Fings ain't what they used to be. In the old days, there was something called Budget purdah. It came into force around mid-January, and the Treasury went off the air. Anyone who might have known what was in the Budget was supposed to avoid the company of anyone who might be interested in finding out. Naturally, political advisors and Treasury officials took most care to observe the rules. But even Ministers were restrained. At drinks parties, they would say: "I shouldn't be talking to you". Equally, there was absolutely no point in raising Budget matters with those from the inner circle. To do so was to invite classification as an incorrigible naif.

These days, that still applies, but only in Number Ten. Craig Oliver, the Communications Director and Gabby Bertin, the PM's press spokesman, have still not been told what is in the Budget, unless some Liberal has recently whispered in their ears. With the Liberals, however, it is more a matter of shouting. Two factors are in play. The first is irresponsibility. One should constantly remember that until 2010, no modern Liberal had ever been in government, no Liberal ever expected to be in government and no Liberal had made any psychological preparations for government. The idea that government must involve disciplines and secrets would be well beyond their comprehension. They cannot restrain themselves from gassing to their friends: "hundred-year gilts: what do you think of that?"

The second is another form of irresponsibility: a reversion to type. Everyone knows how Liberal canvassers operate. Ring the door-bell, smile sweetly at whoever answers and ask what is worrying them most. If your hear "immigration", assure them that the Liberals want to crack down on it. If – albeit less likely – there are complaints that the government is being beastly to immigrants, agree wholeheartedly. Contradict yourself shamelessly. If necessary, entice six neighbouring households with six different policies, none of which is actually the policy of the Liberal party.

With the Budget, the Liberals have a similar objective, which could hardly be more transparent. They wish to take the credit for any measures which the voters might like and escape the blame for anything unpopuar. The Tory high command understands what is happening and why. So, despite occasional mutterings about "unprofessional", Messrs Cameron and Osborne are restraining their exasperation.

After all, despite the leaking and briefing, the Chancellor has one great advantage. On Wednesday, he will be able to command undivided attention. This goes far beyond the fate of the 50p rate and any compensatory measures which Mr Osborne will take to raise more revenue from the rich. Those are the stuff of headlines, but they involve less than one percent of GDP. George Osborne has four important tasks. The first pair relate to hard-pressed groups; the others, to general statements of principle.

The first hard-pressed group is those affected by the withdrawal of child benefit from higher-rate taxpayers. There is a philosophical argument in favour of an unyielding position. Children should not automatically be regarded as clients of the state. So it would seem reasonable to withdraw child benefit from the better-off. Someone arriving from Mars might assume that higher rate tax-payers were among the better-off.

If you said that to a struggling family at the lower end of the higher rate, they would conclude that you had indeed come from Mars. At present, the 40 percent rate is not just a tax on the rich. The threshold is far too low, which turns it into a tax on the squeezed middle. Practicality must prevail over philosophy. Something ought to be done to mitigate the effects of the child-benefit cut. One obvious move would be to raise the 40p threshold, perhaps by £5,000. I would be surprised if there were not some step in that direction.

The second needy group consists of small and medium enterprises (SMEs). It is impossible to overstate their importance. SME formation is a crucial guide to economic health. Yet at present, many of these indispensable characters are having trouble with their bankers. We should not rush to assume that this is always the bankers' fault. For a start, the banks have been receiving contradictory signals. They have been told that their imprudent lending got us into this mess. They have also been instructed to improve their capital ratios – all of this, while lending more to SMEs. Only Vince Cable would even try to make that morass of confusion sound like a coherent policy. He has, inevitably, failed.

The banks are also entitled to point out that not all SMEs are good risks, especially in these troubled times. There are still some sub-prime SMEs, struggling away. But I have met far too many serious businessmen, on the 'M' or even upper-M wing of SME, whose banks have suddenly started harassing them. Financing arrangements stretching back years, never a limit breached or a covenant broken – and even so, problems, with minimum notice. There is more truth than there ought to be in the adage that a banker is a man who rushes to lend you an umbrella on a sunny day, and grabs it back when there is a drop of rain.

One way to tackle this is old-fashioned banking. Mr Bulstrode the banker is walking to his office in Middlemarch High Street. He notices that Mr Garth the greengrocer is already open: good fellow, Garth. Though times have been hard for him, he has always been straight with the bank. If hard work can get a man through, he will survive. If he needs more help, he shall have it. Then there is Vincy the vintner. No sign of him yet, which is hardly surprising: far too keen on his own product. He is most unreliable. If he ever learned book-keeping, it was in Naples. Better to fore-close on him right away, before he drinks the entire stock.

The UK economy would work much better if banking were still conducted in that manner. Assuming that it is a romantic impossibility, there is an alternative. Why not use some of the money set aside for quantitative easing to increase lending to the SMEs? A middle-sized business would like to borrow £5 million. It goes to its bank, which is responsible for due diligence. The bank decides that this is a good proposition. It puts up £1 million, the government the rest, charging, say six over base rate. As the bank is risking its own money and reputation, it has every incentive to get it right. Thus QE funds escape from the banks' vaults and stimulate the real economy, as was intended. The Government's money is safe, and it might earn a much-needed profit.

This idea has been in play for some time. Oliver Letwin was always an enthusiast. Its time may now have come.

Mr Osborne will have another message for the banks; here we come to the first general statement of principle. He will want to persuade the markets that Britain is steady on course towards deficit reduction and that any fiscal concessions which he does make can be afforded without compromising that over-riding objective. There will be no hint of a plan B. But he will not want to make all that sound defensive. He will aim to project gravity, but also confidence. That should not be a difficulty. George Osborne has still not been given sufficient credit for his intellectual command. This is a Chancellor who does not do self-doubt, as we will be reminded on Wednesday.

That brings us to the final statement of principle. Although the fiscal measures will receive all the attention, I suspect that the most interesting parts of the Budget speech will be the less specific ones. After nearly two years as Chancellor, with his eye in, Mr Osborne may be ready to tell us more about his economic philosophy. It is not easy to win a respectful audience for that in the midst of a crisis. But I think that he will succeed.

Comments are closed.