George Osborne’s first budget hardly threw up any surprises but it certainly did seek to clarify the vision of the new reality that we are becoming accustomed to. ‘Tough but fair’ has been the chancellor’s strap line over the past 24 hours, but today’s detail was hardly Harry Callaghan.

 

The coalition’s fiscal team has been at pains to communicate just how shocked they have been by the previous regime’s profligacy, to prepare the way for George to unveil his ‘progressive’ emergency budget. And yes, it does look painful in areas, but we can’t pretend to be surprised.

 

Experts have been predicting a rise in the VAT rate to 20 per cent for over six months. On the one hand, it is a tax that penalises all consumers equally, regardless of wealth – but on the other hand it’s probably the least painful way of raising £13bn a year. When the rate was reduced to 15 per cent in an attempt to stimulate sales last year did anyone actually notice? It cost us £12bn. And now we more are in line with France at 19.6 per cent and Germany at 19 per cent. This was an easy move to make because the market already had the expectation.

 

The support for small business comes in the form of a one per cent cut in Corporation Tax for four years until it reaches 24 per cent and the removal of the threatened rise in National Insurance contributions for employers.  

 

But the announcement of a two year pay freeze is the tip of an iceberg that doesn’t only threaten to trim the flab in the public sector, but is the precursor to the mother of all attacks on public sector finance. I’m all for abandoning the endless and pointless stream of quangos, consultancies and expensive studies into the socio economic impact of the demise of the futon, as well as        

redressing the balance between managers and medical staff in hospitals.

 

But a reduction in public sector budgets across the board will have a knock on effect to small businesses. Some of us have had it good while government bodies have been desperate to spend their seven figure budgets before the year end, but those days are over.

 

Other than that, I can’t argue with the increase to 28 per cent in Capital Gains Tax for high rate taxpayers and I’d be a brave man indeed to argue against the Bank Levy.

 

And with the Liberals in a position of recently unrivalled influence there was never any danger of alienating all but a handful of their supporters by revisiting that silly increase in tax on Cider.