At the last election, the Conservative Manifesto pledged that a Tory Government would “set out a credible plan for eliminating the bulk of the structural current budget deficit over a Parliament”.  After it, the Coalition Agreement promised to “significantly accelerate the reduction of the structural deficit over the course of a Parliament”.  The counter-Keynesian logic of reducing the planned growth of borrowing during a recession was that business wouldn’t have the confidence to invest and expand until or unless the structural deficit was dealt with.  It was an argument accepted by all the major parties: the disagreement was (and is) about the pace of deficit reduction.

The best part of four years on, economic recovery is happening, but that reduction, like peace in the Yeats poem, comes “dropping slow”.  In 2009-2010, the last full year of Labour, government borrowed some £163 million.  George Osborne told the Commons during last year’s Autumn Statement that “this year we will borrow £111 billion – £9 billion less than was feared in March. That falls next year to £96 billion.”  With growth at its current rates, the Chancellor will doubtless be able to tell the Commons in next week’s budget that the Government will need to borrow less than he anticipated last autumn.

But the stark fact is that Osborne has come closer to halving the deficit than eliminating the bulk of its structural element.  Or, as he himself conceded: “Yes, the deficit is down. But it is still far too high.”  Cutting back the growth in spending is arduous work.  In the Autumn Statement, he anticipated that the Government will borrow £23 billion in 2017-18.  Not until the following year does he expect the Government to run a surplus.  The structural deficit will have gone by then (and we can all argue about precisely when), but one thing is certain: he has missed the original Conservative goal.

Since the case for reducing the structural deficit is as good as ever, and the Chancellor has said that £25 billion worth of further reductions in the rate of spending will be needed after 2015, and even Ed Balls has conceded that some will be needed, it is hard to understand the present head of steam for income tax cuts.  It is as though the mere fact of recovery has, like wine, gone to some people’s heads.  Today’s Daily Mail, for example, reports a “top Tory” calling for a higher threshold for the 40p rate.  Yesterday, David Skelton produced a plan to abolish that rate entirely.

It is true that, when one looks at the small print, those concerned are very cautious.  The Mail’s top Tory is Nick De Bois, who as a Secretary of the ’22 Committee’s Executive is indeed one.  He writes of raising the 40p threshold: “I don’t suggest that the Chancellor can do this now or even before 2017.”  Skelton stressed that his plan to end the 40p rate (but bring down the income level at which one pays the 45p rate) would be fiscally neutral.  Dominic Raab, another champion of raising the 40p threshold, is one of the few Tories to have produce plans to cut public spending.

But there is a danger in all this of hope triumphing over experience.  Obviously, Osborne will have some room to cut taxes in his budget: after all, he has raised the basic rate threshold, reduced corporation tax, cut NI through the employment allowance, and so on.  The question is where any cuts in personal taxes should be concentrated.  My own view is that the Chancellor should take up Robert Halfon’s plan to raise the threshold for NI, which would help some of those who don’t gain from the rising basic rate threshold.  But since that isn’t in the Coalition Agreement, it probably won’t happen.

None the less, the main point is clear.  Osborne isn’t in a position to cut income tax across the board.  Any reductions that take place should be offset by further cuts in the spending rise.  Tomorrow and the day after, Mark Wallace and Peter Hoskin will also write about how best to produce a budget for the marginals – the seats that David Cameron must win next year to gain a majority.  The temptation is always to bung a mass of pre-election tax cuts at them and hope that this will do the trick.  The Chancellor is better advised to stick to his last.

That would mean delivering the mission that has held this PushmePullYou Coalition together since 2010: deficit reduction.  Most voters don’t follow the twists and turns of life in the Westminster Village, but many of them do have a rough sense that bringing down public borrowing each year is the Government’s raison d’etre.  With so much still to do when it comes to reducing borrowing, the best message that Osborne can send is the one made famous by the lady at whose funeral he shed tears: No U-Turns.