Has George Osborne Already Begun Fighting the Next Election?

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.

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  • Sergiogiorgio

    You conveniently forget about the removal of tax relief from pension contributions. A real kick in the teeth for the Welfare state (sic). At least George was equitable – he fooked us all!

  • chrisjones2

    “I refuse to call it the national living wage”

    …refuse all you like.

  • MainlandUlsterman

    I actually think Labour’s response to the budget, while in the usual Opposition back foot on Budget Day itself, hit back pretty well yesterday. The point about the cuts in real terms to wages by the Tories while claiming to champion the low paid, was very well made and got through I think. The serious commentators (e.g. IFS, Andrew Neil, Martha Kearney on the World At One, Newsnight) are asking the same questions of the Tories and noting the empty responses. Labour has an opportunity here in Osborne’s self-satisfied chicanery. “He’s been too clever by half,” as the wise old Alan Johnson put it last night (though Osborne did enough to dazzle the quick but shallow Independent editor, Amol Rajan – he who editorially wished for another Tory-Lib Dem coalition at the election, losing legions of readers in the process).

    Yvette Cooper has put together a good response to the budget, though I agree it needs to be out in the media more, and that’s an issue in the leadership election, I think they are all holding back from putting themselves out too centre stage – http://www.newstatesman.com/politics/2015/07/once-again-biggest-losers-george-osbornes-budget-are-women

    But I hope Ms Cooper comes through. She can do it for Labour.