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Coffee House

Budget 2014: a torpedo Budget which will split the Shadow Cabinet

24 March 2014

9:42 AM

24 March 2014

9:42 AM

Last week’s budget has transformed the political landscape. The welfare cap, new savings and pensions freedoms and ‘NISA’s, have all been much commented on. So too other micro measures, like the very welcome continued investment in science and innovation for the innovation economy, and support for exports.

But I think the events of Wednesday went far beyond entrenching the defining key fiscal reforms of ‘Osbornomics’. It laid down the dividing lines on which we will fight, and can win, the next election. And as we saw in the Chamber on Budget day it has brilliantly exposed the growing tensions between Ed Balls and Milliband, who couldn’t agree how to respond. This is a slow-fuse torpedo Budget which has holed Labour amidships. You can already hear the cracking as their ship founders.

With Election Day now less than 14 months away, after the phoney war of the last two years, the Budget marked the real beginning of Election 2015 hostilities. Chancellor Osborne unleashed his pre-D Day economic barrage from the Treasury artillery on Wednesday. And – to the embarrassment of all watching on – Her Majesty’s Opposition seemed to have turned up armed with little more than a water pistol.

With just over a year until the public has to decide whose finger it wants on the nuclear button, the choice is becoming brutally clear. On Wednesday, George Osborne had the guts to tell the public the truth about the scale of the car crash in the public finances under Labour. He was candid in saying that we don’t currently export enough, manufacture enough or build enough. He didn’t flinch in addressing the long-term structural faults that have bedevilled our economy for a generation, namely spending too much and saving too little. He was refreshingly frank about the scale of the challenge, the work still to be done and the measures needed to finish the job. The message was clear: it isn’t easy, but we’re getting back on track. Don’t hand the car keys back to the debt drunkards who crashed the British economy last time, are in denial and show no signs of any attempt at economic rehab. It was a crystal clear, hard edged political and economic Budget which framed a clear choice.

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The contrast with Ed Milliband’s response was palpable. Here was Milliband’s chance to set out the defining vision of his new One Nation economics. His chance to share the fruits of the detailed, provocative and potentially interesting policy review carried out by Jon Cruddas and Lord Glasman to define a popular capitalism of ‘moral markets’.

Yet what we saw on Wednesday was an embarrassing mix of class war, pantomime knockabout and red meat for Labour’s union paymasters. Milliband’s performance really was woeful. Don’t take it from me. Even centre-left commentators were embarrassed. The pained faces on the Labour frontbench said it all. In the Chamber there’s only one thing worse than the barrage of noise from your opponents on the other side. Silence from your own behind you. As Milliband played Sixth Form knockabout we watched in silence as his own benches, including some on his front bench, winced.

The fact is that his performance is symptomatic of the uneasy truce at the top of the Labour party which is fraying fast. As witnessed by Ed Balls’ sour post-Budget briefing to journalists, Wednesday exposed real tensions in the Shadow Cabinet. It has become painfully obvious that Balls and Milliband had not been able to prepare an agreed response. Balls’ contempt for Milliband’s ‘New Socialism’, and Milliband’s recognition that his Shadow Chancellor’s unapologetically Brownite views and inability to accept any responsibility for the failures of the Brown debt crash are an election-risking albatross around the party’s neck – have been made clear for all to see.

The remorseless nature of election scrutiny soon uncovers which party is bluffing their way through. Last week, the Chancellor showed that only the Conservatives have the serious policies for these serious times, whilst Labour fell apart in a vacuum of stale phrases and retro class war.

It’s clear that Milliband and Balls are not at one. This weekend’s polls show their inability to set out a shared, coherent, and responsible economic programme to deal with the debt legacy they left us is rightly alarming middle England. The Budget showed what is becoming increasingly apparent – the reforming, entrepreneurial, progressive centre-ground agenda is now led by a new generation of Conservatives. And Balls and Milliband’s deep tensions over how best to respond to Osbornomics are splitting the Shadow Cabinet.

Ed Milliband is going to have to decide whether he is bold enough to reshuffle his cabinet, and his Chancellor, to stand a chance of winning. Or will he continue with the current muddle and hope the consolidation of the public sector and Lib-Lab centre left core vote, off the back of likely Government unpopularity following a hugely difficult programme of austerity, is enough to disguise the cracks and get them into office?

This week’s Budget has made that a lot less likely. He’s shown in his treatment of his brother that he has the killer instinct when required. Will he take the opportunity of a summer reshuffle to repair the damage this week’s torpedo Budget has done to his economic credibility? Or risk failing the no:1 test of any Opposition: economic credibility.

George Freeman is the Conservative MP for Mid Norfolk and a founder of the 2020 Conservatives and a Prime Ministerial Trade Envoy.

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