Budget 2013: Osborne swaps hair shirt for straitjacket

Chancellor George Osborne's first three budgets were all about austerity. The man from Number 11 had his hair shirt on as he unveiled his plans for getting on top of the deficit and reducing borrowing.

For his fourth, his choice of outfit had changed. Not for him the blandishments of the Lib Dem Business Secretary Vince Cable in support of "good borrowing" for spending aimed at triggering growth.

Image caption The chancellor took about an hour to deliver his Budget

In the language of the Treasury, Mr Osborne told us his budget was "fiscally neutral overall".

In plain English, this means that any investments in pump-priming infrastructure projects, including capital construction schemes, had to be funded by savings in government spending as a whole. Hence the £2.5bn of extra cuts announced for most Whitehall departments the day before.

But having donned his fiscal straitjacket, Mr Osborne is nevertheless doing quite a lot of wriggling around inside it.

After a series of passionate appeals by the Conservative MP for the home of brewing, Andrew Griffiths of Burton, Mr Osborne found enough scope to cut the price of a pint by 1p and to scrap the duty escalator altogether - a real crowd pleaser in a Tory marginal.

There is also the promise of major infrastructure investment in what Mr Osborne called "the great arteries of Britain". The details of the expected upgrade to relieve congestion on Midlands motorways like the M6 will have to wait until the spending review in June.

'One of the worst-affected'

But his support of Lord Heseltine's call for control of billions of pounds of government and European growth funding to be devolved to local decision-makers, piloted by the Greater Birmingham and Solihull Local Enterprise Partnership, will not cost Mr Osborne a penny.

The money, which will go into a single pot, will come from disentangling an existing spider's web of central government handouts.

But for local Labour leaders, Wednesday's key numbers are not the chancellor's calculations. They are the unemployment figures which went up by 4,000 in the West Midlands during the quarter from November to January.

Image copyright Getty Images
Image caption Mr Osborne said he expected the 1p cut to be passed on in full from Sunday

At 8.7%, the region's unemployment rate remains stubbornly at about the same level it was last year - the third highest regional figure in England.

The Birmingham Hodge Hill constituency is one of the worst-affected. Its Labour MP happens to be the shadow work and pensions secretary Liam Byrne.

He told the BBC on Wednesday that an average family in Britain has had a £1,200 a year pay cut under this government.

He said: "That's why we need real action to kick-start our flat-lining economy with help for people on middle and low earnings not tax cuts for millionaires."

For his part, though, the chancellor is also using this Budget to put pressure on Labour to explain what they would do instead.

Raising the income tax threshold to £10,000 to take more low earners out of tax altogether; cutting Corporation Tax to 20% by April 2015 - these are all designed to convince the government's supporters that they are listening to the appeals both of business and of people at the bottom of the earnings league who are struggling to get on.

Mr Osborne's Budget statement is also intended to smoke out what Labour's response would be if, in May 2015, it became their turn to put on that fiscal straitjacket.