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  1. Business
  2. Economics
22 June 2010updated 27 Sep 2015 2:18am

Osborne gets away with regressive VAT rise thanks to Lib Dem cover

Harman on fiery form as she lays into coalition’s first, welfare-slashing Budget.

By James Macintyre

The extent to which there is unity in the coalition was vividly demonstrated as George Osborne delivered the government’s first Budget this afternoon, measured by the times at which Nick Clegg chose to nod, as he frequently did, and when he chose not to.

The Lib Dem leader looked grim-faced as the Chancellor introduced an increase in regressive VAT to 20 per cent, a policy which, as Harriet Harman reminded the House, the Lib Dems once described as a “secret VAT bombshell”.

The acting Labour leader also quoted David Cameron as saying: “It’s very regressive. It hits the poorest hardest.”

Harman went on to ridicule the Lib Dem frontbenchers as “fig leaves” for the Tories, and turned Vince Cable’s own memorable “from Stalin to Mr Bean” attack on its head by describing the Business Secretary’s transformation from “national treasure to Treasury poodle”. Cable smiled.

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The other regressive headline from the Budget — and again a moment when an otherwise nodding Clegg merely looked down at the floor — came when Osborne announced, like his heroine Margaret Thatcher, that he was freezing child benefit for three years. This is a proposal pushed by Iain Duncan Smith, who has misleadingly been portrayed in recent years as a kind of reborn Robin Hood with a mission to help the “vulnerable”. Progressive it was not. Nor was the abolition of the pregnancy grant.

On the other hand, an assured Osborne talked the talk of redistribution (he even referred to the Cameron-led administration as a “progressive alliance”) and the widely trailed move to enhance the bracket of lowest-paid out of income tax — a step on the way of lifting the lowest income-tax threshold to £10,000 — was indeed designed to incentivise jobs, and goes a long way to calming any Lib Dem jitters.

But neither that, nor a new bank levy set for next year, stopped Harman laying into what she called “a Tory Budget that will throw people out of work, hold back growth and harm vital public services”. She added: “This is the same old Tories.” David Miliband, running for the Labour leadership, immediately described it as a ” ‘give with one hand, punch with the other’ Budget”.

Finally, the true colours of this government, especially on welfare, are beginning to be laid bare. The Labour opposition, including the leadership candidates, have their work cut out. Harman sounded genuinely pained at the Lib Dems’ decision to prop up the Tories’ agenda. But this is only the start. Let no one say there are no dividing lines in British politics.

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