Is Osborne planning a surprise cut in income tax for the Budget?

A source suggests that Ed Balls's call for a temporary cut in the basic rate was designed to pre-empt Osborne's Budget rabbit.

Expectations for the Budget have been so downplayed that suspicion is growing in Westminster that George Osborne will pull some kind of rabbit out of the hat tomorrow. If so, could it be a surprise cut in income tax? Here's the theory one source put to me earlier.

Ed Balls, who always seeks to pre-empt Osborne's announcements (he called for a freeze in fuel duty before the Chancellor did just that in last December's Autumn Statement), proposed a temporary cut in the basic rate in his interview in last Saturday's Daily Telegraph. The shadow chancellor, who has previously called for a cut in VAT and the reintroduction of the 10p tax rate (a measure Osborne was considering before Labour's announcement), told the paper: 

Anything he can do to help low and middle-income families would be better than no tax cut at all. A Labour shadow chancellor says taxes should be cut. A Tory Chancellor says, 'Over my dead body.' I can't remember a situation like that in my lifetime. If George Osborne, in this Budget, were to cut the basic rate of tax, we would applaud him. If that's all he did, I would be concerned. But, even so, we would say, 'At last'.

My source suggested that Balls had either learned or guessed that Osborne was planning to cut income tax in the Budget. If the former, the question now is whether Osborne will go ahead with the move. After last year's disastrous decision to abolish the 50p rate, a 1p cut in the basic rate would be the perfect way to demonstrate that, as Tory MP Robert Halfon recently put it to me, the Tories believe in "tax cuts for the many, not just the few". 

Chancellor of the Exchequer George Osborne. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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I believe only Yvette Cooper has the breadth of support to beat Jeremy Corbyn

All the recent polling suggests Andy Burnham is losing more votes than anyone else to Jeremy Corbyn, says Diana Johnson MP.

Tom Blenkinsop MP on the New Statesman website today says he is giving his second preference to Andy Burnham as he thinks that Andy has the best chance of beating Jeremy.

This is on the basis that if Yvette goes out first all her second preferences will swing behind Andy, whereas if Andy goes out first then his second preferences, due to the broad alliance he has created behind his campaign, will all or largely switch to the other male candidate, Jeremy.

Let's take a deep breath and try and think through what will be the effect of preferential voting in the Labour leadership.

First of all, it is very difficult to know how second preferences will switch. From my telephone canvassing there is some rather interesting voting going on, but I don't accept that Tom’s analysis is correct. I have certainly picked up growing support for Yvette in recent weeks.

In fact you can argue the reverse of Tom’s analysis is true – Andy has moved further away from the centre and, as a result, his pitch to those like Tom who are supporting Liz first is now narrower. As a result, Yvette is more likely to pick up those second preferences.

Stats from the Yvette For Labour team show Yvette picking up the majority of second preferences from all candidates – from the Progress wing supporting Liz to the softer left fans of Jeremy – and Andy's supporters too. Their figures show many undecideds opting for Yvette as their first preference, as well as others choosing to switch their first preference to Yvette from one of the other candidates. It's for this reason I still believe only Yvette has the breadth of support to beat Jeremy and then to go on to win in 2020.

It's interesting that Andy has not been willing to make it clear that second preferences should go to Yvette or Liz. Yvette has been very clear that she would encourage second preferences to be for Andy or Liz.

Having watched Andy on Sky's Murnaghan show this morning, he categorically states that Labour will not get beyond first base with the electorate at a general election if we are not economically credible and that fundamentally Jeremy's economic plans do not add up. So, I am unsure why Andy is so unwilling to be clear on second preferences.

All the recent polling suggests Andy is losing more votes than anyone else to Jeremy. He trails fourth in London – where a huge proportion of our electorate is based.

So I would urge Tom to reflect more widely on who is best placed to provide the strongest opposition to the Tories, appeal to the widest group of voters and reach out to the communities we need to win back. I believe that this has to be Yvette.

The Newsnight focus group a few days ago showed that Yvette is best placed to win back those former Labour voters we will need in 2020.

Labour will pay a massive price if we ignore this.

Diana Johnson is the Labour MP for Hull North.