Last Wednesday saw George Osborne deliver what was potentially his final Autumn Statement as Chancellor. The top line Conservatives will be looking to focus on is predicted economic growth of 3 percent this year, up from the 2.7 percent predicted in the Budget. However, as critics will be quick to point out, the Chancellor will be borrowing some £12.5 billion more than forecast nine months ago, and the deficit is expected to expand by £91.3 billion this year and £75.9 billion next.
Importantly, job creation was also found to be on the up, with 400,000 more jobs created this year than predicted in March. Of these some 85 percent are full time, deflecting Labour claims that the recovery was creating a ‘zero zero’ economy. It was also revealed that swinging cuts will need to take place during the next Parliament, ensuring that whoever holds the keys to Number 10 next May, difficult decisions will need to be made.
In the run up to the Statement the Chancellor introduced a series of policies, including an increase of around £2 billion for NHS funding and £2.3 billion for flood defences. However, a number of key announcements were held back. Perhaps most important were an overhaul of stamp duty, equalling a tax cut worth some £800 million, the creation of a Sovereign Wealth fund for the north, the doubling of small business rate relief for another year and an extension of a government-backed R&D tax credit to small and medium-sized enterprises worth £400 million.
In recent months the Labour Party has crystallised its policy around two key issues. First, the notion that the NHS is unsafe in Tory hands. Second, that only a Labour government will rebalance the economy, taking wealth from the very richest individuals and companies, and redistributing it throughout society. The Chancellor, demonstrating why he has become both feared and respected in Whitehall, gamely shot both of these foxes from the Despatch Box. By promising extra funds for the NHS he has extinguished perhaps Ed Miliband’s clearest line of attack. Similarly, by promising to help those struggling to get on the housing ladder, entrepreneurs getting off the ground and the regions beyond the south east, Osborne has made inroads into Labour positioning. On first glance these policies certainly carry the air of Hampstead, rather than Notting Hill.
The political landscape in Britain is clearly changing. To date the Conservative response to the rise of UKIP has been to match it on immigration and to talk tough on Europe. This approach has been of limited success. The Tories have lost two MPs, including Douglas Carswell, an influential backbencher with uncommon intellectual gravitas, and have seen its poll position improve little. It now seems that the Tories are targeting ‘soft’ Labour voters, those who have drifted towards the party, but remain unconvinced by Ed Miliband’s leadership, with small measures designed to take the sting out of current, and indeed future, austerity.
Certainly Labour’s support appears, in an age of post-tribal politics, increasingly fluid fluid. North of the border the SNP has hacked into Labour heartlands across the central belt, while the Greens are providing a challenge to their more metropolitan fringes. In the past this challenge may have pushed Labour towards a more liberal fiscal approach, however, this is likely to alienate the kind of voters Tony Blair drew to the New Labour project. In short, Ed Miliband, is becoming confined. A move to the left may alienate those craving economic stability, tracking right will see him lose support from traditional supporters. Although Labour hold a narrow lead in the poll they are yet to provide a broad, all-encompassing vision for the country and have seemingly relied too heavily on the much-discussed ‘35 percent strategy’.
To exploit this, the Conservatives appears to be following the approach pioneered by New Zealand’s National Party during the 2014 General Election. After a first term beset by economic difficulties and government cut backs, Prime Minister John Kay was re-elected following an ‘issues management’ based strategy. Although economic competence was central to this, the National Party also ran tightly-focused campaigns on those issues where his opponents were strongest. By targeting the NHS, house prices and the issue of centralisation, the Tories appear to be doing something similar. Notably, while John Kay was advised by Mark Textor, David Cameron’s strategy is being orchestrated by his partner Lynton Crosby. If Labour are to successfully combat this they are may be required to find new ground to fight on and develop an engaging narrative.
Planned reductions in current expenditures (outside the protected areas of the NHS, schools and overseas aid) can be found in the Office of Budget Responsibility’s ‘Economic and Fiscal Outlook.’ This document reveals projected per capita spending cuts – in real terms- of 43% by 2019-2020, an aggregate fall of £147 to £86 billion. Non–protected departments include Justice, Defence, and transport, fundamental services that affect every British citizen. Drawing attention to the real implications of Conservative spending plans will undoubtedly be a key Labour strategy, though whether the public will listen to a party with such low ratings on fiscal competence remains to be seen. It is notable that Société Générale have suggested that the UK “cannot compete,” as reflected in poor export growth since 2010.
It is important that any predictions on next May’s General Election are tinged with caution, however, the Conservatives seem to be moving into the ascendancy. The Autumn Statement introduced policies to not only bolster their position, but also weaken their opponents. Although the idea of ‘playing politics’ with matters of such importance is popularly frowned upon the Chancellor has developed it to something of an art form. Fighting on two fronts, Labour may find it difficult to craft a similarly effective response. The Chancellor’s focus on ‘hair nets and hard hats’ rather than hard times is compelling and with many voters seemingly willing to ignore the bulging deficit could well see him maintain his Chancellorship next May.
What Now for the Lib Dems?
Serving as the junior partner in a coalition government is nothing if not thankless. Maligned by the many of their former supporters, suffering from humiliating losses during both the European elections and more recent by-elections and facing electoral wipe out, the Liberal Democrats risk wipe out.
In the face of such difficulties the Lib Dems appear to be undertaking a strategy of differentiation. One noticeable absence from the Chamber yesterday was Deputy Prime Minister Nick Clegg, who opted to remain in Cornwall. The Deputy Prime Minister has also missed two successive sessions of Prime Minister’s Question Time, suggesting that he has begun to distance himself, at least publicly, from his Coalition colleagues.
The Lib Dems have also been keen to stress their role in the ‘softer’ aspects of the Autumn Statement. A statement on the party’s website drew attention to the rise in the Personal Tax Allowance, stamp duty reform and improving opportunities for apprentices as Lib Dem policies, before suggesting that: “it is because there are Liberal Democrats in Government that we have an economic recovery.”
However, such positioning has revealed a lack of clarity within the Lib Dem ranks. For example, Danny Alexander continues to operate closely with Cameron and Osborne, and is widely seen as a key part of their operation. Perhaps more tellingly, backbencher Tessa Munt recently delivered 42,000 leaflets to seats in her Wells constituency that featured a large picture of her and the Prime Minister. By comparison, Nick Clegg was given just a thumbnail.
It seems that while Cameron is a – relatively – popular figure, the Deputy Prime Minister is not, even within his sections of own party. If the Liberal Democrats are to hold on as the third force in British politics his bargaining position in a future coalition will undoubtedly be weakened by this, suggesting that he needs to unify his party and establish just what they really stand for.
Latest posts by Jack Taylor (see all)
- Conservatives face welfare challenge - July 1, 2015
- Retreating from the middle: what can we learn from the Select Committee elections? - June 22, 2015
- Understanding the Tories’ approach to energy - June 9, 2015