Rabble rouser

IN 1970, with a General Election looming, the then Labour Chancellor of the Exchequer Roy Jenkins refused to produce a crude giveaway Budget to curry favour with the voters. Such bribery, he said, would be “a vulgar piece of economic management below the level of political sophistication of the British electorate”.

Yesterday, Alistair Darling also avoided the temptation to be vulgar. Britain is borrowing £11bn less this year than the £178bn he had predicted, so he did have a little leeway to float a few vote-winners. Aside from £100m to fill in potholes, there were very few pre-election giveaways.

But there was also very little economic management.

This was barely a Budget. It was more like a stump speech. It was a campaign opener, even a rabble rouser.

And as such, it worked.

Gordon Brown acted as a warm-up act at Prime Minister’s Questions. Two North-East MPs – Fraser Kemp and Sir Stuart Bell – asked Mr Brown about Nissan in Sunderland winning the Leaf electric car and Corus in Hartlepool winning a £200m pipeline deal. Mr Brown replied that both deals had only been possible because Government had chosen to intervene – a theme Mr Darling immediately picked up.

He said: “At the heart of our decisions is a belief that Government should not stand aside, but instead help people and business achieve their ambitions.”

This is a fundamental election dividing line.

Labour believes bigger government can become involved, through regional development agencies (RDAs) such as One North East and Yorkshire Forward, and create jobs.

“Over the last two years, we have been reminded of the force for good that governments can be in protecting people,” said Mr Darling.

The Conservatives philosophically disagree.

They believe big interfering government is a force for the bad. They plan to scrap the RDAs and give a freer hand to private enterprise and local authorities to create jobs.

The other election dividing line that this speech wanted to highlight was that Labour was the party of the many and not the few. The Conservatives still plan a cut in inheritance tax which will benefit the wealthiest 3,000 estates.

Yesterday, Mr Darling got a big cheer when he announced an increase in the stamp duty threshold for first-time buyers from £125,000 to £250,000 – a tax cut that would be paid for by the wealthiest as he was increasing stamp duty on houses costing more than £1m.

Mr Darling, this most drab of speakers, even left the chamber with a reputation as a rabble rouser. He sombrely announced that he was about to sign “tax information exchange agreements”

with three countries (in normalspeak, this means he is going to close offshore tax loopholes in three countries).

The Labour benches were immediately agog.

Mr Darling paused for effect.

He sipped his water to allow the hubbub to grow.

Then, with the timing of a comedian, he named the countries: Dominica, Grenada and (long pause) Belize.

Never since Sir Robert Walpole introduced the first Budget in the 1720s can a Chancellor have received such a noisy response from his own backbenches. Never in all those Budgets can the tax affairs of one man – Lord Ashcroft, the deputy chairman of the Conservative Party, who is domiciled in Belize – have received such attention.

The Labour rank and file were cockahoop as they left. This was a Budget for jobs – their jobs – and they were now energised to go out and fight for them.

But was this a Budget for the wider country?

Mr Darling repeated his pledge to halve the country’s debts within four years. This will require the most painful measures since Walpole announced taxes on windows, male servants, salt and, curiously, “pleasure horses”.

Yet, only weeks before the election, Mr Darling dared not introduce any new revenueraisers, except a wild increase on cider duty.

On the other side of the coin to tax rises is a reduction in what the Government does.

“I know there are some demanding immediate cuts to public spending,” said the Chancellor.

“I believe such a policy would be both wrong and dangerous. To start cutting now risks derailing the recovery – which is already bringing down borrowing more rapidly than expected.”

This is a plausible argument, but as Mr Darling claimed to have “the fastest deficit reduction plan of any G7 country” he must have had an inkling of where 2011’s cuts would fall.

HE gave one example. “In the long-term, I am announcing that the number of civil servants in London will be reduced by a third,” he said.

He became more specific. “As a first step, 15,000 posts will be relocated within the next five years.”

He became more specific still. “I can tell the House today that 1,000 posts from the Ministry of Justice will be moved out of Central London, saving £41m.”

So that’s £41m saved from a potential £900bn black hole. Will the rest really come from efficiency savings?

Perhaps so close to an election it was expecting too much from a Chancellor who ditched the economics to concentrate on the politics.

Perhaps, instead he should be praised for not offering a pre-election bribe. Such vulgarity would have won immediate votes but could have proved disastrous in the long run for a country already flirting with bankruptcy.

Roy Jenkins in 1970 was the last Labour Chancellor to be praised for putting country before party in his Budget just before an election.

It didn’t do him any good. Labour lost.