Reality check for Osborne’s ambitions

Reality check for Osborne’s ambitions


The Donald Brind Friday Column

Can it really be only a month since the Chancellor George Osborne was swaggering around Manchester stealing Labour policy clothes and putting himself at the head of the queue to be next Tory leader? A Telegraph sketch of his Tory conference speech recounted – tongue in cheek — Osborne’s journey from “omnishambles to omnipotence”

Today, says the Economist, Osborne is “in a bind” over how to deal with tax credits. Rumbled by think tanks like the Institute for Fiscal Studies and the Resolution Foundation and defeated in the House of Lords, “he has no good options; barring a U-turn the policy will do damage to some of Britain’s most vulnerable, and to his reputation.”

What makes life difficult for the Osborne is that the House of Lords makes the IFS analysis the yardstick against which the U-turn will be judged. in the Commons Shadow Chancellor John McDonnell challenged a grim faced Osborne to provide independent evidence that no child would be pushed child living below the poverty line

Translated the Labour threat is “don’t give us any more of your usual tricks George, or you’ll be defeated again in the Lords.”

The “tweaks” that are a favourite in Tory vocabulary are dismissed by the Resolution Foundation. Phasing in the cuts would still leave 2.7 million families worse off and only shift the burden towards the end of parliament. Imposing the cuts only on new claimants would save very little and “undermine the universal credit scheme by creating perverse incentives to work.”
The U-turn Osborne will have to perform is part of a bigger crisis which will be exposed when he produced his Autumn statement on November 25th,according to the Guardian’s Aditya Chakrabortty.  “The chancellor’s maths are finally outrunning his politics. If he doesn’t U-turn he’ll have to keep hitting striving families again and again …. over the next five years, austerity will produce many more episodes like the war over tax credits.”

The General Election in May was a disaster for Labour but it was well short of a full-hearted endorsement of Osbonomics. The overall Tory majority was the reward for just 36.9% of the national vote and, as Mike Smithson has argued, it’s unlikely they would have got that if they’d told the truth about tax credits.

Former Tory treasurer Lord Ashcroft has warned the Tories they would be making a big mistake if they conclude that their “old brand problem – the long running perception that Tories are more concerned about the rich than about than they are about ordinary people – has disappeared.”

Osborne’s biggest contribution to the Tory victory was perhaps his decision in 2013 to abolish a little known tax on investment funds, which Labour has described as a £145m ‘hedge fund tax cut’.
As Jeremy Corbyn highlighted in his Labour conference speech the Tories “received £55 million in donations from hedge funds.” The cash was spent by Lynton Crosby on the Tory ground war which crushed the Lib Dems and blocked any Labour advance in the English marginals.

Whatever optimism that Osborne and Cameron generated to secure their narrow victory in May seems to be melting away, according to Ipsos Mori polling reported in the Evening Standard under the headline “Britain’s sunny view of the future goes as economic clouds gather.”

The poll shows gloomy Britons outnumbering optimists by 38% to 32%, with women, the young and people living outside the South of England particularly gloomy. The score of minus 6 on the index is the worst since April 2013, after the country had only narrowly avoided a double-dip recession. The index had plunged into the negative following the Chancellor’s “omnishambles” budget in 2012 which was followed by a U-turn over the taxes on pasties, caravans and charities. The U-turn now required of Osborne is arguably on a greater scale that that needed in 2012.

You may have guessed you have been reading the thoughts of an Osbosceptic. I find the whiny voice and the expression permanently half way between a smirk and a sneer deeply unattractive.

I’m guessing a lot of voters react in the same way. Or,  maybe I’m not guessing. In 2020, if things go to plan Osborne will be head to head with the much derided Jeremy Corbyn. Approval rating produced by Opinium show they are “effectively tied”. Bad news for Osbophiles.

Don Brind

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