If Chancellors were rated by the little things they get right, Alistair Darling would be a champion.
He packed his Budget with much-needed and well-aimed mini-measures for business.
He took care to see that state pensioners are not hit if the Retail Prices Index goes into reverse or by a drop in their winter fuel bonus.
He promised a £260?million “guarantee” to help stop young victims of the recession from drifting into life-long unemployment.
He even went ahead with the “scrappage” scheme for old cars and vans, against his own instincts, though failing to mention in his speech that the car companies will have to put up half the money.
True, Chancellor Darling also grabbed an easy headline with the 50 per cent tax for anyone earning more than £150,000 a year. That may hearten a few Old Labour stalwarts as the election approaches and cause a few high-earning, commission-driven salesmen to adjust their work-life balance on Fridays. But it does not make this an election Budget.
The horrors of the underlying arithmetic pushed such thoughts right off the agenda. As Mr Darling acknowledged outright “There are no quick fixes. No overnight solutions”.
Over an again he reverted to the global nature of the disaster that has overtaken us. Poor fellow. He could not very well utter what everybody knows – that it would have been nothing like as painful for Britain now if the man sitting next to him had been a trifle less reckless with the public finances when the going was good.
The consequences are breathtaking. The Chancellor did what he could to mitigate them by calling an end to the recession “towards the end of this year”. Well, it could happen, if the scattering of tender “green shoots” that have been popping up here and there this month go on sprouting. They may, or they may not.
But even if they do, huge damage is already done. Few independent economists would describe the Treasury’s new forecast of a 3.5 per cent economic setback this year as unduly pessimistic. Some expect worse.
The Treasury’s record on this is unimpressive. Last November it predicted the economy would shrink by a bearable 0.75 to 1.25 per cent in 2009. Would that it had been right.
The best that can be said is that if the recession really does peter out before Christmas, what with “quantitative easing” and minuscule interest rates, the forecast of growth of 1.25 per cent next year does not look extravagant.
But when he looks a little further out, this Chancellor, like others before him, detects fruitful uplands beckoning that other mortals cannot see – something very like a boom.
“From 2011,” he declared, “I am forecasting that the economy will continue to recover with growth of 3.5 per cent from then on.” Peculiar phraseology.
Then in the next breath he seemed to qualify it, saying: “In future years, the economy will recover towards a trend rate of growth of around 2.75 per cent.”
For what it is worth, the Treasury’s Budget Bible – what used to be known as the Red Book, but is now white – predicts 3.25 per cent for each of the three tax years from 2011-12.
The shock is that even this sunny scenario leaves the public finances wallowing in red ink, in a way they were not in the desperate years after the Second World War, nor in the late 1970s when we were bailed out by the IMF.
Even as a proportion of the fast-growing economy the Treasury glimpses from 2011, public sector net borrowing – the “National Debt” in old money – will not even “stabilise and then begin to fall” until 2015-16.
That will be after £16?billion of property sales, always supposing buyers can be found, and “extra efficiencies” in the way the public sector goes about its work worth £9?billion a year.
It will also be after bumping VAT back to 17.5per cent, starting the new 50 per cent tax rate for high earners next April and squeezing their pension contributions.
The Chancellor wisely refrained from holding out the prospect of a windfall from privatising the nationalised banks, or their returning any of the billions lavished on them to prod them into lending again.
That may happen one day. But it would have been crass to talk about it in yesterday’s speech, let alone feed any prospective proceeds – along with the inevitable losses – into the official numbers.
In the context of those we got yesterday – starting with net borrowing of £175?billion this tax year and a curiously precise £173?billion next – the eye-catching 50 per cent tax rate is little more than a token.
It is meant to raise £1.13?billion in its first year, 2010-11, and £1.81?billion in 2011-12. But you cannot take even that for granted. The independent Institute for Fiscal Studies calculates that the 45 per cent top rate Chancellor Darling proposed last November would cost as much as it raised.
His proposal to limit tax relief of high earners’ pension contributions – to the outrage of the life assurance companies – is pencilled in to save a mere £200?million.
This is strange since the Treasury calculates that people with more than £150,000 a year received an astonishing £6.1?billion in tax relief on their pension contributions last year, an average of £27,000 for each individual.
You can see why the Chancellor has them in his sights, despite the anger he is sure to face for yet another attack on pension savings and fears that there are more to come. But for a paltry £200?million it hardly seems worth it.
The big numbers, though, spell out the grim message of this Budget. The tax increases so far are irrelevant.
So brace yourself for something altogether more fearsome after next year’s election – regardless of which party wins, or which individual has the misfortune to be the next Chancellor.