Coffee House

George Osborne’s race to persuade voters and colleagues to back his plan

5 December 2012

9:31 AM

5 December 2012

9:31 AM

George Osborne has managed, so far, to manage the run-up to the Autumn Statement far better than he did the Budget. There have been no cat fights across the pages of the newspapers, and the briefing over the past few days has been disciplined. After being told about the £5bn of Whitehall spending cuts to fund ‘shovel-ready’ projects including new schools and investment in skills, science and transport yesterday, one hack jokingly asked whether ‘this means that tomorrow’s statement is going to be horrendous’ given the news so far had been relatively positive.

Osborne’s stock is up in Westminster at the moment – something James detailed in the magazine last week – but today isn’t going to be easy by any means, even if he has postponed a feeding frenzy on the granny tax-style details that the extensive leaking of the Budget caused. He will tell MPs that there is no ‘miracle cure’, and will have to make a number of admissions that are pretty unpleasant. Austerity will last until at least 2018 because of weaker growth and higher borrowing than originally expected. He will probably have to admit that he is going to miss his key targets on cutting the deficit and having debt as a percentage of GDP falling by 2015, and it is well worth reading Jonathan’s briefing on what the Office for Budget Responsibility is likely to say on these fiscal targets. The Chancellor will say:

‘In this autumn statement, we show that this coalition government is confronting the country’s problems, instead of ducking them. The public know that there are no miracle cures Just the hard work of dealing with our deficit and ensuring Britain wins the global race.’

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The real significance of the Chancellor’s admissions today will be that the Tory party now knows it cannot fight the next general election on the straightforward message that it has turned around Labour’s economic mess. The message in 2015 will now have to include a participle: ‘we are clearing up the mess that Labour left’, rather than anything as complete and perfect as ‘we have cleared up the mess’. The Tories will have to rely much more on asking voters, as Nick Clegg did at his party’s conference in September, whether they really believe that the alternative that Ed Balls is offering them would lead them beside stiller waters.

As Tim Montgomerie points out in the Times today, the Chancellor is well-regarded by colleagues, but that doesn’t mean that all his relationships with cabinet ministers are rosy. He has a job to do today just to convince his own government to support him. One relationship which is worth watching is that between Osborne and Iain Duncan Smith. The Chancellor has in the past few months managed to convince the Work and Pensions Secretary of the need for further welfare cuts when Duncan Smith had previously been adamant that spending had been squeezed sufficiently in that area. Duncan Smith can be a stubborn fighter, so it is impressive that the Chancellor has brought him on side for today’s statement. But he may yet dig his heels in if some of the cuts prove unpalatable, and he is also faced with cutting his department’s spending by 1 per cent in 2013/14 and 2 per cent in 2014/15. That will require some steel from any cabinet minister, but remember that the Work and Pensions Secretary is also trying to push through an enormous IT programme to implement universal credit when the civil service is displaying increasing reluctance to back the flagship reform. There may be trouble ahead for Osborne’s rapport with this particular colleague, at least.

It’s also worth noting that both the Chancellor and the Prime Minister’s official spokesman have been using the phrase ‘global race’ in their briefings about the Autumn Statement. Britain’s positioning in the world will be a key theme over the next couple of years as CCHQ turns on to an election footing: those working in campaign headquarters are already sick of the phrase, which shows how important it is. If you’re playing one of the many ‘Osborne bingo’ games today as you watch his statement, you could do worse than to place your bets on ‘global race’ cropping up. The Chancellor today will be running his own race to persuade voters that the Tories are the ones to trust on the economy, and to persuade colleagues to continue to back him.


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Show comments
  • TomTom

    Allister Heath has a very good article in today’s Daily Telegraph which has more relevance that Osborne’s latest bit of politicking

    • MinnieOvens

      Glad to hear that Tom Tom except the Telegraph’s layout is becoming very confusing and finding many of the decent articles is extremely hard these days.
      And Disqus is becoming appalling where you have so many attempting to put in their own view, under a good post, that any other original posts get lost 20 pages deep.
      End of rant!!

    • telemachus

      “Yet the Chancellor and most forecasters – most of whom still rely, in
      quasi-religious fashion, on the intellectually bankrupt economic models and
      worthless forecasting tools that contributed so much to the crisis – are still
      clinging to the hope that we will soon be bouncing back, returning to the kinds
      of growth rates seen during the bubble.”
      Yes
      Bankrupt
      He cannot just hope
      He has to invest for growth

  • pigou_a

    “Osborne’s stock is up in Westminster at the moment”

    Surely some mistake? Have they seen any of the recent economic statistics?

    The performance of the economy over last two years is worse than at any point in the last 100 years. It is a direct consequence of catastrophic fiscal and monetary policy decisions by King, Cameron, Osborne, Clegg and Alexander.

