2020 is not yet sewn up for the Tories
There is no more dominant contemporary politician than George Osborne: iron chancellor in the public mind, tactical maestro to those within his party, and devolutionary kingpin to many in Westminster and beyond. All is therefore looking nailed on for the occupant of Number 11 to effect a swift move next door in a few years. To be fair, given his reputational slump of 2012 (omnishambles budget, booing at the Paralympics) this is quite a turnaround.
Except that, even beyond the twin pillars of China and Redcar (the latter explored recently on these pages by Grace Blakeley), the landscape isn’t quite as rosy for Osborne as it may appear. As Tony Blair put it in July, “the Tories are going to get cocky – that’s for sure. We’ve noticed this already, and that’s very good”.
On all three of Osborne’s central tenets, there are clear strategic weaknesses that Labour’s various current maelstroms are somewhat obscuring. In broad terms the Cameron-Osborne project has successfully reinvented the Conservative Party to a degree the left sometimes refuses to acknowledge, but this has been against the leadership of Gordon Brown and Ed Miliband. The bar has been so low that Labour hasn’t taken advantage of bumps in the road along the way. That needs to change.
Firstly then, on economic competence, the Tories’ lead is absolutely clear. But the issue of tax credits is demonstrably shifting the debate (and bringing out more effective interventions from shadow chancellor John McDonnell).
This all boils down to fairness – not in the slightly vague wishy-washy manner the left sometimes defaults to – but the brass tacks. For a government which has banged on about credit cards and managing the family finances effectively, it is making a significant misstep in the pace of these changes. Fundamentally, it is breaking the social contract between citizen and government in asking families to do something it itself has been unable to achieve.
To set this out, the Institute for Fiscal Studies (IFS) had real terms government spending falling by 2.9 per cent over the five years of the coalition. In other words, with all the smorgasbords of potential departmental spending reductions in front of him, the chancellor achieved a 0.6 per cent year on year real terms reduction.
That is not necessarily in itself a criticism – given institutional and public opinion constraints, cutting public spending is hard, and cutting hard and fast even more so. But it does make the decision to strip an average in excess of £1,000 from three million families with a few months notice all the more galling. For the single earner family where one parent looks after a child full time and the other brings home a £20,800 salary, £2,104 will be lost through the changes – over 10 per cent of their take home.
For these families, the expectation is that they can achieve in a matter of months a belt tightening exercise three times more successful than the government delivered over five years. The consequences for the government’s failure was the pretty light cushion of being able to borrow at historically low interest rates; for many families it will be the road to Wonga. Therein lies the difference.
Secondly, in terms of Osborne’s tactical mastery, the Fiscal Charter was widely viewed as a bit of a catastrophe for Labour and flip-flopping from pro to anti-positions indeed did not look good. Labour needs to up its strategic and communications game.
The underlying Charter itself remains a strange concoction, however. Handing de facto control over whether a democratically elected government can borrow (something every administration from Attlee to Thatcher made use of) to a Joaquin Phoenix-esque thumbs-up/thumbs-down from the Office of Budget Responsibility (OBR) is just bizarre.
For a start, the OBR’s record of predicting future growth in its first few years has barely outperformed throwing a dart at a dartboard from thirty feet. But it also produces odd historical anomalies such as the UK being technically unable to borrow during most of the two world wars (since growth was above 1 per cent – driven, certainly, by some very necessary borrowing).
Do we really want a government determining to drive growth into the ground just to open up some pretty standard fiscal options? Osborne’s allotting of parliamentary time has on occasion become very strange indeed.
So, certainly it is reasonable to ask why Labour was even contemplating signing up to this? But equally, given the expected economic storms of the latter part of this decade, some of which are already coming to light, why has George Osborne done this in the first place? His economic competence over Labour is priced in already; this smacks of over-reach.
And thirdly, on the matter of competence, the Labour brand will be about to experience something of an upswing due to one very sensible course the chancellor is pursuing – devolution.
Here the actual policy by Osborne is sound. Devolve significant powers to Northern Labour run cities where the Tories have been historically weak, and reap the cross-party, consensual plaudits for doing so. Labour’s reluctance to do just this continues to remain a sore point, and Jon Cruddas’ recent interventions on the matter have been welcome.
But Osborne’s long-term problem remains that Labour will gain a series of leaders with meaningful executive experience and a high profile. Good work has been done by Labour councils for many years, but this kicks them up the agenda. Jeremy Corbyn has therefore been astute in affording council leaders like Judith Blake (Leeds) and Nick Forbes (Newcastle) a proper seat at the policy making table, but there may be room to go further.
I accept the eight MP strong Liberal Democrats might not be the ideal example, but Tim Farron’s decision to put local government figures on his frontbench is a perfectly reasonable one. As power shifts, the composition of Labour’s upper-echelons must shift too. This will innately help Labour’s robotic default to group-think, too.
And so, from Labour’s point of view, all this must not just be about the ‘Northern Powerhouse’. Osborne’s devolution agenda is seeing deals being negotiated with local authorities from Cornwall to Cumbria, and this should not be underestimated. Greater Brighton and any forthcoming arrangement involving Cambridge will be natural Southern Powerhouses where Labour can show they can govern with significant powers within commuting distance of both Westminster, and parliamentary marginals within these regions.
As things stand in late 2015, George Osborne looks calm, collected and calculating whilst Labour appear vulnerable on the economy, way to the left of public opinion, and, most importantly, incompetent.
But the ground on all of these is shifting subtly in various ways. There is significant work to do to formulate Labour’s own positive pitch to middle England, but 2020 is not yet sewn up for the Tories. In short, for Team Corbyn, there are reasons to be cheerful.
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