Budget 2013: Osborne does it best when he does nothing at all

“The last thing we need is more tinkering”.

Asked what he wanted from next week’s budget, one successful entrepreneur I spoke to this week replied “not much".

A couple of others in the same discussion agreed. None had a list of proposals at the ready. It wasn’t that they don’t care what Mr Osborne says (although all agreed their focus was more on their businesses), it’s more that they want him to do very little. It fits with the general theme I hear from business that the government’s role should be to create a positive growth environment and then get out of the way.

And with the national finances in a pickle, the entrepreneurs were unanimous that the boldest thing Mr Osborne could do was nothing.

“The last thing we need is more tinkering,” said one. Her point is one ICAEW made in its submission to George Osborne, in which it suggested that instability in tax policymaking undermines future confidence. Whatever the good intentions, the culture of constant change in the tax system ends up leading to complexity.

After last year’s omnishambles, Osborne might himself wish he could get away with doing nothing. But with forecasters pointing to a triple-dip recession, sitting on his hands isn’t a political option for Osborne any more than it’s an economic one.

Assuming he ignores calls (some from within the coalition) for a switch to a plan B, or a plan A+, and instead sticks rigidly to fiscal austerity, he will have very limited scope for manoeuvre. As a result, rather like the wizard in the Wizard of Oz, he’ll be using all the political trickery, smoke and mirrors he can to create the illusion of doing lots to help the country (and will be especially keen to be seen to help what he calls strivers and “the working poor”) without really being able to do a great deal.

The best outcome for business would be a Budget that really grasps the need to inject growth and confidence into the economy. As ICAEW explained in its Budget submission, this means putting in place the right mechanisms for getting finance to small businesses. This doesn’t mean another rebranding of the government’s lending scheme (which has already been re-launched on several occasions) but it does mean getting the proposed Business Bank up and running properly. It requires the funds already made available, whether through the Local Enterprise Partnerships or other mechanisms such as Funding for Lending to actually get to the frontline.

Accepting the limited scope for action open to the chancellor, combined with the need for a little political magic, (these occasions are often as much about pulling political rabbits out of the hat as they are sensible economics) there will doubtless be a whole raft of changes to various types of taxation.

Personal allowances will be raised, some commentators are expecting a tactical reduction in VAT (possibly for the hospitality sector), while others point to a continuing reduction in corporation tax (this one coming into force in 2014).

In the absence of much room for real action, it is fair to assume there will be a number of consultations announced into a whole host of potential schemes many of which will never amount to much, but which look good on the day.

There will be the usual media flurry listing winners and losers from the budget, all filtered through the current political lens of austerity and Labour’s constant jibe that the Tories are more concerned with helping the rich than the poor.

It’s hard to think that there would be more winners if Mr Osborne listened to the entrepreneurs and made next week’s the shortest Budget in history.

This article first appeared in economia.

Photograph: Getty Images

Richard Cree is the Editor of Economia.

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How the middle-aged became the hedonists

When they next open a bottle of wine (or three), the parents and grandparents of today’s teens should raise a glass to their responsible offspring.

Rare is the week that passes without more horrific tales of the debauchery of the youth. One photo has come to embody their supposed recklessness: "bench girl", a young woman lying passed out on a public bench in Bristol with bottles of booze scattered beneath her. The photograph is now a decade old, and the image it portrays is in urgent need of updating. The startling thing about today’s youth is now how much they indulge but how well behaved they are. They are putting their hedonistic parents and grandparents to shame.

Wherever you look, the picture is the same. Over a quarter of those aged 16-24 today are teetotal; just 29 per cent drink heavily in an average week, compared with 44 per cent a decade ago. Only 23 per cent of under-25s smoke, a 10 per cent decrease since 2001. Conception rates among under-18s are at their lowest since records began in 1969, and the number of sexually transmitted infections among those under-25 has also declined in the last five years. Today’s youth haven’t been resorting to narcotics, either: drug use among under-25s has fallen by over a quarter in the last decade.

Young fogeys are not only on the rise in Britain. In America teen sexual activity has decreased by one-fifth since 1988, and only 38 per cent of 12th grade students (those aged 17 and 18) said they have been drunk in the past year, compared to 52 per cent in 2001. Something similar is happening throughout Western Europe: in Spain, wine consumption has halved since 1980.

These trends reflect how times have changed for young people. The rise of online entertainment and socialising has its downsides, such as increased loneliness and anxiety, but teenagers and those in their early twenties have many more alternatives to boozing or smoking a spliff. “In past decades, teens might have smoked, drank and had sex because they didn’t have much else to do,” says Jean Twenge, the author of Generation Me. “Now, teens have a world of entertainment and digital communication available on their phones 24/7.” And savvy youngsters know that social media has given debauchery an online afterlife. About half of recruiters in the UK already look at a candidate’s social media profile, according to a study last year from Career Builder, and a third of all recruiters have rejected candidates about finding evidence of binge-drinking or drug use online. Small wonder ambitious young people are so reluctant to indulge.

