This wasn’t just a clever Budget — it was deeply moral. Let’s just hope Osborne’s luck holds

GEORGE OSBORNE has changed a great deal since his first Budget almost exactly five years ago. Then aged 39, he was a weedy figure with a thin, squeaky voice who had been handed a man’s job.

That 2010 financial statement reads poorly today. It contained pledges that were later broken. The most important of these concerned his plans for dealing with the huge financial deficit inherited from Labour.

Back then, Mr Osborne promised to bring the budget back to surplus within the timescale of the last parliament — an aim that was swiftly abandoned.

Five years on, and the Chancellor has grown. His manner has mellowed and he has aged well. Now 44, he no longer resembles some sneering regency swell, but looks like a hard-working politician on a mission to improve the lot of the working man.

He has learned from his mistakes. It is also significant that the Chancellor is no longer constrained by Liberal Democrat coalition colleagues.

Yesterday, Mr Osborne delivered the first Conservative party Budget since Kenneth Clarke’s final statement in 1996 (and a very good Budget that was, from a fine chancellor — Mr Clarke handed over a golden legacy for Gordon Brown to ruin).

Yesterday, Nigel Lawson, a legendary custodian of the nation’s finances from the remote Thatcher years (and an important personal mentor to George Osborne) sat in the visitors’ gallery. All the elements were therefore in place for a thunderously Conservative budget. That was what the Tory backbenchers — suddenly set free after five years of the hated Lib Dem coalition — hoped for. That is what the nation expected.

But that is emphatically not what the Chancellor delivered.

Mr Osborne, once the creature of the Tory Right, unveiled a Budget containing many measures that outflanked Labour — from the Left.

He raised the minimum wage without any advance consultation with the business community. He abolished tax breaks for the rich. He imposed a compulsory surcharge on banks, yet more tax on dividends and announced a shake-up of Vehicle Excise Duty.

If Labour’s Ed Balls had suggested these changes, there would have been outrage. The stock markets would have slumped. Sterling would have fallen.

AFTER all, it is only two months since Mr Osborne and his fellow Conservatives were fighting a bitter guerilla war against Ed Miliband and his promise to raise the minimum wage to £8 (not £9) an hour.

Worryingly, yesterday’s Budget put back any thought of bringing the nation’s finances back to surplus until 2020.

In many ways, much of this could have been a Labour Budget.

Ever since Disraeli, the unscrupulous Victorian genius who invented the modern Conservative Party, Tories have delighted in pinching the best ideas of their opponents. George Osborne has acted in the cynical tradition of the party’s cleverest leader.

But the Budget was not just clever. It was also highly moral — above all, the daring decision to lift the minimum wage (now renamed the ‘living wage’) to £9 an hour. For decades, big businesses — the supermarket chains as well as retailers such as online giant Amazon — have exploited the British welfare system.

They have paid wretchedly low wages to their hard-working staff, secure in the knowledge that the Government would make up the difference through the tax credit system.

In effect, taxpayers have been handing out a gigantic annual subsidy worth tens of billions of pounds to big business. It has been a very troubling arrangement — all the more so when one bears in mind that many of these businesses (Amazon is a very good example) pay little or no British tax.

So, three cheers for Osborne for — at last — acting on a national scandal.

Crucially, it should be business, not the welfare state, that has an obligation to pay decent wages.

In the light of yesterday’s notable reform, it is now clear that the greatest achievement of the David Cameron Government so far has been to ‘remoralise’ the world of work.

By doing so, it has brought about a fundamental alteration in the relation between the individual and the state. When Mr Cameron became Prime Minister in 2010, the welfare state too often rewarded idleness and fecklessness (as well as corporate greed).

As Mr Osborne noted yesterday in a brave remark that will outrage the Left, the welfare state has wrongly provided a lifestyle choice for many.

To its enormous credit, the Cameron Government has restored the welfare state to the purpose originally envisaged by its great founder, William Beveridge, who wanted to provide a safety net for those who lost their job — not a way of life for those who wanted to avoid responsibility. Sir William would have cheered to the rafters yesterday’s announcement of a living wage, which restores genuine dignity to work.

These much-needed reforms aside, it has to be said that the Chancellor’s financial calculations continue to provide very serious grounds for concern.

Looked at in the round, this was a hightax, high-spending Budget, which will make the national deficit even larger.

Mr Osborne boasted that the national finances will be back in balance by the end of this parliament in five years’ time. The Chancellor made exactly the same claim five years ago — and it turned out to be undeliverable.

He says he doesn’t want an economy ‘built on debt’. But under his management, for all the jobs created, the economy has been built on very little else.

MR OSBORNE’S continued reliance on borrowing means our economy is very vulnerable, and his financial calculations could easily go horribly wrong. At this stage of an economic cycle, a wellrun economy should be in surplus, not encumbered by a huge deficit.

Mr Osborne insists that the economy will rebalance over the next five years. But his assumptions are based on curiously optimistic projections of future growth.

What if the Greek crisis causes Europe to go back into recession, or the world catches a chill from the stock market collapse in China?

Even if nothing goes wrong, the British economy is due to fall back into a cyclical recession as part of the natural pattern of events.

We will be very fortunate if, as the Chancellor hopes, the economy continues to expand for the next five years.

However, if it does not, we will be in very deep trouble indeed.