As with student fees, the Lib Dems prevailed on the detail of the budget but were trounced in the bigger political struggle
There were highfalutin hopes in Liberal Democrat towers after the budget announcement that the Grand Old Man would have approved. Gladstone was indeed a tax-cutter, who wanted money to "fructify" in private pockets. JS Mill too, party romantics said, had always wanted to tax earnings less. But that was then, and this is now. The pertinent questions were asked by Miliband not Mill. Namely, why was the party of the 1909 People's Budget happy to see top earners indulged in the hard times of 2012?
"Follow the money" is the Lib Dem reply. More is going on higher allowances for the many than trimmed top rates for the few – far more if you swallow official claims that 50p never raised much. The party's high command these days is instinctively sceptical of too much government. It has made a totem of allowances, so workers can keep more of whatever wage they command in the market. Benefits hardly figure in the thinking. After securing £18bn in welfare cuts, George Osborne did not have to haggle with his partners before signalling he would now come back for more.
The wrangling was all around allowances, which make for good rhetoric about "lifting the poor out of tax", but bad policy for the workless and parents struggling to raise children on inadequate pay. They do not need freely sprinkled income tax cuts, but targeted support. The superstition that people do not want handouts but only to keep what they've earned has, after all, been tested to destruction with the plan to withdraw child benefit from the better-off, which the chancellor was forced to soften with a complex new affluence test. The stealthy snatching of pensioner perks in the name of "simplification" has soured this budget just as surely as 10p tax soured the last of Gordon Brown's, and has also exposed the hollowness of pinning a political strategy on just one tax parameter.
It is true that Lib Dems did negotiate to make things fairer round the edges. They battled to limit the extra allowance for higher-rate payers, just as they recently fought to preserve benefits from inflation. But, as with the tripling of student fees – where they won concessions on loan design – they have prevailed on the detail but got trounced in the bigger political struggle. Weeks before tax credits are snatched from part-timers, how can it be right for comfortable professionals to get any tax cut at all? And why on earth should someone pulling in millions a year be handed multiples of average pay by the single move on 50p?
Neither new levies on a few thousand pricey properties nor anti-avoidance measures, which should surely be unavoidable for any chancellor, are a real answer. Smart Lib Dems always knew it would be tricky to salvage progressive credentials after governing with the Tories. The new budget will make it that bit tougher.