Osborne has not solved the cost of living crisis

Britain needs convincing ideas about how to ensure that real wages rise.

Stand back from the detail of today's Budget and what we observe is Britain's political class trying – and failing – to respond to the crisis in living standards facing Britain.

They are doing this at the same time as they, of course, seek to outmanoeuvre their political opponents and build support among their friends. One manifestation of this will be the growing tussle over tax cuts, which will increasingly dominate party politics in the years ahead (see tomorrow's NS).

Until there are convincing ideas that resonate with the public on how to ensure that real wages will rise, party leaders will remain in the familiar territory of fighting over tax and benefit changes.

The political need to support living standards and kick-start growth, which greatly outstrips the practical ideas on how these goals can be achieved, resulted in a number of contradictions that ran through today's Budget.

Changes to personal tax – billed as reducing the burden on low-to-middle-income Britain – actually result in by far the biggest gains going to those in the top half of the income distribution. A statement of vaunting ambition about the need to reform and simplify the whole of our tax and National Insurance system immediately gets submerged in a sea of tax wheezes. And the heralding of a new model of growth is fleshed out with a set of micro-measures that will be wearily familiar to anyone who has spent time in Whitehall over the past decade.

There are, naturally, things to welcome. Steady growth in apprenticeships, extra support for science, a helping hand for first-time housebuyers and taxing private jets are all to the good. The extension of mortgage interest support will prove important in a year that is going to see more and more households pushed closer to repossession due to the impending hike in interest rates. And there may be some begrudging acknowledgement from an angry public for the cut in fuel duty.

But the real measure of today's political class will be whether they can develop a compelling account of what really underpins shared growth, in which the gains are more fairly spread across the working population. Without this, all of today's tax tweaks and the associated reform rhetoric will be neither here nor there.

Gavin Kelly is the chief executive of the Resolution Foundation.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.