    As any competent macroeconomist (e.g. Larry Summers) pointed out, austerity, when interest rates are zero, does not work and leads to economic depression and rising public debt.

    It’s getting ridiculous, absent some kind of economic miracle a lot of MPs are going to be booted out in 2015. Surely they must be considering installing a competent PM and chancellor who actually understand basic macro and public finance?

    • telemachus

      This is one of the best analyses I have read in a long time
      On your conclusion however I just wonder whether leaving these folk in for a bit longer will allow us to install reasonable and competent judgement for a generation
      We owe it to our children and grandchildren

      • pigou_a

        I think they’ve done enough: they have managed to do more damage to the British economy than the entire second world war.

        It’s beyond a farce.

    • DavidDP

      Any competent macro economist also knows that when government debt and deficit levels reach a certain ratio, any possible expansionary effect is minimal and it causes more of a drag and debt spiral. If you are concerned about the fact we can’t increase spending any more than we are already doing, blame those who brought it up as high as it got during a boom.
      We owe it to our children and grandchildren that those responsible for the latter never get in again.

    • http://twitter.com/doggywoggydooda doggywoggy

      And that party is UKIP.

      You cannot possibly mean labour? The utterly incompetent party which CREATED the worst recession in living memory in the first place and which we are STILL suffering and will continue to suffer from their economic lunacy for many years to come?

      Miliband and Balls are economically clueless and they would sink the economy even faster than the coalition are doing.

  • Bob Dixon

    When are we going to start sorting out our ZOMBI banks.

    RBS needs to be put into administration.
    Lloyds Banking Group took on HBOS. Have they started to put BOS into administration?.

    These two banks will stagger on for years gobbling up funds. Cut their throats to put them out of an impossible situation.

    The administrater will be deluged with offers for the bits that work so they can help in the recovery of the UK economy. He can then find a dustbin to drop the non performing parts in.

    • telemachus

      Yes and in the meantime they continue to troser mega salaries and bonuses
      Driving up rents in London to the point that councils faced with government cuts are having to ship families out to Stockton on Tees

      • TomTom

        Stocktone on Tees – hardly Transportation to the Colonies !

        • telemachus

          Have you ever been?

    • TomTom

      You clearly have no understanding of Bank Balance Sheets. Maybe you should put the Bank of England into Administration and ask where the Gold is that Austria deposited in London, that Germany deposited in ondon. Just how much Gold does the Bank of England OWE ?

  • Swiss Bob

    Is part of Osborne’s plan to give Africa £2 billion for windmills while our own pensioners freeze to death, paid for by scrapping the Army’s fleet of Apache helicopters?

    Anyone would think our whole political establishment had been compromised by a foreign power, or are they all just closet communists?

    • DavidDP

      An excellent double entry for John Rentoul’s series of Questions To Which The Answer Is No.

      • telemachus

        In reality closet fascists

        • DavidDP

          No that’s Ed “I want to end the free press” Miliband.

          • telemachus

            Not end the free press
            Make the almost fascist barons accountable by law

    • telemachus

      Any aid to Africa is an investment in our futuer influence that will repay one hundred fold.

  • DavidDP

    “The public know that there are no miracle cures Just the hard work of dealing with our deficit and ensuring Britain wins the global race.’”
    We’ll never *win* the global race, but we could put in a good showing. But, essentially, all we have left is hard work. We can’t increase spending without problems, and we can’t cut a huge amount more without causing real hardship; there is little room to cut taxes, but little room to raise them either.
    Electoral consequences? Well, for as long as the public still blame Labour for the mess, then not much. But that number will slowly decrease, and the siren song of “we can give you more money for nothing” will become more and more attractive.
    The Government then can only sit tight and concentrate on what it can control – no more cock ups. The lack of in-media arguing ahead of the statement compared to the Budget is at least a step in the right direction there.

    • telemachus

      “and we can’t cut a huge amount more without causing real hardship;”

      *

      And there has been hardship a plenty already

      Ask the poor disabled chap down the street in a wheelchair who cannot now afford to get to the shops

      And if he could would struggle to find food he could afford fo a square meal

      Ask Frank Field about Food Banks in Birkenhead

      • DavidDP

        And you’d add to the hardship by spending so much more money that more would have to be spent servicing debt than on services and investment. If you think Osborne has a hard sell now, wait till you end up having to explain that the budget has exploded but less will go on vital services because you are having to spend more paying back the international money markets.

        • telemachus

          You miss the point about a steming growth economy generating the revenues to repay the invested deficit and then the debt

  • anyfool

    It is slowly beginning to dawn on people that Osborne bad as he appears is the only solution currently on offer, Balls and Milicent run around yapping, to far to fast, their only policy, when around the rest of the world but particularly in the EU slumping productivity will stop any high flown growth policies, the result of that will be ever more cuts until things level out. all efforts must be to keep the private sector going and the only way to do that in a stagnant economy is slash the unproductive sector.

