A tactical retreat?

‘The Tories will take Britain back to 1930s levels of spending’ might be Labour’s most important and effective slogan in this election. Even though they can no longer use it, it’s already had an important effect, forcing Osborne into a tactical retreat.

Former Treasury Adviser Damian McBride made a point on Newsnight last night in his analysis of the budget that’s worth expanding on: yesterday’s budget was actually rather unexciting, and this was largely down to the reaction to the Autumn Statement at the end of last year.

Yes, Osborne was rather triumphal in his appraisal of Britain’s economic trajectory, but there were very few announcements of interest. No real fireworks, no game-changers.

The Autumn Statement, and the OBR analysis in particular, had given us the Labour slogan that the Tories would take Britain back to 1930s levels of spending. This figure – based on projected spending on public services as a proportion of GDP – was a powerful piece of rhetoric for Labour to use. They rather successfully planted the idea of the Tories taking us back to a pre-NHS era, back to the Britain Orwell described in The Road to Wigan Pier.

In the absence of the OBR and Labour’s use of that statistic, Osborne may well have chosen to use this final budget to promise some big giveaways for the next five years, probably in the form of tax cuts. As a result of lower than expected inflation, Osborne had more money to play with than predicted. Cutting taxes would normally make political sense, and it’s what previous Chancellors have done immediately before an election.

However, Labour’s line of ‘1930s levels of spending’ might just have spooked Osborne, and caused him instead to use the money to soften the planned spending cuts just enough to stop Labour using that line. Instead, we’re being taken back to the early 2000s.

While it’s bad news for Labour that they can’t use the line anymore, its use over the last few months may just have been enough to stop Osborne from the tax giveaways he would dearly have loved to be able to announce.

The result? Not much to give the Conservatives momentum for the last two months of the campaign, but also very little that Labour can attack.