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Autumn Statement: George Osborne moves into a stronger position

5 December 2012

3:41 PM

5 December 2012

3:41 PM

There’s a sense of satisfaction among Tories, and Osborne allies in particular, this afternoon. First, the Autumn Statement didn’t all leak out in advance. Instead, the Chancellor had some news to make on the day—notably the cancelling of the 3p fuel duty rise and a further increase in the personal allowance. Second, it has drawn political battle-lines that they believe favour them.

Labour now has to decide whether to accept the coalition decision to up-rate most working age benefits by only 1 per cent for the next three years. This saves more than two billion pounds by 2015-16 and will, judging from previous polling on welfare, be popular. But Labour MPs don’t like it, and even Ed Balls himself could be seen shaking his head when Osborne announced it. If Labour do vote against it, the Tories will make almost as much political hay out of that as they have from Labour’s opposition to the £26,000 a year benefit cap.

The cancelling of the 3p rise in fuel duty and the increase in the personal allowance mean that the winners from this Autumn Statement are people on 19,000 – 30,000 a year. This all fits with the new Tory focus, inspired by Osborne and Andrew Cooper, on the strivers. Indeed, given the end of the fuel duty escalator it would only cost, roughly, another billion pounds to freeze fuel duty for the rest of this parliament. Expect this Chancellor, with his eye for the political opportunity, to do just that.

According to the Office of Budget Responsibility, the policies announced today should boost GDP growth by 0.1 per cent in 2013 and 2014. But some of the other numbers produced by the OBR are far less pretty. Osborne will miss his second fiscal rule of having the national debt falling as a percentage of GDP. Indeed, it will hit 79.9 per cent in 2015-16. But, overall, Osborne will feel he is in a stronger political position now following this statement and the appointment of Mark Carney to the Bank of England job than he was a fortnight ago.

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