David Cameron had two big concerns for the Budget — and George Osborne has ridden over both of them.
The Prime Minister telegraphed well into last year that he was unhappy with the Chancellor’s plans to axe child benefit for households with a higher rate taxpayer, at least in its crude implementation.
He has also been much more chary than his friend about getting rid of the 50p tax rate, fearful that it would ruin both the coalition’s message of “we’re all in this together” while also trashing his hard work at presenting himself as an everyman rather than a Tory friend of the rich.
Mr Osborne appears to have listened to the Prime Minister’s concerns — and largely rejected them. For all the talk in Downing Street of this being a collaborative team when it comes to Budgets, this is still a mighty powerful Chancellor.
It may be, when we see the detail, that Mr Osborne has pulled off the seemingly impossible trick of cutting taxes for the rich and easing the pain of higher earners over their child benefit loss in a politically-neutral way. That will be some conjuring.
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Mr Osborne may, unlike Gordon Brown, share his thinking with No 10 and other senior colleagues. Indeed, given the coalition, he is bound to.
There is little doubt, though, that this is the Chancellor’s work. Indeed, the master strategist appears to have won all the big arguments. When negotiations started in earnest, Mr Osborne was in a minority of one when it came to getting rid of 50p. The other members of the Quad, the coalition’s power-broking body made up of Mr Cameron, Mr Osborne, Nick Clegg and Danny Alexander, the Chief Secretary to the Treasury, believed it was neither politically desirable or possible.
It bothered Mr Osborne little that Mr Clegg began the year by showing his Budget negotiating hand — a hefty rise in the personal allowance towards the Liberal Democrat’s manifesto pledge of £10,000.
Mr Osborne could live with that both politically and economically. He has credited his coalition partners for the policy but has said that he is proud to be enacting it. More to the point, if Mr Clegg was putting all his chips on income tax thresholds, the Chancellor could move his towards getting rid of 50p. The economic case pointed him towards prompt action, as did the politics, which suggested that it would only become harder to act as an election approached.
The Liberal Democrat price for supporting the end of 50p has been something of a moveable feast, from achieving a £10,000 threshold to a mansion tax to a list of tax grabs on the rich, including pension relief, to a tycoon tax, whereby a minimum rate of tax is set for the super-rich below which they cannot duck and dive.
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Wednesday’s fine print may yet reveal that Mr Clegg has won something substantive, but a lot of Liberal Democrats are worried that they are going to be left with a few closed loopholes slipping through their fingers while Mr Osborne holds aloft the bloodied stump of 50p.
And higher-rate taxpayers should not hold their breath for large-scale relief on the loss of child benefit, despite Mr Cameron’s concerns. Its “cliff-edge” implementation may be crude, but so is the reason behind it. Without taking child benefit away from higher earners, the graphs produced by the Treasury to show the impact of the austerity drive at all income levels would show the well-off as the big winners.
The Budget may have been chewed over by the Quad but it is an Osborne production.