BUDGET 2011: Onwards, upwards ... ignore the elephants in the room

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12 April 2012

Budget speeches are always crowded affairs but when the Chancellor rose to speak today space in the Commons chamber was even tighter than usual.

There were so many elephants in the room as to make breathing, let alone sitting down, difficult. George Osborne wanted this to be the "let's move on" Budget, the one in which he put the nasty stuff behind him and set the economy on course for renewed prosperity. But he did this against a backdrop of surging inflation, stalling growth and rising unemployment.

This was also a Chancellor who when he first drafted today's address had no idea we would be bombing Libya, with the consequent effect on the oil price (let alone the high six-figure cost of each sortie and its missiles).

Nor did he have any notion that the world's third-largest economic power would be shattered by an earthquake and tsunami, and that, suddenly, the future of the world's nuclear industry would be imperilled. And if he thought negativity surrounding the cuts he trailed in the Spending Review would be over and done with, he has also been forced to think again. The impact of those measures is only now starting to be felt and public anger, to be expressed in Saturday's giant London march, remains combustible.

These were just some of the beasts making today very uncomfortable. This is a Budget that follows decades in which UK manufacturing has been eroded, infrastructure has aged and not been replaced, and the workforce has lost its skills. While the City filled the void, that didn't matter, but what was once our economic saviour is anathema and the emphasis is on rebuilding our industrial might. Saying that, however, what was striking was how positive Mr Osborne managed to make it all sound.

The contrast with his dour Labour predecessors, who managed to make Budgets in much better times seem miserable, was stark. It was also marked in another sense: this was a determinedly pro-business Budget.

We've had what Labour Budgets designed to create the "enterprise society" but in essence they did no such thing. Now we've got a Chancellor who is beginning to sweep away stifling regulations, is simplifying the tax system, cutting corporation tax, expanding apprenticeship schemes, making it easier for housebuilders to get planning permission, boosting research and development, offering tax breaks to entrepreneurs, creating enterprise zones, and promising to lower the 50p higher rate, which is so hated by our business leaders.

As a start at rebalancing the economy that's not bad. And this, don't forget, with no money to spend, no giveaways to hand out. It will take years, we know that. Doubtless, when push comes to shove, amalgamating national insurance and income tax will prove an administrative nightmare. Likewise, reforming the planning laws will not happen overnight and will take years to filter through. As for enterprise zones, we've had them before and they didn't make a long-lasting contribution - hopefully this time they will be better run and organised.

He's an awful long way to go and he's coming from a dreadfully low base - you only have to listen to our business chiefs complaining about the educational standards of school-leavers to appreciate that. Britain has slipped in the competitive league tables in the last decade. The slope we must now climb - against the might of China and India, which did not threaten us in the past, is steep and long. But credit where it is due - at least we are now moving in the right direction once more.

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