When George Osborne launched his 2012 Budget, I was one of a minority of people to praise it. I admired the boldness of his move on the top rate of income tax, even if I did not approve of it. And often Budgets look better (or indeed worse) in hindsight that they do at the time. But that happy fate will not await this Budget. Today the third successive retreat was announced from its proposals, this time on tax relief for charities – following VAT on hot food, and the taxation of caravans.
I haven’t followed the issues on hot food and caravans in any detail. The former, at least, looked quite reasonable – and extending the base of VAT is quite sensible policy. The regressive impact of such an extension (i.e. the idea that they affect poorer people proportionately more that the rich) is generally overdone by lobbyists and mischief making politicians. The charity issue (limiting the amount of tax relief on charitable donations) was an idea that looked more sensible the more I thought about it.
What went wrong was the politics. The measures came out of the blue and sowed panic. As I blogged at the time, the charity lobby has shown formidable political skill. The sort of skill that this government seems to lack.
This does not bode well for the stormy European waters ahead. Downing Street needs an Alistair Campbell – a no nonsense head of communications with a feel for the tabloids – who once again have shown their ability to set the political agenda. And his 0r her brief must be to make the Coalition as a whole look good. It doesn’t help that both Tories and Lib Dems are spending so much time trying to show differentiation from each other, however understandable that might be.