How Labour’s 50p tax trick has ended up helping George Osborne

Last week’s public borrowing and tax-receipt figures, headlined ‘Chancellor hails biggest monthly surplus in seven years’, received considerably less attention than the employment and wage-growth numbers a week earlier, underlining my belief that voters care a lot less (or indeed not at all) about the intangible ‘fiscal deficit’ and its implications than they do about their own prospects and spending power. And rightly so. Failure to shrink the deficit at the rate he first promised is nevertheless the one major issue on which George Osborne is seriously open to criticism as Chancellor. But what matters in political terms at this stage is that borrowing this year is 7.5 per cent down on last year and can be described as ‘on track’ — while tax revenues are up by 3.1 per cent after a long run of near-zero growth. Within the tax figures, corporate payments for January were up a billion on the same month last year, a useful answer to the accusation (even if it’s largely true) that HMRC is slack in pursuit of tax-minimising multinationals. Stamp duty receipts were down 11.4 per cent — a welcome indication of a cooling property market. Best of all, income tax receipts were boosted by payments on high earners’ bonuses and partnership profits deferred from 2012-13 to 2013-14 in order to take advantage of the top-rate cut from 50p to 45p. Since the 50p rate — which came into effect just six weeks before the 2010 election — was designed by Darling and Brown as a cynical political trap for the Tories, rather than a responsible fiscal measure, there is both justice and cunning in the way Osborne has used its reversal to conjure a bumper monthly surplus just ten weeks before the next election.

Lesson of Leeson

‘Win some, lose some’ was our headline for March 4 1995, under a Castro illustration of Chinese merchants smiling inscrutably at the FT headline ‘Barings lose all in Far East’.