So Ed wasn’t so red after all. George Osborne’s budget yesterday contained at least six promises that Labour set out in their manifesto for the May elections, including further taxes on the banks, the increasing the NMW (I refuse to call it the national living wage) and (not quite) abolishing non-dom status. Indeed, poor Andy Burnham was absolutely pilloried in the Tory-leaning press for recently suggesting that Labour’s 2015 manifesto was “the best manifesto I have stood on in four general elections for Labour”, whereas Bolshevik George is being heralded as the saviour of blue-collar conservatism for adopting many of the same policies!
But what was Osborne playing at and what does this all mean for Labour? There is no doubt that since the omnishambles budget of 2012, George Osborne’s reputation as a political strategist has been on an upward trajectory. Despite continually missing the fiscal targets he set himself on both the debt and the deficit, the squeals of derision from Her Majesty’s Opposition on the announcement of Tory cuts right up until the end of the last parliament made it appear that George was nothing more than a sadistic slasher. Evidence, however, would suggest otherwise and it was clear after his experiences in 2012 and the short periods of recession in the first half of the last parliament that Osborne had slowed the pace of deficit reduction.
Yesterday, however, Osborne lived up to the reputation that Labour helped cultivate for him, by really sticking the boot in with cuts to working tax credits, a four-year freeze on all benefits, a maximum 1% pay rise for public sector workers in each of the next four years and the withdrawal of maintenance grants for students. And this apparently from the party of aspiration! These punitive policies, underlined by the findings of the IFS presented this afternoon, were all set against nice retail offers brazenly stolen from Labour and were also accompanied by sops to the Tory right including raising the inheritance tax threshold and a further cut in corporation tax. Best not forget about the donors!
It is clear that Osborne is doing the necessary fiscal dirty work very early in this parliament and with growth projections over the next four-five years remaining positive, he will steadily ease the pain. Working on the assumption that his reputation will be secure by that stage, George will be hoping to make the seamless move from No. 11 to No. 10 Downing Street when Cameron finally goes.
As for Labour, the lengthy leadership battle has affected their ability to challenge much of what Osborne announced yesterday. Even if they did manage to articulate a strong case against the budget, would anyone be listening anyway? May’s defeat has left the party in disarray and while it’s clear that the working poor are again bearing the brunt of George’s deficit reduction, Labour are struggling to present a coherent argument against them in an effort to show their fiscal bona fides. It probably won’t be until a new leader is elected and the party is at perceived to be on a path to fiscal discipline will they start to get a hearing. I say ‘perceived’ because, as I’ve shown above, Osborne can also show a slight of hand when he wants, saying one thing and doing another. Labour just needs to be as ruthless and learn to do the same. It’s all about winning after all.