Budget 2015: There could not be a better time for the Chancellor to find a spare £5bn down the back of his sofa

The first time I heard the words “David Cameron” was during the 1992 general election campaign. Steve Hilton, seconded from Conservative Central Office to Saatchi & Saatchi, told me to look out for this guy called David Cameron because he was going to be prime minister one day. I mention this now because of the similarities between then and now.

One of the big things that happened before the 1992 election was Norman Lamont’s Budget, in which he trumped Labour’s “shadow Budget” with a clever tax cut for the low-paid. That was one of the formative events of a formative election for Cameron, who went on to be Lamont’s special adviser. Hence the importance of a report in the Financial Times last week by Chris Giles, its economics editor, which suggested that George Osborne has £5bn a year to play with in his Budget in 17 days’ time.

Higher than expected tax receipts, lower oil prices and lower inflation mean that the Chancellor has more scope to cut the deficit, cut taxes or increase spending than he planned just three months ago in the Autumn Statement. Cut the deficit, I hear you cry. Doesn’t he know there is an election on? He is not going to do that in the short term, but I can tell you what he will do on the basis of no inside information whatsoever. He will adjust the spending plans for the next five years to make sure that the Office for Budget Responsibility has to take back its words about public spending in 2019-20 “at its lowest level… since the late 1930s as a share of GDP”. Osborne thinks that “at its lowest level since the last Labour government” has a much better ring to it, and it requires only the smallest tweak.

In the here and now, however, he has £5bn a year to spend. Given that Ed Miliband has just blown £2.7bn from taxing the pension contributions of the better-off to cut the student debt of tomorrow’s bankers, Osborne does not have to be a genius to pull off Lamont’s trick again, 23 years later.

There are many things wrong with Miliband’s tuition-fee cut. Those who benefit will be students who go into well-paid jobs, because the lower-paid won’t ever pay off their debt anyway. The universities are unhappy because it means they have to rely on the generosity of passing governments to make up the lost revenue. But worst of all is that Miliband, knowing that it was a bad policy because Ed Balls told him so, went ahead and did it anyway because he thinks voters are stupid.

Even on that cynical calculus, though, it is a bad policy because Osborne, finally getting lucky with the world economy, can outflank it so easily. The Chancellor could offer more financial assistance to students from middle-income and poorer families. He could do that and still have billions left for a tax cut or a spending pledge to benefit people on low to middle incomes who are not students. I do not know what form this “lamont” will take, exactly, but it is coming.

Two big things have happened in the past six months. One is what senior Conservatives call the “revolution” in Scotland since the referendum. I am told that one of Cameron’s advisers explained to him how bad it was for Labour: “It’s a bit like the Chief Whip coming to your office and saying, ‘Bad news: we’ve lost Surrey, Hampshire and Sussex’.”

Thoughtful Tories worry that Nicola Sturgeon’s party wiping out Labour in Scotland is not good for the prospect of keeping the Union together, and note that swapping Labour seats for SNP ones doesn’t bring Cameron any closer to a majority in a hung parliament, since Sturgeon would never prop up a Tory government. But that is not going to stop them enjoying Labour’s humiliation.

The other big thing that has happened, or rather not happened, is that a swing back to the Government has failed to materialise in English opinion polls. Computer models predicting the election assumed that there would be such a swing back, because there has tended to be one in the past, although there has been much variability. That is why forecasts for the number of Tory seats have been drifting down.

Thus, both Miliband and Cameron feel as if they are losing ground as the election approaches. What shifted public opinion in the last few weeks in 2010 were the television debates, but I still think they are not going to happen this time. Last week, the broadcasters announced a timetable and bravely said they would go ahead regardless of who turned up, but we shall see. It would be monstrous to allow Plaid Cymru to take part but not the parties in Northern Ireland.

With no debates to move the political market, the Budget becomes the last chance to make a difference. There could not be a better time for Osborne to find a spare £5bn down the back of the Treasury’s sofa.

Twitter.com/@JohnRentoul