At the start of this week, everyone was wondering how George Osborne was going to get out of trouble on tax credits, avoid a deeply damaging row over police cuts, all while still keeping to his surplus target. But thanks to the Office for Budget Responsibility upgrading its forecasts, Osborne was able to scrap the tax credit changes, protect the police budget and maintain his plan for a £10 billion surplus by the end of the parliament.
But now, an even bigger challenge awaits Osborne: the EU renegotiation. I argue in my Sun column today that it is now the biggest threat to his chances of becoming Prime Minister.
Boris Johnson and Theresa May have both kept their referendum options open, but Osborne is pretty much certain not only to back staying In but to be a key figure in that campaign. This means that he not only needs In to win, but to win well. As one senior backbencher warns, ‘If the vote is close, the next leader is going to have be a unifying figure. It can’t be anyone too associated with the campaign’.
Now, getting a clear majority of Tories to back staying in is probably going to require more than what Cameron is currently asking for—one Cabinet Minister who is undecided on how to vote come the referendum describes Cameron’s current demands as ‘pretty thin gruel’. This is why it would be such a mistake to rush the renegotiation. But the government is currently pushing to try and get a deal at next month’s European Council.
But with border controls returning all over Europe, Cameron and Osborne should be playing this long. If they wait, they might just find that they can get more than they are currently asking for.