Round two of the 2016 budget has Osborne promising to jettison his changes to disability benefits and having his record torn apart by Angela Eagle.

But to dismiss his budget as a huge failure would be to underestimate what has happened. In fact the budget book shows he already has enough changes built into his forward programme to make sure that the welfare state will be atomised by 2020. Services cut and run by Whitehall.

The challenge to us is to produce a programme to rebuild the state, redesign services and finances, and win the electoral support we need from the centre-ground to get back into government. Local income tax, city regions, a new generation of new towns, a national health and care service, to name but a few.

In the short term the Tory’s answer to the £4.2bn hole in the budget is to wait until the autumn statement, by which time we will also know what has happened to the growth figures. Meanwhile, the planned cuts already in hand over the lifetime of this parliament include:

• £9.3bn reductions in tax credits and local housing allowances
• £14.5bn in work and child allowances in the universal credit
• £10.3bn through a one per cent annual cut in social rents, reducing housing benefit costs and devastating the financial base of social housing.

There is the half trillion pounds worth of savings in pensioner benefits trumpeted by Osborne in his recall budget speech to counter the charges of intergenerational injustice. These savings include cuts to some of the wallet to purse benefits that Labour made in government to tackle the particular problem of poverty among women pensioners.

Total education spending is down, according to Institute for Fiscal Studies figures, both in real terms and as a share of national wealth.

Meanwhile there are the tax cuts:

• £5.9bn reduction in small business rates
• 7bn in capital gains tax reductions which exclude residential property
• £7.5bn in raising the personal tax allowance to £11,500
• £2.1bn raising the higher rate threshold to £45,000

But as serious as the finances are, the changes in the budget to the way services are run are greater. Schools are out of local authority and parental control with academisation and scrapping of parent governors. Social housing is facing fresh rounds of sell-offs, and unsustainable rent reductions. Council spending by central government is earmarked for one of the biggest cuts, down from £10.8bn to £6.2bn, with no capital spending identified. And lots of feelgood handouts to good causes by central government – the kind of thing that local government would normally undertake.

Roll forward to 2020 and we need to have won the argument that the deficit will not be eliminated by tax cuts, and society will not be improved by spending cuts. We also need to have made the case for collectivism and redesign local accountability. We need to win. Otherwise, whatever the short term humiliations Osborne has suffered over the last week, he will have succeeded where even Margaret Thatcher failed in the long term Tory aim to shrink the state.

———————————

Sally Keeble is a former minister and former member of the Treasury select committee. She tweets @Sally_Keeble