Norma Desmond’s retort in Sunset Boulevard (“You used to be in silent pictures. You used to be big”. Norma Desmond: “I am big. It's the pictures that got small”) might also apply to recent budgets, perhaps particularly that delivered yesterday by George Osborne. For while some of the measures (particularly on pensions and the increase in the individual allowance) are commendable, what was missing was a clear sense of direction, an overall strategy for economic reform. Where for example was the bold clarity of the great Howe and Lawson reforming budgets of the 1980s? Where was the big picture?
This lack of a coherent and cogent strategy may explain why the 2014 Budget contained a number of internal contradictions. Yes, the Chancellor announced several pro-growth supply side reforms, eased the burden on lower and middle income households and (largely) kept to the programme of deficit reduction. Yes, radical savings and pension reform, more income tax cuts and a boost to exports are all welcome. But this Budget also increased tax complexity, increased pork barrel spending and gave higher estimates for cyclically adjusted net borrowing.
What is needed now is a dynamic programme of supply side reform, clearly focused on increasing productivity (the only sustainable route to greater prosperity for all). Proposals on how to achieve this will be set out in a paper to be published shortly by the Centre for Policy Studies.