Page last updated at 18:30 GMT, Wednesday, 9 December 2009

Analysis: How Darling sought to set out dividing lines

By James Landale
Deputy Political Editor, BBC News

Alistair Darling arrives at Parliament
Mr Darling sought to impart a steady, sober message

Alistair Darling did not use the phrase "dividing lines" in his pre-Budget report - he chose instead to talk of "competing visions" - but they were there alright.

Labour, he suggested, will tax the richest in society a lot more, including bankers, through their bonuses, National Insurance, tax thresholds and inheritances.

At the same time, it will protect frontline spending in health, schools and police, and generously raise the basic state pension. It will be tough on public sector pay because this is kind of pain many must face if the deficit is to be paid off.

Some departmental spending will be cut, but in ways that won't hurt too much. And the party will protect economic recovery by not cutting spending too early, allowing growth to pay off the deficit over time.

A steady, sober recipe for success by a serious chancellor. That was the message Mr Darling hoped people would take from the pre-Budget report.

Tory test

And almost every sentence had an unwritten footnote: so George Osborne, what would you do? What would you scrap? What would you match?

Well, when I saw the shadow chancellor just a short while ago, he was looking rather chipper. And that is because the Tories believe Mr Darling has fallen between two stools.

He has, in their view, not said enough to persuade the financial markets that the government is serious about cutting the deficit. Yes, Mr Darling has outlined some pain in higher taxes. But he still, in their view, has not set out clearly enough where the spending cuts will come.

Nor do the Tories think the chancellor has done enough to convince voters that the government is serious about restoring growth. They point, in particular, to the National Insurance increase as a tax on jobs that has been condemned by many business organisations.

They also note that raising National Insurance will mean higher taxes for anyone earning more than £20,000. If you add this to the VAT increase and the end to the stamp duty holiday, that means that a lot of people on quite modest incomes will soon be paying a lot more tax.

And if they are public sector workers, they might be facing a real terms pay cut at the same time.

These facts will be used by Tories on many doorsteps across the country from now on.

Political weather

In other words, the Tories do not think the pre-Budget report has succeeded in changing the terms of political trade, putting pressure on them to outline their own plans.

They believe that Mr Darling has not set out enough future spending pain to make it clear to voters, as Labour argue, that it would be worse under the Tories.

Wednesday's statement was a chance for Alistair Darling to change the political weather. In fact, I am not sure what politically it has changed.

The government remains committed to cutting the deficit in half over four years; all we have learned today is a little more detail of how it might do it.

And even that was quite modest - most of the tax rises announced will pay for protecting spending, not paying down the deficit.

The Tories are still committed to cutting spending sooner and quicker but have still not told us when or how.

If elected, they would keep the bonus tax but try to overturn the rise in National Insurance. In other words, the debate about tax and spend which will shape the general election is still half formed.

Both sides have yet to engage seriously with how the public finances are going to be cut to size and what kind of country they want Britain to be at the time.

There is still a Budget to come from Mr Darling and some kind of shadow Budget from Mr Osborne. Only then will we have a real sense of the competing visions of both their parties.

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