Following the Chancellor’s delivery of the 2015 Budget today, our Public Affairs team considers its significance…
Today’s Budget could be a pre-election milestone of rare political significance. With opinion polls currently fluctuating within the margin of error, this Budget sought to further the Conservatives’ fiscal agenda and prove their economic credentials in government since 2010.
The Chancellor has been aided with positive forecasts from the Office for Budget Responsibility, which has confirmed that growth was 2.6% last year and has revised up its estimate for growth this year to 2.5%. These are the figures that prompted George Osborne to claim that “Britain is walking tall again”. They are also the figures which give the Conservatives the confidence to base an election strategy almost entirely on economic responsibility.
Though Danny Alexander will tomorrow take the unprecedented step of introducing his own Liberal Democrat budget through a statement to the House, there is much in today’s Budget that the Lib Dems will not be unhappy about. The changes to income tax allowance at the lower end are an extension of the Lib Dems’ major contribution to the early coalition, and the announcement of £1.25bn of funding for child mental health services is clearly coalition policy.
Of the headline measures in this Budget, most were focused on countering Labour’s assertions that George Osborne’s apparent recovery has been one oriented principally in favour of the wealthy members of society.
Thus, having already raised the personal allowance for income tax from £10,000 to £10,600 in last year’s budget, the Chancellor this year promised to increase the allowance further to £10,800 in 2016/17 and £11,000 in 2017/18. Middle earners were also favoured in today’s Budget as the Chancellor promised an increase in the top rate of tax above the rate of inflation, from £42,835 at present to £43,300 in 2017/18.
The Chancellor also offered some hope to would-be first-time buyers, who stand to benefit from a new Help to Buy ISA. The government has promised to match every £200 invested in these new ISAs with a £50 investment of their own, up to a maximum contribution by the government of £3,000. By the same token, the government today announced the establishment of 20 Housing Zones UK-wide to help build more homes.
What it all amounts to is a Budget that is insistent about its fiscal responsibility, but that also attempts to stimulate positivity among UK citizens. When we reviewed the financial announcements that gained most social media attention under the hashtag #Budget2015, day-to-day talking points within the Budget prevailed. The reduction in alcohol duty, the petrol freeze and unemployment dominated – closely followed by the frivolous introduction of a 12-sided pound coin.
In an election, the macroeconomic situation, while important, tends to matter less than individual voters’ outlooks on their current situation and their future. George Osborne has, therefore, attempted to tread the fine line between the two, by continuing to follow his economic plan of debt and deficit reduction, while also attempting to stimulate some confidence in UK citizens, whose votes his party covets in just a few weeks’ time.
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