Tactician shows his skill with reform and voter-friendly moves

ANALYSIS:Chancellor already fighting 2015 election with talk of hope for better days

GEORGE OSBORNE is credited with being a superb political tactician, behaving as the British government’s chief executive, while Prime Minister David Cameron acts as the camera-friendly chairman.

Yesterday, he once again showed some of those skills, successfully dominating the agenda by making changes to fuel duties and by placing extra taxes on oil companies, while putting the bankers’ levy to use for good causes.

In truth, the budget is a scatter-gun approach; cutting business taxes and regulations, setting up nearly two dozen enterprise zones, along with investment in education and apprenticeships to boost the skills of British workers.

But there is genuine reform, too. His plans to merge income tax and national insurance in coming years will make the latter’s use as a “stealth tax” more difficult for governments in future – exactly as a chancellor seeking to reduce the role of the State would wish.

Osborne is fighting the 2015 election already, but everything depends on decisions taken months ago when he announced spending cuts rather than anything dreamed up in recent weeks in the treasury.

Given the political pressure caused by high fuel prices in the UK, where a litre of petrol now costs £1.30, Osborne had little choice but to act, given that a recent opinion poll showed 49 per cent of voters ready to switch party allegiance on the issue.

But he did extract maximum political advantage, scrapping a rise due next week that would have added 5p per litre, but also other duty increases left behind as minefields by Labour scheduled for coming years.

Most importantly, he had to offer hope of better days, which he did with clunking rhetoric: “We want the words: ‘Made in Britain’, ‘Created in Britain’, ‘Designed in Britain’, ‘Invented in Britain’ to drive our nation forward. A Britain carried aloft by the march of the makers. We have put fuel into the tank of the British economy,” he told the House of Commons to the cheers of government MPs.

So far, Labour’s record in office is providing cover for the Conservative-Liberal Democrat alliance, which never tires of repeating the mantra that Gordon Brown left behind a mess that will take years to clear up.

However, memories fade quickly. Despite the official ending of the recession, the British public remains deeply nervous about its future, compounded by an inflation rate that is over twice the Bank of England target.

Last June, 32 per cent more agreed than disagreed that tough measures are necessary, but correct. Today, that majority is just 6 per cent; and this before public service cuts really bite.

For now, Mr Osborne has little choice, or inclination, to change strategy mid-stream, even though growth this year will be well below forecasts made just a few months ago; something Labour never tires of pointing out.

Growth, he argues, will return, adding that actions taken early in his tenure have proven their worth. While the UK’s deficit remains at eye-wateringly high levels, its ability to borrow on the international markets is judged by near-German rates.

The changes he did make to small business regulation and rigid planning laws will boost economic activity in time, even if the latter causes political problems of other kinds, but it will take time for this to feed through.

Osborne cut corporation taxes by more than expected, a decision that should lead some UK companies who fled to Ireland and other places, to move back.