James Forsyth

The New Labour influences on Osborne’s Budget

The New Labour influences on Osborne's Budget
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George Osborne had a ringside seat for New Labour’s dominance of British politics and you could see the influence that this has had on him in the Budget. First, there was Osborne’s determination to unpick the structural changes that Gordon Brown had made to move British politics to the left. So, Osborne took the axe to tax credits not only limiting the numbers who’ll receive them in future, down from nine out of ten families with children in 2010 to five in ten by 2020, but he also attacked the intellectual rationale for them, arguing that they have actually kept wages down.

But the Budget also owed something to Tony Blair. One of Blair’s great political skills was to straddle the centre ground meaning that if the Tories wanted to be distinctive they had to move to the right. Osborne has done the same with this Budget and his national living wage. If Labour now want to sound different on low pay, then they will have to advocate for a far higher minimum than £9 an hour. But if they start doing that, they start moving into the territory where Osborne can claim that their policy will cost a considerable number of jobs.

One of the other things that makes this Budget so politically astute is that it all hangs together: the national living wage doesn’t work without the corporation tax cut and the increase in the employers’ allowance. This means that Labour has to either take the Budget whole or not at all.