The most heartening part of George Osborne’s Budget was perhaps one of its least glamorous proposals.
The most heartening part of George Osborne’s Budget was perhaps one of its least glamorous proposals. In his speech, the Chancellor started to bemoan the regional disparities within Britain. Ten jobs in the private sector are created in the south for every one in the north, he said — all too true. One was braced, next, for some doomed proposal for a new Silicon Valley in Teesside, or a harebrained attempt to incubate green energy forms in the Welsh valleys. But no: he would cut the taxes of companies starting up in these areas. And that was it.
It was wonderfully refreshing. Rather than pour yet more taxpayers’ money into parts of the UK where spending has already reached Soviet levels, why not just kick government out of the way? Such a formula has transformed Hong Kong and has made wealth spring from the deserts of Dubai — so why not Dunstable? Mr Osborne’s regional tax cut was modest, but the philosophy was sound. All he needs to do now is apply this fiscal medicine more widely.
The Chancellor cut no more, and no less, than had been expected. There was nothing ideological about the level of the cuts, and his critics in the press missed several points. First, had Mr Osborne not made the extra cuts Britain would be facing a sovereign debt crisis — or another IMF bailout. There was no other route. The markets will not lend to an irresponsible government, as the Greeks have found out. Next, the coalition government is not cutting total state spending — it is rising from £697 billion to £757 billion, broadly in line with inflation.
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