Budget 2012: 20 minutes in, 1-0 Team Clegg

The Lib Dems are right to identify higher rate pension tax relief as ripe for review.

It may still be early February but the March Budget has already kicked off. This morning's Telegraph splashes with Danny Alexander's first attacking move, with the Chief Secretary saying he strongly supports a reduction in higher rate pension tax relief to fund further increases in the personal allowance. For all the Lib Dem's previous talk of mansion taxes and crackdowns on tax evasion, this is serious stuff. Alexander claims the government could save £7 billion by reducing the 40p tax relief currently given to higher rate tax payers to 20p, the first cash on the table that would come close to funding his party's ambition on the £10k allowance.

If there's one thing Alexander's intervention confirms it's this: the key question for the 2012 Budget is no longer whether the Lib Dems will get anything on personal allowances but how the next increase will be paid for. This marks a big change of tactics for Clegg's team from previous budgets. They've come hard out of the blocks in a very public way and not just to argue for the allowance move itself -- easy words, after all -- but putting a big money, progressive, revenue-raising measure front and centre.

It's a shift of strategy that was marked first by Nick Clegg's speech to the Resolution Foundation in late January when the message was more coded but the intention no less clear: “I want to help the hard-pressed and the hardworking. If that means asking more from those at the top - so be it."

And, make no mistake, for those on low or modest pay, it's a change in emphasis -- if it pays off -- that could be hugely important. As Gavin Kelly has argued before in the New Statesman, the coalition has shown a deeply worrying instinct in recent months to make deep raids into tax credits as their default way of funding their wider ambitions. It is now clear that Clegg's team realise their previous strategy -- in which they win the offensive for a higher allowance but fail to defend areas of spend that are absolutely essential for low to middle income households -- has become utterly unsustainable. These earlier failures will sadly still bite low to middle income households hard when substantial tax credit cuts bite this April. But at least if the Lib Dem's new approach works, things might not get worse.

So all in all, 20 minutes in to Budget 2012, it's probably fair to scratch up 1-0 to Team Clegg. They've come out early and marked their territory well. And in higher rate pension tax relief they've identified an area of public spend that there's long been a good case for reviewing. Ultimately, of course, if a week's a long time in politics, six weeks is an aeon in budget negotiations. Staking your claim early is bold but it's also risky. The key question now is whether the Lib Dems can hold on for the win. One thing's for sure: with their funding ambitions now out in the open for all to see, any further cuts to tax credits in March would be a stinging humiliation.

James Plunkett leads the Resolution Foundation's Commission on Living standards.

James Plunkett is director of policy and development at the Resolution Foundation

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Michael Gove definitely didn't betray anyone, says Michael Gove

What's a disagreement among friends?

Michael Gove is certainly not a traitor and he thinks Theresa May is absolutely the best leader of the Conservative party.

That's according to the cast out Brexiteer, who told the BBC's World At One life on the back benches has given him the opportunity to reflect on his mistakes. 

He described Boris Johnson, his one-time Leave ally before he decided to run against him for leader, as "phenomenally talented". 

Asked whether he had betrayed Johnson with his surprise leadership bid, Gove protested: "I wouldn't say I stabbed him in the back."

Instead, "while I intially thought Boris was the right person to be Prime Minister", he later came to the conclusion "he wasn't the right person to be Prime Minister at that point".

As for campaigning against the then-PM David Cameron, he declared: "I absolutely reject the idea of betrayal." Instead, it was a "disagreement" among friends: "Disagreement among friends is always painful."

Gove, who up to July had been a government minister since 2010, also found time to praise the person in charge of hiring government ministers, Theresa May. 

He said: "With the benefit of hindsight and the opportunity to spend some time on the backbenches reflecting on some of the mistakes I've made and some of the judgements I've made, I actually think that Theresa is the right leader at the right time. 

"I think that someone who took the position she did during the referendum is very well placed both to unite the party and lead these negotiations effectively."

Gove, who told The Times he was shocked when Cameron resigned after the Brexit vote, had backed Johnson for leader.

However, at the last minute he announced his candidacy, and caused an infuriated Johnson to pull his own campaign. Gove received just 14 per cent of the vote in the final contest, compared to 60.5 per cent for May. 


Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.