George Osborne holds his ministerial red box as he leaves 11 Downing Street to deliver the Budget. Photograph: Getty Images.
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Osborne's politically deft Budget makes life even harder for Labour

The Chancellor ruthlessly exploited the opposition's weaknesses and addressed his party's own. 

The Conservatives had waited 19 years for a Tory-only Budget. There was plenty in George Osborne's seventh statement to make them feel it was worth it. The inheritance tax threshold will be raised to £1m from 2017, finally fulfilling the ten-year-old pledge that made the Chancellor's reputation. The 40p tax threshold will be increased to £43,000 next year as a downpayment on the promised £50,000 threshold. "The defence and security of the realm", as Osborne grandly phrased it it, will be guaranteed by year-on-year real-terms increases in the MoD budget and a joint security fund of £1.5bn a year. The UK will meet the Nato pledge to devote at least 2 per cent of GDP to defence spending. By acting early in the parliament, Osborne has prevented what would have been a fierce internecine struggle and earned the favour of those MPs whose support he will need in the coming Conservative leadership contest. 

The tax credits system that the Tories have long regarded as a form of Labour bribery was further unravelled. Support for families will be capped at two children and those who start a family after April 2017 will received reduced payments. The planned £12bn of welfare cuts will advance Osborne's goal of a budget surplus by 2019-20 and further surpluses thereafter. Public service spending is forecast to fall to just 14.5 per cent of GDP by 2019-20 - the lowest level since 1964/65. The state that Gordon built has been epically rolled back. 

But Osborne, who has grown in stature with every Budget since his 2012 nadir, was too politically astute to dress his statement in Tory clothes alone. The anticipated rabbit was unveiled in the form of a "National Living Wage", a measure designed to provide political cover for his cuts to in-work benefits (while poaching a pet cause of his leadership rival Boris Johnson). The wage is a "living" one by Osborne's definition alone. The planned rate of £7.20 from next April is below the current voluntary UK rate of £7.85 and far below the London rate of £9.15 (it is, in other words, merely a higher minimum wage). In a further sleight of hand, the Chancellor omitted to mention that the current rates took account of the in-work benefits he had just cut. But in politics, as Ronald Reagan observed, "if you're explaining, you're losing". The experience of the last five years proves that Labour cannot assume that voters who recieve a pay cut will not thank Osborne for their "pay rise". For a party that in recent memory opposed a minimum wage of any level, a rate of £9 by 2020 (£1 higher than that promised by Labour at the election) it is still some journey. 

There were other acts of political crossdressing that the opposition will find even harder to dismiss. Permanent non-dom tax status has been abolished with anyone resident in the UK for more than 15 of the past 20 years now paying full Brtish tax on all worldwide income. As Osborne allowed himself to cheekily note, his erstwhile opponent, Ed Balls, had warned that full abolition would likely cost the government revenue. In a long overdue move, an apprenticeship levy will be imposed on all large firms to fund the Tories' promise of three million more. Roads investment will be guaranteed by hypothecating revenue from Vehicle Excise Duty. It took Osborne far too long to recognise the value of infrastructure investment and the need to raise productivity  - but he can no longer be caricatured as a simple-minded Randian. The only consolation for Labour is that so many of the issues it campaigned on - higher wages, non-dom taxation, higher NHS spending, free childcare - have been embraced by Osborne. The party had many good ideas; it was the sales pitch that was the problem. 

It was a coalition, not a Conservative, Budget that Osborne had expected to deliver. After the Tories' unforeseen victory, this was a statement designed to ruthlessly consolidate their advantage. Labour's weaknesses were exploited through the budget surplus law and the reduced benefit cap; the Conservatives' were addressed through tax cuts and a "National Living Wage". After another Budget sweeping in its scope, the opposition is less sure than ever about how to reset the terms of debate in its favour. 

George Eaton is political editor of the New Statesman.

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Leader: Trump and an age of disorder

Mr Trump’s disregard for domestic and international norms represents an unprecedented challenge to established institutions.

The US presidency has not always been held by men of distinction and honour, but Donald Trump is by some distance its least qualified occupant. The leader of the world’s sole superpower has no record of political or military service and is ignorant of foreign affairs. Throughout his campaign, he repeatedly showed himself to be a racist, a misogynist, a braggart and a narcissist.

The naive hope that Mr Trump’s victory would herald a great moderation was dispelled by his conduct during the transition. He compared his country’s intelligence services to those of Nazi Germany and repeatedly denied Russian interference in the election. He derided Nato as “obsolete” and predicted the demise of the European Union. He reaffirmed his commitment to dismantling Obamacare and to overturning Roe v Wade. He doled out jobs to white nationalists, protectionists and family members. He denounced US citizens for demonstrating against him. Asked whether he regretted any part of his vulgar campaign, he replied: “No, I won.”

Of all his predilections, Mr Trump’s affection for Vladimir Putin is perhaps the most troubling. When the 2012 Republican presidential nominee, Mitt Romney, warned that Russia was the “number one geopolitical foe” of the US, he was mocked by Barack Obama. Yet his remark proved prescient. Rather than regarding Mr Putin as a foe, however, Mr Trump fetes him as a friend. The Russian president aims to use the US president’s goodwill to secure the removal of American sanctions, recognition of Russia’s annexation of Crimea and respect for the murderous reign of the Syrian president, Bashar al-Assad. He has a worryingly high chance of success.

Whether or not Mr Trump has personal motives for his fealty (as a lurid security dossier alleges), he and Mr Putin share a political outlook. Both men desire a world in which “strongmen” are free to abuse their citizens’ human rights without fear of external rebuke. Mr Trump’s refusal to commit to Nato’s principle of collective defence provides Mr Putin with every incentive to pursue his expansionist desires. The historic achievement of peace and stability in eastern Europe is in danger.

As he seeks reconciliation with Russia, Mr Trump is simultaneously pursuing conflict with China. He broke with precedent by speaking on the telephone with the Taiwanese president, Tsai Ing-wen, and used Twitter to berate the Chinese government. Rex Tillerson, Mr Trump’s secretary of state nominee, has threatened an American blockade of the South China Sea islands.

Mr Trump’s disregard for domestic and international norms represents an unprecedented challenge to established institutions. The US constitution, with its separation of powers, was designed to restrain autocrats such as the new president. Yet, in addition to the White House, the Republicans also control Congress and two-thirds of governorships and state houses. Mr Trump’s first Supreme Court appointment will ensure a conservative judicial majority. The decline of established print titles and the growth of “fake news” weaken another source of accountability.

In these circumstances, there is a heightened responsibility on the US’s allies to challenge, rather than to indulge, Mr Trump. Angela Merkel’s warning that co-operation was conditional on his respect for liberal and democratic values was a model of the former. Michael Gove’s obsequious interview with Mr Trump was a dismal example of the latter.

Theresa May has rightly rebuked the president for his treatment of women and has toughened Britain’s stance against Russian revanchism. Yet, although the UK must maintain working relations with the US, she should not allow the prospect of a future trade deal to skew her attitude towards Mr Trump. Any agreement is years away and the president’s protectionist proclivities could yet thwart British hopes of a beneficial outcome.

The diplomatic and political conventions embodied by the “special relationship” have endured for more than seven decades. However, Mr Trump’s election may necessitate their demise. It was the belief that the UK must stand “shoulder to shoulder” with the US that led Tony Blair into the ruinous Iraq War. In this new age of disorder, Western leaders must avoid being willing accomplices to Mr Trump’s agenda. Intense scepticism, rather than sycophancy, should define their response.

This article first appeared in the 19 January 2016 issue of the New Statesman, The Trump era