Today's youngsters have less money for booze and drugs. They have become poorer in the past decade: in real terms, full-time wages for those aged 18-21 and 22-29 were over 10 per cent lower in 2013 than in 2004. Add to this soaring housing costs, and Generation Rent is too preoccupied with saving to spend a great deal on drink and drugs: 670,000 more people aged 20-34 live with their parents in Britain today than in 1996. 

Parenting has become better, making it harder for children to drink away their teenage years. A quarter more 11-15-year-olds say their parents don’t like the idea of them drinking than in 2008. Parents have become older – the average age of a woman giving birth has passed 30 for the first time in history, and is four years higher than in the 1970s – and are having fewer children: the average number of children per UK woman has decreased from 2.93 to 1.83 in the past 50 years. “Over the last 20 years, parents have become more attentive and involved, more playful, less harshly punitive with their children. They are more educated about parenting, and monitor their children more closely,”  says Frances Gardner, Professor of Child and Family Psychology at Oxford University. “Women have also become more educated in general, and now have children at later age. So this may have improved the behaviour of young people.”

The government has also made life harder for youthful hedonists. Schemes like Challenge 21 and Challenge 25 and an increase in fines dished out to shops, pubs and clubs that allow those under-18 to drink have made it more difficult to source drink under-age. The ban on smoking in enclosed public places, including pubs and bars, and workplaces in 2007 has ushered in an era when smoking is increasingly regarded as an inconvenience. Meanwhile taxes on cigarettes and alcohol have been ramped up: across the 28 countries of the EU, only Ireland has higher alcohol and tobacco prices than the UK today. Selling alcohol below cost price was banned last year.

But the decline of youthful excess is about far more than the cost. If price were all that was driving youngsters away from booze and fags, then use of drugs, which have become significantly cheaper in real terms, would be on the rise. That young people are far better behaved owes to something much deeper than a thinning out of their wallets: it is the result of a generation who know how competitive the workplace is and are ambitious to get ahead.

The recession and globalisation mean have made the employment market far tougher. Most important to making the workplace more cutthroat is the rise of skilled female graduates. Women outnumber men at university today – including Russell Group institutions. Thirty years ago, only 56 per cent of women aged 16-64 were in work; today, 69 per cent are.

Young people have never faced more competition for the best jobs. They know it, too: even at university, freed from the prying eyes of their parents, young people are shying away from drugs and booze. The trebling of tuition fees to £9,000 a year five years ago makes university an awfully expensive place to go if your only aim is to get hammered. And students know that indulging while their contemporaries swat up in lectures will make them less employable after they graduate. Greater competition in the workplace means that “the cost-benefit analysis for people of going out and getting hammered starts to go out of favour,” says Will Seymour of consumer trends agency Future Foundation.

Some fear that as real wages increase, so will underage drinking and drug taking. Yet it seems more likely that young people will become even better behaved. Even as the economy has ticked up young people have not changed their habits. “If you grow up in the middle of a recession it will effect what you spend your money on,” says Kate Nicholls, chief executive of the Association of Licensed Multiple Retailers. Young people who have discovered alternatives to late-night drinking have learned there are plenty of other ways to be entertained than binge drinking into the early hours.

The changing face of Britain is making youthful excess less common. Although London is the richest part of the country, it is also among the least hedonistic: a third of adults in London do not drink alcohol at all, easily the highest of any British region. The decrease in alcohol consumption “is linked partly to demographic trends: the fall is largest in areas with greater ethnic diversity,” says Dr James Nicholls, Director of Research and Policy Development at Alcohol Research UK. Not only are ethnic far less likely to indulge in booze, drugs and fags, but the effect seems to rub off on their white British friends.

While millennials have proved better behaved than the previous generation of young people, they are now being outdone by those born in the new century. Children are a third less likely to bunk off school now than in 2008. Just 22 per cent of under-16s have tried a cigarette, half the number who had in 2003.

“All I need are cigarettes and alcohol,” Oasis sang 22 years ago. While the spirit of excess is dying among today’s young, it remains alive among their parents and grandparents. Sexually transmitted infections, which are declining among the under-25s, are rising fastest among those over 45. Those aged 65 and above are now more likely than any other group to drink alcohol at least five days a week, with those aged 45-65 not far behind. Perhaps, as Katherine Brown of the Institute of Alcohol Studies says: “Watching your parents get gozzled might put young people off.”

When they next open a bottle of wine (or three), the parents and grandparents of today’s teens should raise a glass to their responsible offspring. And when politicians complain about “broken Britain”, they should make it clear that they have middle-aged hedonists in mind. 

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.

This article first appeared in the 05 February 2015 issue of the New Statesman, Putin's war