David Cameron, perhaps sensing the difficulties ahead in the autumn statement, confided in his Conservative conference speech in October: “I did not come into politics to make the lines on the graph go in the right direction”. That may be just as well.
Overall, George Osborne delivered a speech that was about politics rather than graphs and economics. Almost every key paragraph was written to help the chancellor to clarify the political battle lines before the election.
The chancellor, eking out this political good news over an impressive four days, has dispensed capital spending into every marginal seat, tried to trump shadow chancellor’s Ed Balls mansion tax with his reforms to stamp duty and even doffed his hat to a northern England renaissance by promising a £235m science centre in Manchester.
There are hints at the shape of the Tory manifesto including the abolition of employers’ national insurance for apprentices under 25, part of a plan that boldly promises to abolish youth unemployment.
Osborne offered a clear indication that he wants to devolve more tax raising powers to Wales, Scotland and Northern Ireland. Meanwhile, the ever cosseted grey voters are kept happy by his decision to allow them to pass on their tax-free ISA allowances to spouses when they die.
The chancellor has been determined to undo the political damage of the maso-sadist 2012 budget in which he affirmed the Tories as the party of the rich by cutting the top rate of tax. New, progressive George has gone after the banks and the multinational tax avoiders such as Google and Apple. A new £90,000 charge will be imposed for people who are non-domiciled in the UK for tax purposes but have lived here for 17 of the past 20 years.
He even managed to produce a table showing that the top quintile – the top 20% – will lose more in cash terms due to the welfare, tax and public spending changes over the parliament than the other four quintiles gain.
White man van has been shown respect Labour is supposed to lavish on him with a further increase in the personal allowance, a promise to throw out European Union migrants without job prospects and a freeze on fuel duty.
To find this number of giveaways in the overall context of a contractionary budget is an impressive political achievement.
Above all, Osborne hopes to skewer Labour next week when he publishes plans for a new code of fiscal responsibility that will challenge Balls to say when he will bring the structural current deficit into balance. A vote will be held in the new year and Osborne will put all kinds of pressure on Labour in the interim.
In his immediate response, a wary Balls said he was not willing to go beyond his promise to end the current deficit as soon as possible in the next parliament. But judging by his tone in his afternoon briefings, Labour still believes it has big political targets to attack.
Balls pointed out that for all Osborne’s promise of imminent prosperity, the Office for Budget Responsibility (OBR) is still forecasting that real wages will fall by 4 % over this parliament meaning that people will be worse off in 2015 than when David Cameron came to office in 2010, one of the central claims Labour is intent on making at the election.
Balls also thinks he has a clear target on borrowing, claiming that far from balancing the books in 2015, borrowing is forecast by 2015-16 to have been cumulatively £219bn more than planned in November 2010.
Labour also finds that borrowing has been revised up by £4.9bn this year and £7.6bn next year.
Buried in the OBR statistics are warnings that public spending as a percentage of GDP will be the lowest since the 1930s on current projections and that the number of people employed by the state will fall by a further 1m by the start of 2020, taking the total fall to 1.3m.
Some of the projections on departmental cuts by the OBR are also frightening and, according to Balls, the £2bn extra funding for the NHS spending advertised at the weekend has largely disappeared since it is based on projected future underspends.
Balls also insisted that Osborne’s surprise stamp duty reform did not negate his plans for a mansion tax.
He argued instead that Osborne’s reform showed the Conservatives had accepted the principle that the wealthy should pay more for the homes they own.
Put together, that is an impressive battery of ammunition discovered by Labour within three hours of Osborne sitting down.
For the Liberal Democrats, these are strange times. Nick Clegg – for the third session of prime minister’s questions in a row – did not attend and was not sitting alongside David Cameron during the autumn statement, preferring instead to spend time with voters in south-west England.
Vince Cable, the business secretary, acting on his own initiative, has written to the OBR asking them to make clear that projections beyond 2015-16 should reflect the fact that the coalition parties have different plans.
Behind that row is a wider dispute about the tone of Lib Dem macro-economic policy in next year’s election. The question for the Lib Dems is whether or not the electorate will even notice their position in the looming Tory-Labour battle over how to handle the public finances.
