Alistair Darling's legacy at stake in budget-day speech

LONDON BRIEFING:The UK chancellor's third budget is likely to be his last, and it may determine how history judges him, writes FIONA WALSH

HOW WILL history judge Alistair Darling? A competent chancellor who battled valiantly against the effects of the global financial crisis – and the legacy of his profligate predecessor – or a ditherer who failed to take the tough decisions?

We should have a better idea of the Darling legacy by about 1.30pm today, when the British chancellor resumes his seat in a packed House of Commons after delivering his third budget speech.

Showmanship has never been Darling’s style and that’s just as well, as he has absolutely no room for manoeuvre. He has already ruled out “a Christmas tree budget”, promising instead that his proposals will be “sensible”, “workmanlike” and in keeping with the mood of the times.

In ordinary times, that would make for a very dull budget indeed, but the atmosphere in the Commons this afternoon will be electric, as the chancellor’s statement effectively fires the starting gun on the general election campaign.

There will be an unreal quality about Darling’s statement; after all, if the Conservatives are elected, they have pledged to hold an emergency budget within two months of taking office. So, assuming the election date is confirmed as May 6th, we could be here again in July. But victory for the Tories is far from assured given their poor showing in recent polls, and fears of a hung parliament persist.

Darling’s job today is to stick to the government’s plan to halve Britain’s mountainous public deficit within four years and to give the markets some meat on the bone of the deficit reduction plan. He is expected to detail which government departments will bear the brunt of £11 billion (€12.3 billion) in efficiency savings but at the same time must outline credible plans for the recovery of the economy.

He should be able to announce a modest reduction in the borrowing forecasts after better- than-expected data over the past couple of months. While official figures last week showed the February deficit, at £12.4 billion, was a record for that month, it was several billion lower than had been forecast. The January figure was also revised downwards, taking the total for the first 11 months of the financial year to £132 billion and potentially enabling the chancellor to cut his £178 billion full-year forecast to £170 billion or less.

There will be other headline- grabbing announcements. A plan for universal banking was widely trailed earlier this week, as was a £2 billion clampdown on tax evasion. About 1.75 million adults in Britain have no access to basic bank accounts and, under Darling’s proposals, the banks will be obliged to provide accounts to those who want them. He will also give his backing to a global bank levy and the state-owned banks will be set new lending targets for small businesses – a target they missed last year – and mortgage lending.

Measures to return the unemployed to work and create opportunities for the “lost generation” of unemployed young people will also be a feature of today’s speech, as they have been for the past two budgets. A raft of green measures, including a £2 billion investment fund aimed at financing green projects such as wind farms, will also feature.

If Darling is tempted into a mini-giveaway to cheer the voters without doing too much damage to his deficit-reduction credentials, he may well choose fuel duty. The tax is due to rise by 1p on April 1st and any announcement that it is to be postponed will play well with the motoring public. That is likely to be the full extent of Darling’s largesse, however.

The spreadbetters have, as usual, calculated the odds on what looks almost certain to be Darling’s final budget, taking wagers on anything from how long the speech will last (about an hour is the consensus) and the colour of his tie to how often he mentions the words deficit, bankers’ bonuses and fiscal stimulus. You can even have a flutter on whether, with his sensible hat on, he’ll use the catchphrase favoured by his predecessor: prudence.

One phrase Darling will not be uttering is one used by Gordon Brown when he delivered his final budget as chancellor in 2007, when he opened his speech by boasting of “the longest period of economic stability and sustained growth in our country’s history”.

Darling can perhaps take comfort in the fact that those words have done nothing to enhance Brown’s legacy, either as chancellor or prime minister. History may well judge the current chancellor more kindly.

Fiona Walsh writes for the Guardian newspaper in London