It was unfashionable of me to write in praise of George Osborne on Budget day. I did so, you may recall, because ‘at least we have a finance minister who’s always on the front foot’: I wanted to make a contrast between our Chancellor’s relentless activism in pursuit of his political goals, and the supine performance of eurozone leaders — who continue failing to offer any strokes at all while hoping for Mario Draghi to knock up a few runs with monetary trick-shots from the other end. Within 48 hours, however, our Chancellor seemed to be very much on the back foot, one hand clutching his protective box, as bouncers rained down from the unlikely combination of IDS and John McDonnell. So it goes in politics; a fortnight later we may observe — emotive issues of disability benefit aside — that the sheer complexity of modern fiscal policy-making leaves an unlovable risk-taker like Osborne open to attack from any angle his many detractors care to choose.
Here, for example, is my friend Allister Heath at the Telegraph writing about ‘the many (inevitably damaging but often popular) left-wing measures [Osborne] has imposed’ — while Labour’s McDonnell bangs on about ‘the bankers’ Chancellor… looking after a wealthy minority’, not least by offering higher-rate taxpayers a big cut in capital gains tax, to the enormous advantage of those lucky few who happen to incur very large CGT bills.
The recent Budget will go down as one of Osborne’s least successful episodes, even if there were measures in it, to help smaller businesses, for example, that will boost the economy in the medium term. But at risk of being labelled ‘left-wing’ by right-wing purists, let me at least say a word in favour of the Living Wage, which kicked off last week at £7.20 an hour and will rise to £9 by 2020. When it was announced in last July’s Budget it was, needless to say, a blatant bid to knock Labour spokesmen off their soapboxes. It’s also a measure that quietly shifts a little more of the economic burden on to private-sector employers and away from the state. In businesses dependent on low-paid workers, it will clearly cause strain: there are warnings, for example, that it will exacerbate what’s already a crisis in elderly care — in which the state pays as little as it can to buy services from private providers.
So what’s to praise? In the early years of this decade, wages were stagnating in a way that was not helping the recovery and really did look unfair, while rising job numbers indicated room for an uptick in pay — and evidence from the introduction of Labour’s minimum wage in 1999 suggested the impact on businesses would mostly be marginal. Whatever Osborne’s ulterior motives, the Living Wage is a nudge in the direction of a better-balanced economy, and a gambit that finance ministers elsewhere are very likely to follow.
This is an extract from Martin Vander Weyer’s Any Other Business column. The full article can be found here.
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