Mr Osborne is right to stick to his guns



00:04 GMT, 6 December 2012

To give George Osborne his due, he has never for one moment lost sight of the vital task entrusted to him: giving our children and grandchildren some hope of a decent life by bringing the biggest deficit in history under control.

Indeed, it is a tribute to his courage that he has pressed forward doggedly towards that goal through some of the toughest economic conditions faced by any peacetime Chancellor.

Abroad, the eurozone crisis and the dramatic decline in China’s growth are weakening our export markets.

Focused: Mr Osborne is determined to restore order to the public finances

Focused: Mr Osborne is determined to restore order to the public finances

At home, the fiscal mess left by Labour is even more serious than first thought, while new black holes keep appearing in the banks’ balance sheets.

Yet through all this, and constrained by often obstructive LibDems, Mr Osborne has stuck to his determination to restore order to the public finances.

And, painfully slowly, his strategy is starting to yield results.

True, there was little to uplift – and much to depress – in yesterday’s Autumn Statement, which revised growth forecasts downwards, yet again.

There were no dramatic innovations (perhaps just as well, since so much of the gimmicky spring Budget, with its pasty tax and the rest, unravelled in days).

But amid the gloom, it is encouraging that hugely important indicators are moving in the right direction.

Growth and employment are on an upward path, with two new private jobs expected for every one axed in the public sector. And, crucially, the deficit is set to shrink every year until 2018.

Praise: The Chancellor has approved performance-related pay for teachers

Praise: The Chancellor has approved performance-related pay for teachers

Indeed, it shows how effectively Mr Osborne is rebalancing the economy that within six years, the proportion of national income spent by the state is predicted to fall from 48 to 39 per cent.

As for specific measures, the Mail particularly welcomes the decision to peg welfare rises at 1 per cent for three years.

After last year’s monstrous increases of more than 5 per cent, this will end the perverse unfairness of benefits for the unemployed rising faster than wages (though it is regrettable that those drawing in-work benefits will suffer too).

The Chancellor also deserves praise for approving performance-related pay for teachers – a move seen as a trail-blazer for other departments.

Indeed, this paper hopes it will mark the beginning of the end of national pay bargaining in the public sector, which has so distorted and depressed the regional jobs market.

There is also good news for the low paid, with a 235 increase in the personal income tax allowance, while every motorist will be relieved that the 3p-per-litre rise in fuel duty has been cancelled.

As for businesses, they can celebrate a cut in corporation tax to a competitive 21 per cent, while the imaginative tenfold increase in tax relief on new plant and machinery offers small firms a powerful incentive to expand.

Much less welcome, however, is the plan to cut tax relief on pension pots and contributions.

For although this will hit only a small minority with the best provision for their old age (and many of those are in the public sector), it sets a dangerous precedent for future raids.

Like the real-terms cut in the threshold for higher-rate tax, which will draw up to 400,000 more people into the 40 per cent band, doesn’t it flout the Tories’ solemn promise never to penalise the aspirational who ‘do the right thing’

All in all, however, Mr Osborne has played a difficult hand with some considerable skill.

And after Ed Balls’s truly atrocious performance yesterday, the Chancellor has proved himself an infinitely safer guardian of our nation’s future than the alternative.