    • telemachus

      Yes and how do we get the private sector growing
      The banks cannot or will not help
      Major pump priming investment is the only solution
      The 5 billion tickle of yesterday is lip service when tax receipts due to the Osborne engineered recession are down 17 billion
      All we will hear at 1130 today will be tinkering

      • anyfool

        Tinkering is all that is left.
        Remember , money all gone by Byrne.

        • telemachus

          Remember the Chinese
          Keen to invest

          • DavidDP

            Not if they thought the government wasn’t economically responsible. for example, by spending even more of what it hasn’t got.

            • telemachus

              OK so replace the current shower with the Genius of Ed Balls and team

              • TomTom

                Ed BValls should get his brother at PIMCO to come out and endorse his program and say that PIMCO loves Gilts

                • telemachus

                  Listen to him at 1.35
                  And learn

                • TomTom

                  You must be a prize dimwit if you learn from Ed Balls. A poorly educated journalist who knows very little and has a track record as a dilettante

                • telemachus

                  You mean a genius with charisma
                  Just seen him visually slay Cameron and Clegg at PMQ’s

                • TomTom

                  We have experience of Edward Michael Balls and are still living with the consequences as we shall for generations to come. He has proven to all what he is capable of and the full horror of his legacy is yet to unfold……

              • DavidDP

                I want to not spend more of what we haven’t got. Why would I want to put in Ed Balls, whose answer to any question is spending more money with no clue where it will come from? Not really much of a genius on show there. Even someone with basic intelligence will be aware that money doesn’t just appear in your lap.

                • telemachus

                  Clear that you have not heeded what many an economist has said about the Chinese

          • TomTom

            You should look at the Chinese Banking System Troll, and maybe at their solar panel producers. China is in deep and dire mess. The only “investment” is Chinese elites shifting their money into the West before their system collapses just as Greeks are buying luxury homes in London. The Chinese Bubble Economy is headed for major crash

            • telemachus

              Do not believe that the clever resourceful chinese will not weather temporary dips
              They are the future

      • DavidDP

        “Major pump priming investment is the only solution”
        With what? We are already borrowing just to keep spending where it is now.

      • VacantPossession

        Reduce taxes of most (if not all) kinds, reform and simplify the tax system, increase the level at which income taxation commences i.e., you earn more before you are taxed. In short, leave money in peoples pockets because they are far better at redistributing wealth than giving it to a state system which then gives it back out again, after docking significant costs. Lower corporation tax attracts foreign investment and can remove the need or benefit of offshore schemes. Stop Unions getting the public sector to pay their costs (that’s you and me). Reduce legislation enabling a quicker response to market conditions and encouraging a more fluid job market. Dirigisme doesn’t work. Look at the way France has stiched herself up like a kipper. Hello Greece.

        If you don’t do this, the outcome will slowly and inexorably move in the same direction as Foxconn; It pays them to spend huge R&D on human replacement. It has commenced a large experiment to replace its entire 1 million workers with robots; They will end up with practical workable human replacements and be way ahead of the field.

        With a labour market so entrenched in unsackable employees with rights to years off for parenting or any other reason the state can think up, who would want to employ a human and risk their family home.

        We all have to look ahead, think realistically and stop throttling the goose that lays the golden eggs – that’s those of us in the private sector not living off the rest.

        • Davey4Lyfe

          usually people keep their money in the bank, its a pretty standard way of keeping it safe, much better than keeping it in your pocket. if you let the banks fail where does all that money go? and how does that help the economy?

      • VacantPossession

        One more thing telemachus, there are those amongst us that risk everything, their family home, their livelyhood. They try very hard to not need the avaricious banks. These are the people who will work long hours, employ people and risk even their family home. These are the ones who will bring back growth, so think smaller, think ‘personal’. They’ll get people off the dole and they will bring in tax revenue. Just don’t strangle them with regulation and taxes whilst they are doing it.

  • Russell

    The electorate don’t need catchphrases like ‘global race’, what they need is for this government to get a grip and slash the size and cost of the public sector, ensure companies and individuals pay their corporation tax, correct VAT(Amazon etc.) and in the case of individuals (Jimmy Carr types), Income tax and NIC.

    • telemachus

      No we do not
      This is just tinkering
      The megabucks are in the tax receipts from growth
      Any Chancellor wo is incapable of stoking growth is a failure
      It is not just a question of debt and deficit but finding the lost and wandering generation
      These are our future

      • Russell

        So says the most ignorant poster on this site.
        It is not ‘tinkering’ to reduce public sector spending by £billions and increase tax revenues by £billions. That is how the deficit is done away with and a surplus created which will start to pay off the massive debt mountain left behind by Brown/Balls/Darling.

