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A Sugar Tax to Sweeten the Bitter Cuts

Osborne's surprise sugar tax seems to sweeten an otherwise austerity ridden budget

Sam Greenwood

Naked Politics Blogger

The Deputy Speaker inadvertently summed it up best midway through the budget as he calmed the ever-lowing Tory MPs: ‘just relax, more to come’. There is a temptation to always report budgets as some epic struggle against the political elements, the performance of a lifetime and the defining events of a government’s lifecycle. Sometimes this is true, the ‘omni-shambles’ budget of 2012 was so disastrous that it looked like the Olympics-booed Osborne had successfully sunk the Cameron government in a single speech.

However today that was not true, at all. Indeed Parliament has never looked quite so impotent in the face of the economic challenges facing the country. There might be a second crash, but there’s nothing Parliament can really do about it, we might leave the EU, but nothing in the budget is reasonably going to change that, Trump may start renegotiating the American relationship with the global economy and stalwart frenemy Angela Merkel might be toppled by domestic forces – not a lot we can do about those things either. This was essentially an hour long shrug in the face of globalisation, a zero hour contract that could be altered or ignored when those writing it feel like it in the next few months.

However what this budget did offer was a microcosm of George Osborne’s brand of real-politik. A headline grabbing token for progressives, sugar tax, skirting over the latest attack on the disadvantaged, cuts to disability benefit, planning for the next election, shifting the receipt of corporation tax to 2019, and last but no means least, sweeping pronouncements on other departments, in this instance education and local government. Let’s take them individually.

Now the thing with the sugar tax is that it’s really doesn’t deserve headlines, the only reason it does is because it’s got an attention grabbing name, celebrity endorsement and is easier to understand than much of the rest of the budget. There’s a health problem because drinks contain amounts of sugar better measured by shovels than spoons, companies currently have no real incentive outside of morality and social concern to stop putting that amount in, drinks companies are run by little sugar Devils who put profits over conscience, and thus implementing an impending tax leaves the little critters time to reform their act and punishes their sweet profits if they do not.

Now Osborne is trying to have his sugar-free cake and eat it by saying that such a measure will simultaneously help solve the problem and raise revenue, the two things can’t both happen, but it’s a good thing in a low impact way either way it falls. There are quibbles as to infringement on the rights of people to consume sugary acid but as encroachments on freedom go, it’s no snooper’s charter.

A lot more people have written far from far more experience, deeper knowledge and with much greater eloquence than I can on what the cut to the Employment Support Allowance will mean for them. As such I will only briefly comment on yet another grim cut. In simple terms it’s the culling of a policy designed to help people with disabilities be more independent by supplementing their income. In many cases it is the only thing that allows some disabled people to have any independence at all. However under Osborne’s, gaze the real-world value of such a policy is outweighed by the fiscal lucrativeness of it’s cutting and he does have (self-imposed) targets to meet. If this sounds like cynicism that’s because it is, cynicism is actually the best framework for understanding much current policy – think of the most base and self-serving motivations for any one action and, for much of government policy, you will generally be accurate.

Which brings us to corporation tax. Sajid Javid gave a masterful display of linguistic magic on Newsnight. The essence of his response to the question of why the government was denying itself six billion pounds of funding until 2019 was as follows: in the previous budget George Osborne had asked for companies to pay their corporation tax earlier, the companies said no, so the Chancellor boldly rolled over and decided to turn it to his advantage instead. The magic that Javid pulled off was making that sound like the reasonable course of good government rather than the actions of a cowed and self-serving party. In reality it’s akin to what the government was trying to do with tax credits. With cutting tax credits the idea was to make everyone worse off for the next two years before gradually improving their situation with the implementation of the ‘living wage’ in 2018. This would mean that when the classic election question of ‘Are you feeling better off?’ was raised a lot of disadvantaged people could honestly say yes, hopefully forgetting that it was because of the tax credit cut that they’d felt worse off in the first place. This is a much smarter iteration of a similar logic, working with your traditional friends to bank six billion for 2019 so that you can magically meet targets set for that year. Cynicism is sadly again the most reasonable measure.

Last and by no means least the answer to the question ‘What do you do when you can’t make any shatteringly ‘positive’ economic announcements?’ You steal them from other departments. There is something delightfully ironic about being told that because not enough people voted to have devolution to local government, it will now be imposed by central government. Everyone now gets mayors basically. In fairness to Osborne this was his responsibility to announce because you still think that the local government minister is Eric Pickles when actually it’s a fairly unassuming man called Greg who doesn’t command the same level of attention. More interesting was Osborne’s Gove-esque intervention into Education policy. Regardless of the quickly dwindling resources to do so schools will now be open five hours longer with sporting events and artistic conventions. What is the Chancellor of the Exchequer doing talking about education? Unlike the theft of local government policies this is rooted in future realities. Whilst there is more to say on it that can reasonably fit here in essence in the great ‘decentralised’ world of academies, the power rests with whoever has the money. For the moment that is the treasury.

Even a low-impact budget has more of an effect on this country than a regular week of Parliament. However as the return of the old hits – we’re all in it together, we are the builders – suggests, this was a continuity budget, a placeholder saying more of the same till further notice. Undoubtedly more will be unearthed as the policies are subjected to a greater level of scrutiny; the Osborne devils lie in detail,. But for the moment, the things to take away are a resounding economic ‘meh’ and a grim omen of further ridiculous and damaging social policy yet to come.

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