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By Tim Montgomerie
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GROWTH

A week ago I feared the Budget was going to be a cautious affair but it doesn't look that way today. It looks like it might be the kind of supply-side Budget that Britain needs if it is to compete in the world. Allister Heath of City AM and Janan Ganesh of The Economist are also hopeful.

  • It seems almost certain that the 50p rate will go. The doubts concern the speed of the move and whether the will be cut to 45p or 40p. My advice: "If it were done when 'tis done, then 'twere well It were done quickly". The Office of Budget Responsibility was given alternative scenarios to compute on Friday. Final decisions will be taken today but on Andrew Marr's programme yesterday George Osborne insisted that the net effect of the Budget will be to benefit lower and middle income earners. A big clampdown on tax dodging by the super rich is expected. A mansion tax or higher council tax bands are very unlikely.
  • Then there's the end of national pay bargaining in parts of the public sector. If the end of 50p has a blue flag on it there is also an orange flag on this reform. Stephen Tall at LibDemVoice writes a very good defence of this policy – a policy proposed recently by Andrew Lilico and also by the Centre Forum think tank.
  • Thirdly there's a relaxation of Sunday trading laws for the Olympics. Many hope and many fear that this relaxation will become permanent.
  • Other likely measures include a big step towards taking everyone earning less than £10,000 out of income tax and also faster cuts in corporation tax.
RoadPapers

The new news today is that David Cameron will announce a big shake-up in how roads are maintained and financed. The Prime Minister will honour his promise not to introduce tolls on existing roads but (a) new roads might be built with private money and for profit and (b) there could also be express lanes on widened motorways which would be pay-as-you-go.


He will also suggest that existing roads could be run by private sector companies and if they meet performance and improvement targets they will receive a share of Vehicle Excise Duty as a reward. The model is apparently the 1989 privatisation of the water industry through which private companies have steadily renewed Victorian-era sewerage systems, financed by water rates.

The details will be put out to consultation but at least three things are clear:

  • Cameron is reviving the idea of co-payments that he floated when standing for the Tory leadership in 2005.
  • The war on roads and the car is well and truly over. Labour's ambition to reduce the number of milies travelled by motorists has been well and truly parked. Yesterday Justine Greening signalled that she would go ahead with Philip Hammond's plan to increase the motorway speed limit to 80mph.
  • The politics of this are very tricky. Look at the headlines above. The Sun is already on its high horse this morning, worrying that this will not be a policy that will make journeys quicker but one that will increase motorists' costs. "It's a policy that will drive car owners to tears," it complains. Both the AA and RAC both tell The Times (£) that they welcome new capacity but that "drivers have paid for the network many times over and continue to do so to the tune of £45 billion each year”.

If the Government is to make road-pricing, abolition of 50p and decentralised pay bargaining fly electorally it needs voters to look beyond their immediate interest and see these measures as part of a larger project of national economic renewal. It needs to start to frame the next election as a choice between politicians who'll pursue the uphill road to prosperity and Labour politicians who prefer a gently declining path to stagnant wages and unemployment.

Cameron makes a good start today in framing the roads reform in terms of Britain falling behind our global competitors. In advance extracts from the speech he will deliver later this morning he will say:

"The truth is, we are falling behind.  Falling behind our competitors. And falling behind the great, world-beating, pioneering tradition set by those who came before us. There is now an urgent need to repair the decades-long degradation of our national infrastructure……and to build for the future with as much confidence and ambition as the Victorians once did. Infrastructure matters because it is the magic ingredient in so much of modern life. It is not secondary to other, more high profile elements of economic strategy. It affects the competitiveness of every business in the country; it is the invisible thread that ties our prosperity together. It gets power to our lights, water to our taps, workers to their jobs, and food to our shops. It enables factories, offices, warehouses, workshops to function, to trade, to grow."

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