        • telemachus

          Why given the massive cuts in public spending dictated by Osborne 2 years ago do we now have a 17 billion shortfall on predictions?
          It is precisely because the same Osborne choked off growth

          • DavidDP

            What massive cuts? Spending has decreased by a small amount. The idea that a 1 per cent drop in public spending is responsible for chocking off growth is barmy.

            • telemachus

              Not only that, he choked off confidence, choked off bank lending and made most entrepreneurs put expansion on hold(those he did not drive to bankruptcy)

              • DavidDP

                Not only no massive cuts in public spending? What?
                Confidence was already at rock bottom, mainly because businesses and banks had to face the reality that the previous years of growth had been an illusion perpatrated by a free spending and high borrowing Labour government. They faced the reality that the country had, in the words of Liam Byrne, no money left, and as a result of Labour’s failure to face reality and masking of signals showing the economy wasn’t in good health, no one had the reserves to fall back on in hard times.
                Frankly, that would drain all the confidence from me as well.

                • telemachus

                  What pap
                  The records show that recovery was well on the way until Clegg and Cameron ousted Gordon

                • DavidDP

                  No – GDP movement was positive due to increases in public spending, not through improvements in the real economy. That money came from unsustainable borrowing, which indicates that the so-called recovery was nothing of the sort and would always drop back the moment any form of realism was applied to the public finances.
                  There was no money left – it takes a certain amount of chutzpah to say that’s a recovery.

                • telemachus

                  Ask the folks in work then thrown out when Osborne took over what they think

                • MrVeryAngry

                  Well, as any fule no, employment in wealth creating private business has been holding up. Whereas and quite rightly there have been reductions in numbers of those people turning up for non-jobs in the state – Darling Brown Balls ‘client state’. These poor people were always redundant – on benefits if you like – and now they need to be laid off wholesale.
                  At the same time Osborne has failed to slash taxes, necessary to create real grwoth and get us out of Brown’s debt.

                • telemachus

                  Failed to slash taxes
                  Except of course for the rich
                  Only 5% for those who do not need it so far
                  Divisive

                • MrVeryAngry

                  Er, no. I also note that you do not argue with the rest of my comment.

      • George_Arseborne

        Perfect reasoning Telemachus. He does not have any persuasion to do. The Nation is aware of the fact that a man with no Economics brain is running the purse of this nation. No wonder he is borrowing his way into recession not growth. Where is the growth coming from for heaven sake.

        Oh who can help accelerate the calender year so that we can kick this lot out. Very uncreative man at the helm of the economy

      • 2trueblue

        We were robbed of our future by the BMs in the Liebore party, Brown, Blair, Balls, Millipedesx2. It is not something that you can get back, they spent it, all of it.

  • telemachus

    Osbornes stock may look good now
    But within weeks he will be credited as the architect who let us slouch into the third limb of the triple dip recession.

    • http://twitter.com/MatthewSDent Matthew S. Dent

      I’m not sure how Osborne’s stock can be said to look good even now. By every measure he set for his chancellorship, he has failed.

      In certain older civilized cultures, when men failed as entirely has he has, they would throw themselves on their swords.

      Or at least resign.

      • telemachus

        Sadly Osbourne is Cameron’s backbone

    • http://twitter.com/doggywoggydooda doggywoggy

      Indeed, he has never been conservative enough. Do not forget who cause the first dip of the recession, the longest and deepest since the 1930s, by the way. Your beloved Gordon Brown aided all the way by Ed Balls.

      Osborne has not been conservative enough. He has not cut enough from spending, nor cut enough from taxes to encourage overseas businesses to operate and headquarter here. As the recent row over Amazon, Google et al not paying “there share” of tax here. Thanks to the EU, these companies can easily locate and pay tax in whichever EU state is the kindest to them. We charge too much tax on companies, and so they locate elsewhere to legally avoid such taxes.

      Hence we get 0% of their corporation tax. Nice work lefties.

      We need UKIP in power to slash taxes, creating a simple flat rate of tax, get us out of the EU, slash the spending on wasteful state bureacracies and let real, freed up private enterprise and innovation grow our economy based on sustainable and growing exports, not on ever increasing taxes and debts.

      • telemachus

        No no no
        Gordon and Ed rescued us from the recession blown in from the States
        Until Osborne engineered the double dip

      • telemachus

        Oh do Ukip have economic policies too

    • Swiss Bob

      As you love to dribble all over comment threads perhaps you can justify Ed Militwat’s desire to penalise those working in the name of class warfare, rather than actually increasing the revenue raised.

      Miliband is not fit to be leader of a local scout group, let alone the country.

      • telemachus

        He is babysitting for the charismatic Ed

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