Even when doing that which is difficult, it is much easier to accomplish if public opinion is pushing you in the back, rather than blowing in your face.
The UK Government’s whole economic strategy is not easy, of course, but polls still show a majority of the public believing that “it’s tough, but it’s gotta be done”. As a result, Downing Street strategists remain confident about winning the PR war in the second half of this Parliament - by convincing a majority that they took the tough decisions and the country is the better for them. But it’s much more difficult to take action that is shown to be unpopular. Impossible even, without a very brave and united government that holds a strong conviction on the way ahead. I hope I’m proved wrong, but the next three weeks are a time for the Chancellor and PM to show that they have the bottle to do what’s right. Let me explain. In the early afternoon of 21st March (Budget Day), we’ll learn from George Osborne what progress has been made in turning round the basket case economy he inherited - but the most telling words of the afternoon will be in what further measures he takes to stimulate the economy.
Last weekend, we had a fascinating insight into what the British people want him to do. The top three ideas (all with around 30% support) were reducing petrol duty, increasing the personal allowance threshold to £10,000, and reducing VAT.
It’s understandable that those questioned see the greatest priority in those measures which will have the greatest apparent impact on their weekly budget - who wouldn’t want to pay less at the pump, pay less VAT and have less tax deducted at the end of the month? But what was most revealing about the YouGov poll, was how unpopular were the measures that are really required to get this economy moving. Only 3% saw merit in abolishing the 50% tax rate for those earning over £150k, and only 2% wanted to see a reduction in corporation tax. That’s despite those two measures being crucial to creating an economy that is fit for the long term, job creating and entrepreneurial. So George has a problem. He might find that he has some wriggle room in his red box, not much, but some. He has polls giving him a clear steer. Yet, on this occasion, he must reject public opinion and do that which is unpopular. However, I’d recommend that he goes further. He’s made some progress in instilling (at last) a belief in Whitehall that in the end they will need to do less, with less cash. I’d suggest that this is probably the last budget in this parliament when he can take strategic action for the long term, and still see some benefit before the election.
Abolishing the 50p tax rate would send a message to the world that this country is again open for business, and wants to encourage UK residents to “get filthy rich” in the words of Peter Mandelson. And further reductions in corporation tax would see a step change in corporate attitudes to the UK for growing businesses.
Both measures will create a fitter economy, both will bring jobs in the long term, both will make the country a better place - and both will be hated by the electorate if he announces them. I hope he does. Time to be bold, George.
