Episode Overview

Podcast: LSE: Public Lectures and Events
Title: Kate Alexander Shaw on Budget 2015
Date: July 10, 2015
Host: Martin Rogers, LSE Film and Audio Team
Guest: Kate Alexander Shaw (PhD student in Government, former treasury official)

This episode offers expert analysis of the UK’s 2015 Conservative budget—its themes, main measures, political context, and future implications. Kate Alexander Shaw breaks down what distinguishes this budget as the first by a Conservative majority government since 1996, highlighting the shift from coalition constraints, significant welfare reforms, the move towards a “higher wage, lower welfare, lower tax” society, and the political calculations underlying major policy choices.

Key Discussion Points and Insights

1. Budget Context and Themes

(00:11–01:32)

• First Conservative majority budget since the mid-1990s.
• Some elements were heavily pre-briefed; others were surprises.
• Noted for a smoother, more measured public spending trajectory, contrary to past expectations of sharp, fluctuating cuts.
• The budget signals a new vision: a "higher wage, lower tax, lower welfare society," reflecting uncompromised Conservative policy after the coalition era.

Quote:
“It’s the first time the Conservative Party had been able to put forward a vision that’s not been negotiated with the Liberal Democrats. … a so called higher wage, lower tax, lower welfare society.”
—Kate Alexander Shaw [00:57]

2. Fiscal and Distributional Impacts

(01:32–02:30)

• The fiscal stance is broadly neutral: tax increases and welfare cuts balance giveaways.
• Distributional effects are harder to assess immediately: full impact, especially from welfare reforms, will emerge only after 2017–18.

Quote:
“The distributional impact of this budget is what’s going to be really important. … a lot of the big impact is going to come from welfare measures that kick in after that point.”
—Kate Alexander Shaw [01:58]

3. Major Welfare Measures

(02:30–04:52)

• Welfare cuts were pre-signaled, aiming for £12bn in savings, now on a three-year, not two-year, track.
• Benefits Cap: Lowered from £26,000 to £23,000 in London and £20,000 elsewhere, breaking previous links to average in-work household income.
• Tax Credits: Lower earnings threshold for credits (almost halved) and limitation to two children per household for new births after April 2017.
• These measures are designed to “incentivize” work and restrict benefit generosity—clear, assertive Conservative strategy.

Quotes:
“A lot of the bad news, if you like, was got out of the way at the weekend. So we knew some of the things that were coming on welfare cuts.”
—Kate Alexander Shaw [02:37]

“There’s also going to be further restrictions in the future on the number of children that count … limited to two children per household … again, this is pursuing a much more overtly conservative agenda.”
—Kate Alexander Shaw [04:12]

4. Media Management and Osborne’s Positioning

(04:52–06:30)

• Marked improvement in media handling versus 2012’s "OmniShambles".
• Osborne is unusually empowered as a sitting Chancellor in a new government.
• Key welfare cuts were pre-briefed, bad news softened in advance, surprises (like the living wage) saved for maximum impact.

Quotes:
“He’s been able to use that position, I think, to exercise something of a master class in media management around this budget, and certainly a master class in expectation management.”
—Kate Alexander Shaw [05:17]

“Big headline surprises like the move towards a national living wage, which appears much more progressive in some ways than anything people expected from Osborne in this budget.”
—Kate Alexander Shaw [06:05]

5. National Living Wage and Government Levers on Wages

(06:30–07:51)

• Minimum wage rebranded as “living wage,” with a significant increase.
• In public sector, pay increases capped at 1%.
• The private sector is less directly controllable by government.
• Political aim: higher minimum wage creates room for welfare cuts.

Quote:
“The move to a so called living wage instead of a minimum wage is, I think, largely presentational … what you’re effectively seeing is a step change in the rate at which the minimum wage has been set.”
—Kate Alexander Shaw [07:08]

6. Political Strategy: Inheritance Tax and Conservative Mandate

(07:51–09:32)

• Inheritance tax threshold increased to £1 million for main family homes—longstanding Conservative pledge, now delivered.
• The budget is described as “making the most of its mandate,” with a full-blooded social policy shift challenging opposition parties to respond where the public mood lies.
• Welfare changes frame Labour with a dilemma: to support or oppose in a landscape where the Conservative narrative has gained traction.

Quote:
“This is a party and a government making the most of its mandate at the moment. … The fact that austerity has been flattened out somewhat is significant, but nonetheless, the sort of social policy agenda in particular here is unmistakably Conservative and effectively throws down a challenge to the opposition parties.”
—Kate Alexander Shaw [08:40]

7. Labour’s Response and Opposition Landscape

(09:32–10:34)

• Labour is in flux during its leadership contest, making a coherent response difficult.
• New leadership will only be the start of developing a counter-position.
• Osborne takes advantage of weak opposition to launch bold Conservative policies.

Quote:
“Choosing between the leadership candidates will, of course, give an indication of where the party wants to situate itself … but that doesn’t get the job done. … That’s partly why you saw an emboldened George Osborne this week. He knows that he’s got relatively limited effective opposition at the moment and a mandate to launch a Conservative policy suite, and he’s done that.”
—Kate Alexander Shaw [09:51]

Notable Quotes at a Glance

• On the new Conservative vision:
  “… a so called higher wage, lower tax, lower welfare society.” [00:57]
• On the benefits cap policy change:
  “…breaking the link with the initial rationale for that policy … moving much more towards a kind of broader aim to bring down the generosity of the welfare system” [03:30]
• On the new living wage:
  “…largely presentational … what you’re effectively seeing is a step change in the rate at which the minimum wage has been set. … creates quite a lot of political space for the lower welfare part of the equation.” [07:08]
• On Labour’s predicament:
  “…an emboldened George Osborne … knows that he’s got relatively limited effective opposition at the moment and a mandate to launch a Conservative policy suite, and he’s done that.” [09:51]

Timestamps for Important Segments

• Budget Context & Vision – 00:11–01:32
• Fiscal/Distributional Impacts – 01:32–02:30
• Welfare Measures Overview – 02:30–04:52
• Media & Political Strategy – 04:52–06:30
• National Living Wage & Wage Instruments – 06:30–07:51
• Conservative Mandate & Inheritance Tax – 07:51–09:32
• Labour Leadership and Opposition – 09:32–10:34

Episode Tone

The discussion is rigorous, clear, and candid, balancing technical fiscal analysis with insights into political strategy and media management. Kate Alexander Shaw draws on Treasury experience and academic perspective, combining detailed understanding with straightforward language.

This summary should equip anyone interested in British politics and fiscal policy with all key messages from the episode, even if they haven’t listened themselves.