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Osborne’s Gauntlet: How does Labour respond?

January 11th, 2014

Osborne collage

Has the Chancellor just set the terms of debate through to 2015?

Popular memory recalls George Osborne’s 2012 Budget as the Omnishambles.  Ed Miliband’s description was a little unfair, but only a little: any political event where opponents gain traction out of three separate criticisms of it is a PR shambles, whatever its other merits.

It’s also – wrongly – remembered as the defining moment of the parliament in polling terms, from which Labour benefitted from a step-change increase.  Actually, it coincided with the end of the Flounce Bounce, a trend already underway before the Budget, and Labour’s lead in the month afterwards was only around the same level as it had been at several points the year before.  What it did mark a break in was George Osborne’s tendency to indulge in Brownesque gimmickry and tactical game playing in his big set-piece events.  Perhaps he learned, as Brown never did, that the gimmicks are good for at most one news cycle and then have an unfortunate habit of falling apart.

So it was the revised, straight-down-the-line Chancellor who gave his Year of Hard Truths speech earlier this week.  However, while the short-term tactical game playing might be out, the longer term strategic positioning was very much not.

The first challenge to Labour, and potential dividing line, is about accepting the analysis.  It would be easy for him to say ‘job done, re-elect us’.  It would also be all too easy to refute: the job isn’t done by a long way and borrowing remains enormous by historic and international standards.  On the other hand, arguing that while the policy is right, the delivery is not yet complete implies to the public that it’s not yet safe to hand the keys back to the people who crashed the car last time – or so he hopes.

So does Labour reject Osborne’s analysis altogether, something that would surely lead to both governing parties accusing them of repeating the same mistakes they made in office last time, or do they accept it – in which case, they have to answer the second challenge: what would be their solution to closing the structural deficit?

Here, by focussing on cuts, Osborne has provided room for the Lib Dems to steal Labour’s thunder by making the centre-left case for fiscal responsibility: higher taxes, and lots of them.  And that’s where the positioning – if it comes off – gets cute.  Both governing parties’ prospects improve when the Lib Dems take votes from Labour so it actually helps both Blues and Yellows for the Lib Dems to attack the Tories (and vice versa) about policy solutions for after the election.  Osborne’s speech allows the coalition parties to dominate the whole of the debate while leaving Labour nowhere to go.  Expect lots of talk in coming months about ‘black holes’ and uncosted policies in Labour’s plans.

David Herdson