Chancellor had hoped to woo Tories by declaring success of economic plan allowed him to abandon child benefit withdrawal
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George Osborne had hoped that he would never have to withdraw child benefit from higher rate taxpayers. Photograph: Christopher Furlong/Getty Images
George Osborne takes great pride in his reputation as the Tories' greatest strategist.
The chancellor preens himself when loyal members of the Court of George remind him of his masterstroke in the autumn of 2007 when he pledged to raise the inheritance tax threshold to £1m. This spooked Gordon Brown who then abandoned plans to hold an early general election.
Osborne regarded his announcement at the 2010 Conservative conference to withdraw child benefit from higher rate taxpayers as another masterstroke. It would be a vivid demonstration of his "we're all in it together" approach to tackling Britain's record fiscal deficit.
But there was a second, less publicised, element to his plan. One senior Tory sidled up to me after Osborne's announcement and said that the chancellor hoped that he would never have to introduce the change, due to come into effect in January 2013.
A second masterstroke was meant to come towards the end of this year when Osborne would say that his economic strategy was working so well – and the private sector was picking up so strongly – that he was able to take the foot off the accelerator. There could be no uncosted tax cuts. But he could halt one planned piece of unpleasantness: child benefit would, after all, remain a universal benefit.
This became impossible over the last 18 months when the slow economic recovery prompted the Office for Budget Responsibility to embark on a series of downgrades of its growth forecasts. The final nail was hammered into the coffin last November when Osborne was forced to concede in his autumn statement that he would not meet his informal target of eliminating the structural deficit over the course of this parliament.
The disruption to the Osborne plan has led to rare tensions between Nos 10 and 11 Downing Street. David Cameron is deeply nervous that a family with one earner, whose income falls just over the 40% tax bracket of £42,745, will lose out. A family, whose joint income is just over £80,000, will still receive child benefit if neither parent earns more than £42,745.
Osborne is making clear that in the current economic climate it would be "difficult" to introduce major changes. He is also saying that withdrawing child benefit from higher rate taxpayers is actually a popular policy.
There is much talk in Whitehall that the budget on 21 March is the last moment for the chancellor to flesh out a growth plan that can kick in before the 2015 election. It may also mark the first moment when it becomes clear that planned sweeties before that election are unlikely to materialise.