Chancellor: I shall place duty of 100 per cent of purchase price on the following: wheelchairs, white sticks, false limbs, glass eyes and diarrhoea medicine. Observers will notice that I have deliberately chosen to penalise those members of the community who can’t hit back.
Commentator: So, no change there.
Not the Nine O’Clock News (BBC Television, 1979-1982)
John McDonnell did not have long to wait before being proved correct. Labour’s chief Treasury spokesman responded to the Autumn Statement and five-year spending review on Wednesday by noting that whenever a chancellor of the exchequer is cheered to the echo on the day, that usually portends an eventual disillusion with whatever it is he has announced.
So it proved.
As the chancellor sat down, the commentariat was buzzing with excited talk of a masterful performance and suggestions that ‘shares in George Osborne’ were taking off in a big way. Could anything prevent his succeeding David Cameron? Less than 24 hours later, and Mr Osborne faced heavy incoming fire for his (alleged) shallow tricksiness and failure to take any meaningful decisions.
What had he done – and why was it thought to be splendid on the day and terrible the day after?
Ahead of 25 November, it was assumed that the chancellor would need either to abandon his plan to eliminate the deficit by 2020 or to swing his axe at some sensitive targets, including the budget for the police. As it was, he told MPs that, thanks to better-than-expected revenue forecasts from the independent Office for Budget Responsibility (OBR) and its chairman Robert Chote, he would be able to do three things: ditch his plan, blocked in the House of Lords, to cut tax credits for poorer working families; spare the police budget; and still hit his deficit-reduction target.
Indeed, the police budget for England and Wales was not only spared but ‘ring-fenced’ for the rest of this Parliament in real terms, joining the existing protected areas of the National Health Service, defence, overseas aid and spending on schools. Summoned to the headmaster and expecting a jolly good thrashing, the nation’s law enforcers were instead treated to lashings of fizzy pop and ice cream.
But by the next morning, commentators had taken a closer look at how this had all been possible.
Here is what a leader in The Times had to say, under the headline ‘Lucky George’:
To Mr Osborne’s great good fortune, the independent Office for Budget Responsibility (OBR), which he established in 2010, discerned in the uncertain future of the public finances a sum of £27 billion that was invisible three months ago… The Treasury argues that the OBR’s upwardly revised revenue figures for the next five years are the result of robust growth, an improving tax take and a falling welfare bill as a share of GDP [gross domestic product] at a time of near-record employment. These claims will be intensively scrutinised in the coming days.
The City hacks with whom I share working space were rather less delicate than the Thunderer, guffawing as they put on the growly voices familiar from British gangster films and insisted that ‘Chotie’ was owed ‘a big drink’ by the chancellor after his ‘’andsome’ discovery of the £27 billion.
Come Friday morning, and it was clear that ‘Chotie’ was, as the Financial Times put it, ‘nonplussed’ by suggestions that he had offered George Osborne a ‘free pass’ by raising the forecasts for tax revenues.
He shouldn’t have been. The nation’s financial journalists have been on high alert for even the remotest hint of fiscal finagling since the days of Gordon Brown’s commitment to balance the books over ‘economic cycle’ – the point being that the length of the cycle could be (and was) altered to ensure that the books did indeed balance. As Groucho Marx didn’t quite say, here is my economic cycle. If you don’t like it, I have others.
As the weekend approached, it became clear that Osborne-bashing was composed of three distinct but interlinked strands.
The first focused on the fact that the £27 billion may well never appear, that the margin for error is thin and that any noticeable economic slowdown could push the chancellor right off his 2020 deficit-elimination target. We wouldn’t notice this humiliation too much, but he would. Bye bye Number 10.
The second, while acknowledging this, asked further why the £27 billion ‘windfall’ had not been devoted in its entirety to deficit reduction rather than to, inter alia, adding the police to the burgeoning ranks of financially-untouchable public services. Such fiscal rectitude would, they said, have commended itself to Mr Osborne’s predecessor, the recently-deceased Lord (Geoffrey) Howe.
To the third school of critics, these two (justified) lines of attack were merely the beginning of a much broader assault on the spending review and, by extension, the Osborne chancellorship. Labour, they said, is in disarray and the Tories, against all expectations, were returned to office with a majority. This was the time to set about a radical re-shaping of the State and to set in train a five-year process that would leave central and local government unrecognisable by 2020.
Whole ministeries ought to have been lined up for the chop: Culture, Media and Sport (DCMS), Energy and Climate Change (DECC), Environment, Food and Rural Affairs (DEFRA), and Vince Cable’s old fortress on Victoria Street, Business, Innovation and Skills (BIS). The Scotland, Wales and Northern Ireland offices have about as much relevance in the devolution era as the old Colonial Office, and ought also to have been despatched.
George Osborne has, as you can imagine, proved a sore disappointment to this third group. His one constitutional innovation has been to create, with his ‘metro mayors’, a new tier of municipal administration, which is not quite what they had in mind.
But perhaps this third strand of criticism is misplaced. Just because the names have not changed on the Whitehall doorways does not mean business as usual inside all the departments concerned. Indeed, for many of them there is going to be considerably less ‘inside’.
Here are some five-year cumulative budget cuts in real (i.e. inflation-adjusted) terms: DEFRA minus 15 per cent, Ministry of Justice minus 15 per cent, DCMS minus 5.1 per cent, Home Office minus 4.8 per cent, DECC minus 16 per cent, and a whopping minus 29 per cent at the Department for Communities and Local Government.
The Scotland, Wales and Northern Ireland offices will be cut, respectively, by 5 per cent, 4.5 per cent and 5 per cent.
Could it be that Mr Osborne has repeated the manoeuvre identified (admiringly) by the political journalist Norman Shrapnel, and attributed to Harold Macmillan, of signalling right, seeming to move left but actually moving right all along?
Supermac also served as chancellor, of course. A fact, I suspect, that has not been lost on the present holder of the position.