It’s never a good idea to use budgets as a stick with which to bludgeon voters, writes Bill Jamieson
Few budgets are ever approached without an element of trepidation. The first budget I ever had a hand in covering was in 1974 – pretty grim as I recall. The next two weren’t too cheerful either.
But in the 40-odd years of budget coverage I can’t recall a run-up quite as ghoulish, fear-inducing, cack-handed – and certain to backfire – as the “punishment budget” now threatened by chancellor George Osborne in the event of a vote to leave the EU.
He says he will have to slash public spending and increase taxes in an emergency budget to tackle a £30 billion “black hole”. And this budget, he adds, could include raising income and inheritance taxes and cutting the NHS budget.
It’s never a good idea to use budgets as a stick with which to bludgeon voters. In a democracy it’s hardly the most persuasive tool in the box. But here he has reached for the sledgehammer.
His “illustrative” proposals include a 2p rise in the basic rate of income tax and a 3p rise in the higher rate, while spending on the police, transport and local government could take a five per cent cut. The ring-fenced NHS budget could be “slashed”, along with education, defence and policing.
It is a catalogue of fiscal doom that breaks every political instinct in its drive into the vindictive. If his relentless scares and admonitions have not done for his credibility already, this sets the seal.
Even if the referendum a week today results in a vote to Remain, his authority as a finance minister has been gravely weakened.
Now you may feel that Osborne’s dire threat is justified, that a Brexit vote will for a time weaken the pound and rattle the markets.
And you may believe, as some do, that we will cut back on household spending for a time and that business will go into a state of funk.
But you may also believe that such an outcome would be made worse and not calmed at all by a tax rising, pocket-hitting, spending cuts budget of the type the Chancellor has just outlined. Indeed, you may well fear that such a budget would make the current atmosphere more febrile still. After all, if this budget outline is designed to scare us before it’s delivered, what much greater effect will it have when such measures are balefully announced as fact?
It has, of course, been blatantly invoked as a political threat to voters. It breaches every instinct of responsible behaviour by a finance minister charged with a duty to act with thoughtfulness, prudence and care: a declaration of intent to meet a hypothetical outcome ahead of a knife-edge vote in a highly uncertain set of circumstances.
Raise taxes and cut spending in response to a posited recession? It’s the opposite of what good sense would require, whether you lean Tory or Labour. But for Conservative back-benchers it is particularly toxic. Did not the Conservative government last year introduce legislation to not to raise income tax rates, VAT or National Insurance for the duration of the parliament?
And this is supposed to be the clincher argument for Remain.
Little wonder there is now a state of near rebellion in the Conservative Party, and that the vote next Thursday, far from bringing an end to Tory divisions, could see the felling of Prime Minister David Cameron and his Chancellor – whatever the voting result.
For this punishment budget is no one-off, rogue scare. It follows a relentless bombardment of “Project Fear” warnings over the past two months that economic Armageddon would befall us in the event of a Leave vote. There would be a “do-it-yourself” recession; household incomes would be hit; unemployment would rise; house prices would fall.
At the centre of these warnings has been the Treasury – the very institution whose previous forecasts had become so discredited by charges of political manipulation that in May 2010 Osborne himself removed the Treasury’s pre-eminent role in forecasting and set up the independent Office of Budget Responsibility.
Has “Project Fear” worked? It may well still push the Remain vote over the winning line. But so dire, and so oft repeated have all these warnings been that it is astonishing the outcome of this referendum has not been long been settled with an overwhelming lead for Remain with just a week to go.
But instead, an average of the six most recent polls carried out between 9 and 13 June, shows Leave nudging ahead. All of the pollsters are showing Leave in a stronger position than they were a fortnight ago. Both of ICM’s polls – phone and internet – have Leave ahead by five points. In the YouGov poll and in a TNS poll this week, Leave enjoys a seven-point lead.
Now polls are far from infallible. And they famously failed to predict the outcome of last year’s general election. But even if we cautiously concluded at this stage that the referendum outcome was neck and neck, it is a damning verdict on the effect of Remain campaigners so far to persuade the electorate into voting the way they want.
And that’s set to inspire bookshelf-bending tomes and analysis as to why the “Project Fear” strategy has failed to produce a commanding lead among voters.
Is it that the public distrusts the credibility of the economic projections – and that the more of them it hears, the less it trusts them?
Is it that voters distrust or dislike the politicians who have traded so heavily in them?
Might it be, as the former Labour leader Ed Milliband asserts, that “the message has just not been getting through”?
Or might it be that voters regard other issues as being more important than asserted effects on GDP? Frequently polled voter concerns cite immigration as the main issue. Others cite concerns over sovereignty, democracy and accountability in the EU.
Whether it is one of these or a combination, it is remarkable that a campaign with all the authority, resources and advantages of government – and the basic appeal of status quo – has been unable to command a compelling majority in favour of our continuing membership.
The one grim consolation for the Prime Minister and his Chancellor as this battle goes to the wire is that they are not alone in their failure: that across the continent – in France, Italy, Spain, Denmark, the Netherlands, Greece and even Germany itself – Euro scepticism is on the rise, with a notable voter swing towards populist parties.
And as matters now stand, even a narrow victory for Remain would be seen as Pyrrhic and hardly likely to settle an issue that has divided the country for 40 years.
Peace and reconciliation to break out next week? That looks hardly likely now. The resort to threats of a vindictive “punishment” budget may prove the last straw at Westminster: a major crisis of government on 24 June as Cameron and Osborne have lost authority and are forced to resign.
Play the politics of fear, and you gamble with a spectacular backfire.