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Spending review: the dividing lines

26 June 2013

2:40 PM

26 June 2013

2:40 PM

George Osborne loves a good dividing line: he sees it as his job to ‘weaponise’ policies in a way that benefits his party. So what were the key divisions that he set out in today’s Spending Round statement?

1. The full package

Clearly the Chancellor wanted to make Labour as uncomfortable as possible as he set out the cuts for each department. Once Ed Balls finished his response, the Chancellor started prodding him on whether Labour would match the package. ‘Hands up on the Labour benches who wants to match our spending cuts?’ he cried. Ed Balls suddenly became strangely interested in his water carafe and in an urgent conversation with Ed Miliband. The party has released a list of ‘questions for Labour’ which includes ‘do you oppose any of the cuts announced today and if so how would you pay for reversing them’.

2. Capital spending

PMQs today was a bit like a rehash of yesterday’s Treasury questions, with neither side really benefitting from a ding-dong about infrastructure projects. All that really transpired was that both parties haven’t got a great record of making good vows in this area. Osborne clearly wanted to depict his party as still having the edge, though, telling the Commons:

‘Britain will spend on average more as a percentage of its national income on capital investment in this decade – despite the fact money is tight – than in the previous decade, when government spending was being wasted in industrial quantities.’

3. Free schools

What perfect timing Stephen Twigg’s free schools wiggle (a U-turn is far too simple to fit the Shadow Education Secretary’s plan for ‘parent academies’) was, just a few weeks before the spending review. It meant George Osborne didn’t just have to announce funding for 180 new free schools in 2015/16: he could weaponise this policy too. He departed from his published script to say:

‘Free schools are giving parents the opportunity to aspire to a better education for their children. The Opposition have said they want no more of these schools. We can’t allow that attack on aspiration to happen. Instead we must accelerate the programme and bring more hope to children. That is why I can announce that we will fund an unprecedented increase in the number of free schools. We will provide for 180 great new free schools in 2015/16.’

Fraser set out in his Telegraph column last week how the Tories are now able to steal aspirational voters that Labour has abandoned. This is another poaching exercise from Osborne. It also means that if Labour say they object to this increase in funding – which they are likely to do on the basis that free schools can set up in areas where there is already a surplus of places, regardless of how bad those schools with places may be – Michael Gove can continue to call them the ‘enemies of promise’.

4. Pensions

We weren’t given full details of the AME spending cap today. But one line the Chancellor was very keen to drive home was that the basic state pension will not be included. He said:

‘This penalises those who’ve worked hard all their lives. Cutting pensions to pay for working age benefits is a choice this government is certainly not prepared to make.’

The question now is whether Labour would include them. Certainly it is electorally beneficial for the Conservatives to reassure pensioners, particularly if they cannot go into the 2015 election with a pledge to protect pensioner benefits.

5. Welfare

George Osborne has the eye of a hawk when it comes to dividing lines on welfare. He recognises that it is a key issue that led to Labour bleeding support in 2010, and he doesn’t want them to regain any of those voters in time for 2015. So there were a number of policies in today’s statement that he will be very keen to hear the Labour party’s thinking on. They are:

– Upfront work search – people can only receive benefits if they arrive with a CV and register for an online job search.
– Lone parents of children over three will be expected to regularly attend jobcentres and prepare for a return to work.
– Half of all jobseekers who need more help looking for work will need to attend the jobcentre weekly rather than fortnightly.
– There will be a seven-day wait before people can claim benefits. Osborne said ‘those first few days should be spent looking for work, not looking to sign on’.
– Claimants who do not speak English will be required to attend language course, and will have their benefits cut for refusing to do so.

For what it’s worth, I have a hunch that the seven-day wait will be a bad dividing line, and perhaps the most likely subject for a wobble or even a U-turn. The intention is good: to make people think more about getting a job than they do about their benefit entitlement, but there are a number of unintended consequences of this. We’ll see which ones Labour decides to stick its head above the parapet on.

6. Public sector pay

This is a very difficult policy for Labour to oppose. As trailed, Osborne announced that automatic annual increments for civil servants will end by 2015/16, and the government has the same aim for schools, the police and the NHS. The Chancellor made it clear that this would be welcomed by most voters, saying:

‘Progression pay can at best be described as antiquated; at worst, it’s deeply unfair to other parts of the public sector who don’t get it and to the private sector who have to pay for it.’

LabourList is already upset about this idea, arguing that this will make these jobs less appealing. That depends on whether you think people go into nursing, teaching and the police because of the fabulous remuneration or the job satisfaction and their own skill set. But either way, it will be very difficult for Labour to oppose this, and they knew it. Their benches were still and sullen as this measure was announced.

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