Osborne’s Long March

 

From Number 11 to Number 10 will still be a big journey. From here to the country the Chancellor wants to see will be further still.

Autumn statements are quite often negative with growth forecasts often being “revised down”. Coupled with the spending review and the normal quest for revenue by squeezing taxpayers this autumn statement could have been incredibly downbeat; it wasn’t. The Chancellor had found new money to spend.

Much has been made of the Shadow Chancellor throwing a copy of Mao Tse Tung’s Red Book over the despatch box to the Chancellor. As symbolism goes it’s not so much a statement of intent as much as a David Kronenberg film.

All those who wanted a shift to the left in the Labour party seem to have got it. They might even have got it with the Chancellor.

Stephanie Flanders (ex-BBC economics editor and now at JP Morgan Asset Management) said the day after the budget that the Chancellor is pretending to exercise a great deal of wiggle room now when in the last Parliament he pretended to be in a straight jacket. Of course, in an accounting sense she is right. The closer we get to the target date for achieving a balanced budget then the tougher the choices George Osborne has to make.

The politics is different, however. The Spending Review saw the Chancellor change his argument on public service reform. He had previously maintained tighter spending could still deliver better services, citing the police as the key example. Last Wednesday he abandoned that hard-won position. He argued better policing requires a protected budget. He introduced new taxes to fund higher spending on the police and social care. He brought forward NHS spending increases in another emergency intervention too.

With this, Osborne is also throwing a reputation for fiscal prudence out of the window. His mantra was to fix the roof while the sun is shining. Now he’s heading into winter using OBR forecasts as a way to fight political battles.

Compared to Summer Budget 2015, the Office for Budget Responsibility now forecasts higher tax receipts and lower debt interest, with a £27 billion improvement in the public finances.

With the OBR predicting a further consolidation in the labour market with one million new jobs over the next five years the Chancellor was able to invest in education and skills and several key areas for businesses.

Yet most people are nervy about the OBR forecasts. That spells trouble.

Osborne used this set-piece event to burnish his credentials as an champion of working people on lower incomes. Osborne is, very effectively, trying to eat Labour’s cake by saying that the Conservatives, not Labour, are on the side of the working poor, the North of England, those who want to buy a home. Essentially this is Thatcherism for the modern post-industrialised era. Thatcher’s parents were greengrocers, Osborne may be a baronet but he’s also the son of wallpaper manufacturers. Impressively he does seem to understand and empathise with many of the people he is trying to pitch to. By spending money to reverse tax credit cuts and at the same time keeping up the rhetoric on fiscal discipline Osborne is bring the two strands of Conservatism back together. One Nation Disraeli-ism with Thatcherite economics.

Yet, should Osborne who had fought so hard to win a reputation for fiscal prudence and an iron discipline give it up so easily? Many of the same ‘strivers’ to whom the Chancellor is selling his wares feel an acute connection between their identity and their prudence.

The biggest problem for the Conservatives, highlighted in the detail behind the top line opinion polls, remains that while people agree with their policies they do not feel that the party is on their side or share their values.

Many Conservatives will feel that given the travails of Labour Party and the seeming ascendancy they don’t need to worry about such things. Yet this would seem to be complacency bordering on hubris.

Clear messaging and clear policy will be crucial if the Chancellor is going to deliver on his political and economic plans.

Simon Quarendon

Simon Quarendon

As the consultancy’s Chairman, Simon has strategic oversight of all clients. His career in communications spans 28 years, during which time he has held senior management positions in some of the UK’s leading PR agencies.

During his career, Simon has advised numerous blue chip clients and has worked on a number of large scale communications programmes. Simon has extensive international experience and was a previous Secretary General of the International Communications Consultancy Organisation (ICCO), a trade association representing over 1,000 PR agencies in 28 countries.
Simon Quarendon

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About the Author

As the consultancy’s Chairman, Simon has strategic oversight of all clients. His career in communications spans 28 years, during which time he has held senior management positions in some of the UK’s leading PR agencies. During his career, Simon has advised numerous blue chip clients and has worked on a number of large scale communications programmes. Simon has extensive international experience and was a previous Secretary General of the International Communications Consultancy Organisation (ICCO), a trade association representing over 1,000 PR agencies in 28 countries.