In advance of this year's Budget, most commentators and many politicians were content to write it off as a mid-term non-event from a Chancellor who needed to play it safe after the 'omnishambles' of last year and amid ever-worsening economic forecasts. The muted pre-briefing operation from the Treasury seemed to confirm that.
Instead, we got a Budget with much more substance than style as the bad news jostled with some genuinely interesting decisions. Here are five areas that stood out for me as being important markers for the period running up to the 2015 election.
- A green light for a new, more activist, monetary policy framework. Now we know why the Chancellor did not want Mark Carney saying anything too interesting at Davos - he wanted to announce it himself. The Budget speech confirmed the incoming Bank of England governor will be able to issue explicit US Fed-style forward guidance as part of a package involving a new mandate for the Monetary Policy Committee. The 2% inflation target stays but the Bank's options to try and meet it have just been increased.
- The Chancellor cannot afford another set of forecasts as bad as these. This was George Osborne's seventh set of official economic forecasts since coming to office and yet again, the revisions were all in the wrong direction. With the growth forecast halved just four months after being announced in the December Autumn Statement and the deficit and national debt targets all further away from being met, it was an open goal for Ed Miliband to point out how far the Chancellor is from meeting the targets he so confidently set himself in 2010. If there is no improvement by the Q4 Autumn Statement, George Osborne may be fighting for his political life.
- The 'Help to Buy' Scheme is a big deal. Two things make this more significant than its anaemic predecessor schemes. Firstly, scale, with a potential government investment of £3.5 billion. Secondly, range, offering support beyond the first-time buyers targeted up to now. With its name an obviously deliberate echo of the iconic Thatcher policy of 'Right to Buy', this feels like an important retail policy for the doorstep.
- 'Aspiration' and tax policy have arrived as dividing lines. Like Gordon Brown, George Osborne believes passionately in the importance of Budgets to establish political dividing lines between the main parties. With the original plan of delivering deficit and debt reduction by 2015 not going well, the focus has moved to 'aspiration' with an emphasis on Labour as the party of a bloated public sector that was forced to accept a further year of 1% pay restraint this year. Like 'Right to Buy' this worked well in the 1980s so the Chancellor seems to be betting on the public viewing Ed Miliband with the same suspicion with which they eyed up Neil Kinnock. On tax allowances, the acceleration of the £10k tax free allowance is significant, expensive and a key source of unity between the Conservative and Lib Dems sides of the Government vs the 10p tax plans of Labour.
- The forthcoming Spending Review is going to be eye-wateringly tight. The Chancellor announced today the need to find £11.5 billion further savings in this summer's three year Spending Review. With Health and Aid ring-fenced and the PM jumpy about any further defence cuts, this is a reminder of the big political decisions that will be taken in the next few months as departmental budgets are established for the period that will run either side of the General Election.