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Another very political mini-Budget from George Osborne

3 December 2014

2:18 PM

3 December 2014

2:18 PM

A preview of James Forsyth’s political column in this week’s Spectator, out tomorrow:

Autumn Statements lack the drama and traditions of the Budget. Gladstone never delivered one, there is no Autumn Statement box and no possibility of a dram of whisky as the chancellor delivers it. But this year’s Autumn Statement was more important, and more substantial, than next year’s Budget will be: the Liberal Democrats are adamant that March is too close to the general election for the Budget to do anything other than update the fiscal forecasts and set out the duty rates.

The test this week isn’t economic but political. As with last year, the Tories have spent the autumn racing down a rabbit hole after a populist policy initiative: this time it was Ukip’s immigration policy, last year it was Ed Miliband’s energy price freeze. In both cases the Tories spent far too long dancing to their opponents’ tune and now have to steer the national conversation back to the economy and away from immigration and the NHS.

Osborne responded to this challenge with a typically canny manoeuvre. In the tradition of Peel and Disraeli, he simply walked off with his opponents’ clothes, promising another £2 billion for the Health Service. This left Labour awkwardly claiming that it would spend £2.5 billion more on the NHS than whatever the coalition put in, a rather exposed position for a party trying to establish its fiscal credibility. He also neutered some of the populist appeal of Labour and the Liberal Democrats’ proposed mansion tax, with a highly progressive new stamp duty regime.

Then there were a few traps laid for Labour. Ed Miliband and Ed Balls have to decide over Christmas whether to oppose Osborne’s deficit reduction timetable before a Commons vote in the new year. If they do, he’ll brand them fiscally irresponsible. If they don’t, they’ll be left facing calls to set out more cuts, thus disappointing those left-wing voters who want Labour to be an anti-austerity party.


There was an emphasis on how the UK economy is growing while so many other countries’ are not. The purpose of this was twofold: first to make the case that it is thanks to decisions taken by this government, and second to remind voters that it is an uncertain world out there, and that you still need a pilot to weather the storm.

Finally, there were measures to help out coalition MPs in marginal seats. The last few days have seen Tory ministers popping up in key constituencies to boast of some new infrastructure project and Nick Clegg touring Liberal Democrat seats benefiting from coalition largesse.

The combination of Osborne’s intensely political approach and the presence of the Liberal Democrats in government, has led to pork-barrel spending becoming a regular part of the budgetary process. Now, money has long been directed to certain parts of the country for political purposes. But Labour sent money to Labour areas, while the coalition has targeted marginal seats. Osborne, who considers himself a master strategist, is much taken with this idea and, in private, expresses bafflement that no government has done it before on this scale.

But pork-barrel politics is one American import that Britain could do without. The polling that enabled political parties to target their policies and campaigning efforts at a small number of voters in a small number of seats is one of the things that has led to the current alienation from politics. This ‘you don’t mean a thing if you’re seat ain’t a swing’ attitude helped both main parties become detached from their traditional supporters. If government money is lavished only on constituencies in electoral play, this disenchantment with the political process will deepen, and another hung parliament won’t help either — especially if the DUP are left holding the balance of power after the next general election.

As Chancellor, Osborne has achieved one of the most difficult thing in politics: renewing himself in office. When he sat down on Wednesday, he cut a very different figure from the one who presided over the disastrous 2012 Budget. He has broadened his agenda, adding his plans for a so-called ‘Northern Powerhouse’ to it, and refashioned his approach to the job. Much of this change is down to Osborne’s willingness to hire talented operators and listen to their advice. Neil O’Brien, formerly the director of the think tank Policy Exchange, is the brains behind the ‘Northern Powerhouse’, while it is Thea Rogers, once of the BBC, who has been behind Osborne’s decision to emerge into the daylight.

Osborne has also managed to keep his relationship with his Lib Dem Chief Secretary to the Treasury in fairly good working order. The two might exchange more public barbs than before but they still work well enough together. Tellingly, this Autumn Statement passed off without any major leaks — those involved in the ‘quad’ discussions on it emphasise that the process was as smooth this time as it has ever been.

Osborne and Danny Alexander’s ability to maintain cordial relations, something that beyond many coalition ministerial pairings, has increased the power of the Treasury. They both attend those ‘quad’ meetings with Cameron and Clegg, meaning that one department has half the members of the most powerful committee in government.

As Cameron’s closest Cabinet ally and a major influence on Tory political strategy, Osborne has huge clout across all aspects of government policy. It was he, for instance, who pushed successfully for Cameron’s immigration speech not to set out any unachievable objectives for the EU renegotiation. Indeed, if Cameron and Osborne are back in Downing Street after the election, expect Osborne to be heavily involved in the Tory attempt to craft a new form of EU membership.

As Chancellor, Osborne has not succeeded in several of the tests he set himself. The structural deficit will not have been eliminated by the end of this parliament and Britain has not maintained its full set of triple A credit ratings. But it would be harsh to judge him a failure because of this. After all, the UK has performed better than many other countries in the past few years and its current growth rate is the envy of nearly every other major developed economy. There have been more private sector jobs created than even the most optimistic forecaster would have predicted in 2010.

Perhaps, though, the fairest way to judge this most political of chancellors is by whether or not his party still holds office after the next election.

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