could give rise to expectations of a swift end to austerity. That could cause serious political problems down the line if the Conservatives manage to win the election.
Risky strategy
Osborne’s unexpected room for manoeuvre seems to derive, above all, from the current low level of inflation, owing largely to falling food and petrol prices. But these developments, particularly the latter, only underline the extreme volatility of global markets. Again, despite Osborne’s cloak of responsibility, it does seem that he is taking a gamble for short-term reasons, on the basis of factors which could easily prove to be temporary.
And even if the markets plat in his favour, it remains the case that the coalition’s overall strategy has not worked – Osborne has not eradicated the deficit in one parliament, as the government promised it would.
In practice, ironically, this chancellor has come closer to Labour’s 2010 promise for a longer term strategy of deficit-reduction. This does not mean, of course, that the government deserves no credit for the improving economic outlook but it does mean that the Conservatives still have to think twice before boasting about the coalition’s record.
The former chancellor Kenneth Clarke – who has good reason to know about such matters – has recently said that budgets do not win general elections.
Osborne’s latest attempt is unlikely to prove an exception to Clarke’s rule. However, this is not to say that chancellors will ever stop trying to produce election-winning budgets, especially in the era of fixed-term parliaments.