George Osborne is in danger of being caught in an ambush of his own making when he presents his budget next week.

He needs to keep voters sweet ahead of the EU referendum but recently announced that the optimistic note he struck at the time of the autumn statement has now gone flat. There was always a danger that mid term unpopularity might lead people to vote against the government for reasons unrelated to Europe. At the moment the Conservatives hold a healthy lead over Labour, but an unpopular budget with new cuts and tax rises could change that before June.

The Chancellor was too bullish in the autumn and now that the economic headwinds are beginning to blow, he is thrashing around for answers to keep his pledge of a budget surplus by 2020 intact. The suggestion of a major reform of pensions was a spectacular example of this. The idea was floated to remove tax relief on pension contributions rather than taxing withdrawals later in life. This would have been a complete reversal of the current position but would have given Mr Osborne more tax revenue now. The plan met severe criticism, not least because a future Chancellor might be tempted to tax withdrawals as well.

That pledge of a budget balance by 2020 is crucial if George Osborne is going to make a bid for the premiership, but it certainly restricts his room for manoeuvre as uncertainty persists on the international front. With growth forecasts cut and average earnings rising more slowly, tax revenues are not what he expected as recently as November.

Reaching for more cuts in public services is going to prove very difficult. The well reported difficulties faced by councils like Lancashire clearly show there is no low hanging fruit on the public spending tree. Indeed the Chancellor will need a long neck to munch much more. So let’s nickname any more economies in this area, the giraffe cuts!

It is always difficult to predict what Chancellors will do, but I would be surprised if petrol duty remains frozen as it has been since 2011. With the drop in forecourt prices to around a pound a litre, this would be a relatively pain free area to raise tax. He ought to do something about taxing the amount of sugar we consume but there seems to be a reluctance to do so.

With virtually zero interest rates the climate remains favourable for investment and consumer growth remains strong. However the latter familiar development in the UK economy may be storing up trouble in the future. If only the manufacturing figures were as healthy.

Osborne will be entitled to say that his campaign to make multinationals pay their UK taxes is beginning to work. This is an essential development as people grow weary of the austerity agenda.

Wednesday’s budget will be both a temporary distraction from debate on the EU referendum, whilst also potentially affecting its outcome. Osborne has been in post nearly six years now. He will need all his political skills to get through this Budget.




Nigel Farage believes in plain speaking. Well the UKIP leader now has a rival in that department. Manuel Barroso, the outgoing European Commission President has spelt it out for David Cameron as he seeks to appease UKIP over immigration.


An arbitrary cap on immigrants from eastern Europe would fall foul of the Lisbon Treaty of 2007 and the original Rome Treaty of 1957, Barroso said. So David Cameron would need a treaty change. The Polish ambassador to the UK has said Poland would veto such a change. Therefore Cameron would fail in the negotiations and would be under enormous pressure to campaign to come out of the EU. If he refused then Boris Johnson or the ambitious Foreign Secretary Philip Hammond would be eager to replace him and back a better off out campaign. Under those circumstances it is a racing certainty the British people would vote to come out.


I have believed for a long time that it is more likely than not that a referendum would lead to us leaving the EU, so it is time for business, small, medium and large to start speaking up and spelling out the serious consequences of our withdrawal for jobs.


Pressure is building up in the Labour Party for a switch in their position. It is one of the few principled stands that I admire Ed Miliband for. However MPs are in despair at his poll ratings and some want to grasp at offering an EU referendum in a desperate effort to improve their chances of winning next May. The close shave in the Heywood and Middleton by election has only added to the pressure. There is even talk of a northern Labour MP defecting to UKIP.




The City Growth Commission this week increased the pressure on the government to give more power and money to city regions. The Chancellor is expected to make an announcement in the Autumn Statement. Greater Manchester is preparing a partial back down in its opposition to Mr Osborne’s demand for an elected mayor for the conurbation. They are set to name Lord Smith of Wigan as leader of the Combined Authority. It is far short of the directly elected accountability that the government rightly demand but it may be enough for now.


If the Chancellor hands over 90% of business rates to cities like Leeds, Manchester and Liverpool, the vision of a northern powerhouse will begin to take shape. But what about the rest of the north? I was at an event in Lancaster this week where the economy of north Lancashire and Cumbria was under discussion. Places like Lancaster, Workington and Carlisle struggle to retain their talented youngsters who are drawn to the big cities. They also suffer from the scrapping of the regional spatial strategies that used to provide a framework for economic investment. Similar issues arise in North Yorkshire and the Humber.


So as we power up our big cities, we also need to convince the government that the whole North needs support from an overarching Council of the North





If only we could have an election now some Tory politicians might be thinking as they begin their summer break. A new born prince, the heatwave and cycling and cricket success have given our spirits a boost. Most important of all there is a feeling that the economy is turning even in the North which always lags behind the South East because of successive governments’ failure to have an effective regional policy.


House prices are edging up here and jobs are being created in the private sector to help absorb the haemorrhaging of public employment. In that connection the news from Bentley in Crewe that they are to build the company’s new sports utility vehicle enhances the North West’s successful car industry alongside Vauxhall at Ellesmere Port and Jaguar Land Rover at Halewood.


The key man in all this is the Chancellor George Osborne. He rivals the Prime Minister in importance when it comes to trying to stear the Tories to an outright victory in 2015. This is partly because of his power over economic decision making but also because of his central role in political strategy. For this reason Labour call him the part time Chancellor. It is a foolish charge. It makes sense to have Osborne tied closely to political decision making.

It is Osborne’s belief in concentrating on the main issue of economic recovery that has led to the ditching of “peripheral” issues like plain packet fags and a minimum price for alcohol. Lynton Crosby, the Tory party advisor has taken the hit for this regrettable U turn, but the Chancellor will have been involved.


I recently took the opportunity to observe George Osborne up close. He was giving a lecture in memory of that great broadcaster and champion of the North Brian Redhead. To the Chancellor’s credit, he spoke a lot about Brian and didn’t use the occasion for a bog standard political message.


He acknowledged the importance of having a northern constituency (Tatton). He told us his daughter had just been made Rose Queen at her school at Wildboarclough in Cheshire and that he was aware that things looked different from a northern perspective. That was certainly Brian Redhead’s view, Mr Osborne told his audience He missed out on the editorship of the Guardian because he refused to move south with the paper. For a long time he co-presented the Today programme from Manchester until being forced to join his colleagues in London. I used to join him on the train north on a Friday and he always said he was glad to be coming home.


Osborne concluded by observing that the North was not a monolith and should not be stereotyped. Although Redhead had worked in Manchester, he was born in the North East and lived in the Peak District. The Chancellor claimed that Cheshire had more private sector jobs than London.


It was an interesting and different sort of speech from a man that it is not easy to warm to. What will matter in the next two years however is not being liked but keeping the economic recovery going as interest rates begin to rise.


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