Steady as she goes Budget leaves dividing lines unchanged

A little late due to stuff I won't bore you with...but here's my take on the Budget as published in Saturday's Journal.

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Over the past 18 months, throughout the 2010 general election campaign and beyond, the main point at issue in British politics has been the question of how far and how fast to the cut the country's budget deficit.

To begin with, the Tories had the better of that argument, which is essentially why they ended up as the largest single party last May and why we now have a Conservative-led Coalition government.

Because the public blamed Gordon Brown for the scale of the problem, and perceived him as having been in denial over it, the Tories were able to win backing for a much deeper package of cuts than Labour had proposed.

But latterly, doubts have crept in. We may not have ended up in the dreaded double-dip recession, but as anyone running a small or medium-sized business will know, the fabled green shoots of recovery have thus far been very slow to appear.

For all the differences of emphasis between the former Chancellor Alistair Darling and the current Shadow Chancellor Ed Balls, Labour's position on the deficit remains essentially unchanged.

It is that cutting too far, too fast, will damage growth – a view that is now starting to be borne out by the actual growth figures as well as in the everyday experiences of people up and down the country.

So the political imperative for Chancellor George Osborne as he delivered his second Budget on Wednesday was clear: to demonstrate that the coalition is not just about cuts, but has a growth strategy too.

In this he was only partially successful, his task being made all the more difficult by the need to announce – less than five minutes into his statement - a downgrading of the economic growth forecasts for 2011 from 2.1pc to 1.7pc.

Labour leader Ed Miliband's obvious glee at this announcement – "every time he comes to this House growth is downgraded" he told MPs - is scarcely misplaced, given the thrust of his party's economic message over the past year.

It is also fair to say that as a 'Budget for Growth,' Wednesday's package was somewhat underwhelming.

Sure, the 1p cut in fuel duty, coupled with the cancellation of the planned 4p rise later this year, will provide a fillip for hard-pressed businesses which have seen their profit-margins eroded by ever-escalating fuel costs, as will the additional 1p cut in Corporation Tax.

And the creation of 21 new Enterprise Zones, including the Tees Valley and Tyneside, represents a welcome recognition that some part of the country are being hit far harder by the cuts than others - even it looks suspiciously like a re-run of what Margaret Thatcher's government tried in the 1980s.

But those measures apart, this was actually rather a dull Budget – much more a case of "steady as she goes" than the kind of political game-changer which Chancellors usually like to spring on us.

Perhaps the most significant paragraph in Mr Osborne's statement was the one in which he signalled the eventual scrapping of the 50p top rate of tax, drawing a line under the Brown era and pointing to his longer-term ambitions as a tax-cutter in the Nigel Lawson mould.

Meanwhile the key political dividing lines remain unchanged – the Coalition claiming its radical deficit-reduction strategy will ultimately deliver stronger growth, Labour maintaining that it has merely delayed any prospect of real recovery.

At the moment, the economic evidence is favouring Labour. But with another four years for the green shoots to flower before it has to face the electorate again, the Coalition has time on its side.

Dare the government take on the boys in blue?

There was once an old political saying – variously attributed to both Stanley Baldwin and Harold Macmillan – that neatly defined the limits of state power in the middle part of the 20th century.

"There are three bodies no sensible man directly challenges: the Roman Catholic Church, the Brigade of Guards, and the National Union of Mineworkers," it went.

Times change, of course, and a modern rendition would undoubtedly have different bogeymen in the guise of those with whom no government dare fall out.

Media baron Rupert Murdoch, as we saw in last week's column, would certainly be one. The all-powerful motoring lobby might be another. But if you had to pick a third, it would probably be the Police Federation.

Attempts to reform the police over recent decades have invariably foundered as soon as the Federation – as influential a trade union as the NUM once was – started flexing its muscles.

Three years ago, the then Labour Home Secretary Jacqui Smith tried to shelve a police pay increase that had been awarded by an independent assessor – and was swiftly forced to back down.

Fifteen years earlier, Ken Clarke – no softie he – had launched a much more wholesale attempt at reform.

When Clarke moved from the Home Office to the Treasury it landed in his successor Michael Howard's inbox - but even that legendary political hardman decided a scrap with the boys in blue was not worth the candle.

So it is not without political significance that this week has seen the publication of a brace of reports which taken together amount to something of a double whammy for police pay and conditions.

On Tuesday, former rail regulator Tom Winsor published the results of a review calling for the abolition of overtime payments worth up to £4,000 a year to officers.

