BRITAIN

HAD the Conservative Party been 20 points ahead in the opinion polls, this week’s Budget by the UK Government would have seemed a sound and steady-as-she-goes statement.

Some of the measures it contained will help many of Britain’s hard-pressed families and businesses. A 2p cut in National Insurance contributions, the second in just four months, means the average worker will be £900 better off. The Conservatives insist they will abolish NI altogether – in effect, a second income tax by another name – as soon as possible.

There were tax breaks for second homeowners, a rise in the amount small firms and the self-employed can earn before having to pay VAT, and incentives for our booming creative industries.

The budget also cunningly shot two of Labour’s most cherished foxes.

The Chancellor, Jeremy Hunt, tightened restrictions on “non-dom” status for wealthy foreigners living here and extended the windfall tax on oil and gas firms largely because of the protracted war in Ukraine. Labour had planned to pour the money raised from these measures into the bottomless pit of the unreformed public sector and into recklessly accelerating net zero targets. Mr Hunt has used it instead to fund tax cuts for the workers – a commendable move.

If elected, Labour would now have to finance its schemes by either reversing the NI cut, raising other taxes, or saddling the country with even more debt.

By raising the ceiling at which higher earning parents begin to lose child benefit from £50,000 to £60,000, he is saving half a million families an average of £1,300 a year.

A laudable budget, but will it be enough to turn around Tory fortunes? Politically, they are stuck in the trenches and more probably needs to be done to get them back on the offensive.

Despite the budget’s reasonable competence, Mr Hunt’s budget lacked spark. There were troubling omissions: no help for the young to get on the housing ladder; no extra cash for our beleaguered military; no scrapping of the perverse tourist tax; and, most discouragingly, no income tax cut.

There was plenty of rhetoric about the virtues of a low-tax economy. Yet, we remain more heavily taxed than at any time since the 1940s. Freezing allowances has been the worst culprit, dragging millions of people into higher tax brackets, but there is no sign of a thaw. Work must be seen to pay.

Since lockdown, productivity has crashed, especially in the public sector. Although the Treasury has pledged to tackle this culture of sluggishness, we have yet to be told how.

The macroeconomic predictions for this year are good for the Government. Growth, though still low, is forecast to rise, banishing fears of any lasting recession, and inflation to fall below 2 per cent, driving interest rates down and the cost of borrowing.

The Conservatives could yet sail into a general election on a wave of optimism. There may even be time for a genuinely bold tax-cutting mini-Budget in the autumn.

This was a redistributive budget that has helped many, but by no means a sure-fire election winner. For the Conservative Party to win this year’s general election, more still has to be done.