The FINANCIAL — George Osborne has been served notice by Conservative MPs that his budget on Wednesday marks one of the last opportunities for him to restore his economic and political credibility before the countdown begins to the general election in 2015.
As disgruntled Tory MPs turn their sights on the chancellor, amid a growing feeling that David Cameron remains untouchable until the election, Osborne has gone to great lengths to ensure the budget runs smoothly.
As Guardian News said, tight discipline has been imposed by the chancellor on the preparations for the budget to avoid a repeat of last year's disaster, when details of his plans to cut the 50p top rate of tax were leaked. Osborne blamed the Lib Dems for an underhand operation that left him dangerously exposed.
The chancellor has made a big effort to reach out to Conservative MPs, who have complained that he runs a remote operation and fails to listen to their concerns. He took the trouble to answer questions from members of the backbench 1922 committee for an hour two weeks ago.
Osborne, who is confident that no howlers will emerge on Wednesday, is concentrating on ensuring that two key messages emerge from the budget: that the recovery will take longer than expected, with no miracle cures; and that he is taking steps to promote economic growth as he signs up to most of the ideas proposed by Lord Heseltine in a recent review.
Barring a surprise, there is likely to be a rare and noticeable mismatch between the economic significance of the budget – which will probably be minimal – and its political import in salvaging the reputation of a chancellor.
One budget veteran puts it like this: "This is a very significant budget for George. But I'm not quite sure how significant it is for the country. Then again, if the country loses confidence in the chancellor, it will be hugely significant for the country. On balance I would like people to have more confidence in George and to dislike him more."
Carl Emmerson, the deputy director of the Institute for Fiscal Studies, says he hopes the chancellor will learn from last year and deliver a "boring" budget. "If a budget turns out to be boring that's not necessarily a bad thing," he says. "Last year's budget was significant for the things the chancellor did and then had to undo. That is not a good way to make tax policy."
Emmerson highlights one possible budget announcement to illustrate the mismatch between the economics of the budget and its political import. This is the "reasonable chance" that the Office for Budget Responsibility will say that borrowing is higher this year than it was last year, an announcement of little economic significance but a political gift to the shadow chancellor, Ed Balls.
"Economically that doesn't really matter," Emmerson says. "Whether it is £1bn up or £1bn down is neither here or there. Politically, clearly it might matter more because the chancellor made such a thing in the autumn statement of the fact it was coming down."
Balls will no doubt have a field day, though Osborne has nothing but contempt for the shadow chancellor, as he made clear when they appeared together on the sofa at the end of The Andrew Marr Show on BBC1. "Ed, you destroyed the economy when you were in office," the chancellor said.
But Osborne is taking trouble to reach out to his own party, which he divides into three groups. MPs troubled by the cost of living and those concerned with the challenge of raising competitiveness are manageable. But a final group who want to turn everything upside down and introduce unfunded tax cuts are impossible, he believes.
Robert Halfon, the MP for Harlow, who has been campaigning hard on fuel duty, is hopeful the chancellor will delay or cancel a planned rise in the duty due in September. He said: "On cost of living I really think they get it now. I wouldn't have said that a year ago."
George Freeman, one of the leading lights in pressing for greater competitiveness, calls for a turbo-charged "plan A plus plus plus". He said: "We can't borrow and spend more. So we need to be bolder in reforming markets, breaking up the stale and broken structures which are holding back investment and innovation and create new opportunities for the public and private sectors to work together to create value and sustainable growth."
In the final group, the former Tory deputy chairman Lord Ashcroft issued a stern warning of the importance of the budget. He wrote in the Mail on Sunday: "For non-Tories, the biggest problem is that the party doesn't seem to be on their side. Wednesday's budget is one of the last big chances Osborne will have to show that it is. Unless he starts to change minds there'll be trouble at the mill – and the electoral consequences are plain."