The following day, Lord Hutton – that's former Barrow MP John Hutton rather than Tony Blair's favourite retired judge – published a much more wide-ranging review into public sector pensions.

Among other things, it recommended not only the end of final salary pension schemes in the public sector, but an increase in the retirement age which would see police, members of the armed forces and firemen working till they were 60.

Already, the public sector unions – including the Federation - have made clear that the government has a big fight on its hands if it tries to implement this week's proposals.

As Unison's Dave Prentice put it: "This will be just one more attack on innocent public sector workers who are being expected to pay the price of the deficit, while the bankers who caused it continue to enjoy bumper pay and bonuses."

There are certain to be demonstrations, possibly even strikes, which will put the Police Federation in an interesting position to say the least.

For of course its members will be expected to control the protests called by those campaigning against the very proposals which they and their colleagues are being threatened with.

In one sense, this is a reform whose time has come. Final salary pension schemes are a thing of the past across most of the private sector, and in that context the retirement benefits enjoyed by public sector staff have started to look more and more anachronistic.

Yet the country's six million public sector workers remain a big and powerful constituency for any government to take on, especially in the aftermath of a recession.

Ultimately it may come down to a rather crude consideration, namely how many votes there are in public sector pension reform.

The answer is: probably not many. But there are a great many more potentially lost ones.

Dave's useful idiots

Of all the many insults hurled at Gordon Brown during his troubled premiership, perhaps the most wounding was the one delivered by the then Lib Dem acting leader Vince Cable during Prime Minister's Questions in November 2007.

"The House has noticed the Prime Minister’s remarkable transformation in the last few weeks from Stalin to Mr Bean," he told guffawing MPs.

But three years on, the now former Prime Minister may well have permitted himself a wry smile or two at the transformation in Mr Cable's own political fortunes.

In the space of less than 12 months, he has gone from Saint Vince, the most trusted politician in Britain, to a man now widely regarded as little more than a useful idiot for the Tory-led coalition.

Some of it is purely by virtue of his having swapped the luxuries of opposition for the harsh realities of power, at a time when the government was bound to be unpopular whoever was in it.

Yet even within that context, Mr Cable has demonstrated an unusual ability to shoot himself in the head.

His 'declaration of war' on media baron Rupert Murdoch, after being honeytrapped by a pair of female undercover reporters into speaking too frankly about his government role, has backfired more spectacularly than a turbo-charged boomerang.

The end result was that Tory culture secretary Jeremy Hunt this week nodded through a deal which will make Murdoch the dominant player in UK print and broadcast media, with even more financial clout than the BBC.

But if Dr Cable's ambitions in the field of media policy have been well and truly thwarted, the same would seem to apply to his conduct of regional policy.

After the election last May, Dr Cable put it about that he was going into bat to ensure that those English regions that wanted to would retain a region-wide political and economic voice.

Such a stance was, after all, in keeping with a Lib Dem election manifesto that promised to "reform" regional development agencies rather than abolish them wholesale as the Tories' did.

At one stage, Dr Cable was privately telling regional political leaders that the RDAs in the North East, North West and Yorkshire would be effectively be preserved, under the new guise of Local Economic Partnerships.

On the face of it, it hardly seemed Dr Cable's fault that this did not end up happening, and that communities secretary Eric Pickles prevailed in his determination to dismantle the entire regional political infrastructure.

Yet a Freedom of Information request by the Newcastle Journal has since revealed that, far from putting up a huge show of resistance, Dr Cable met his Tory counterpart just twice to discuss the issue.

In terms of the bigger picture, the RDA abolition and the Murdoch bid for BskyB point to a wider political reality - the inability of the Lib Dems to influence major policy decisions taken by this government.

And if proof was needed that this is now a widespread perception among the public, the result of Thursday's Barnsley by-election, which saw the party slumping to sixth place, surely provides it.

For some of us, the result brought back memories of those dear, dead days when world-weary Lib Dem activists used to sing a song called 'Losing Deposits' on the last night of their annual conference, to the tune of 'Waltzing Matilda.'

But for Dr Cable and his fellow Lib Dem ministers, there will be no such wallowing in nostalgia for more innocent political times.

Evidence is mounting that membership of this Coalition government is destroying the Lib Dems as a political force – possibly permanently.

How much more of it the party can take before it is obliged to go its own separate way will continue to be the defining question in British politics over the coming months.