Analysis: Chancellor’s Final Play For Economic Competence Vote

Analysis: Chancellor’s Final Play For Economic Competence Vote

It’s often forgotten that in the years before her remarkable landslides, Margaret Thatcher was regularly rated one of the most unpopular Prime Ministers ever. But what she lacked in cuddly appeal, she made up for by being the person most trusted to run the economy.

Much like David Cameron she came to power after a disastrous Labour government had gambled the country’s future on a crazed tax and spending orgy. Today’s Autumn Statement shows that her reputation for tough uncompromising economic competence is one that George Osborne continues to aspire to.

In truth the statement was a little boring, aside from the changes to Stamp Duty: which will be widely applauded by aspiring home-owners. Anything of any real interest aside from that was leaked long ago, possibly because none of it was that exciting expect that the deficit is going down.

The right will not jump for joy about the deficit, after all it is still at nightmare levels but they should take some comfort from the reminder that Conservative economics work. 

Before today pundits had predicted the deficit would go up because the tax take was £23bn less than the government had hope. But this was more than made up for by the part the pundits had missed, the government spent £24bn less.

The fact that taxes can fall and the nations finances be better off is obvious to most economists, but remains a mystery to the Labour Party. But Budgets and Autumn Statements are not about maximising government coffers anyway, they are about ensuring the government is doing as much as possible to get out the way of wealth creators.

Whilst Labour heartlands will complain about the £23bn loss, Middle England will jump for joy. This is £23bn of their money that the government is no longer collecting from them, it is a partial deliverance from the economic tyranny of the years of socialism in the noughties.

In 2010 the proportion of GDP taken by the government was 45 percent, a nightmare level that left most of us working in order to pay for the gold-plated pensions of public sector workers. Today that figure stands at 40.5 percent, still far too high, but also significantly lower.

This reduction is what has financed things like the abolition of Air Passenger Duty for children, the freeze in fuel duty and the increase in the personal income tax allowance to £10,600.