Osborne's feeble response to the growth crisis

You can't fault the Chancellor's chutzpah. But his growth strategy is paper thin.

As ever, George Osborne summoned a special chutzpah for his speech to the Conservative conference. In the midst of a growth crisis, he warned that "we should not talk ourselves into something worse", as if he had never spread the myth that Britain was on the "brink of bankruptcy". He insisted that the government could not afford to borrow a billion more to stimulate the economy, forgetting that he announced £46bn of extra borrowing at the Budget. And he hailed the "precious stability" that his deficit reduction plan had brought, failing to mention that it left us with a lower growth rate than every G7 country except Japan.

"Don't tell me this government isn't going for growth," the Chancellor snapped, taking a swipe at Labour and Conservative critics alike. But there were few signs of a change of gear. Osborne's response to the growth crisis? A re-announced £805m council tax freeze that will do nothing to cancel the damage wrought by his £12bn VAT rise.

The Chancellor's wager is that loose monetary policy (interest rates and the exchange rate) will compensate for tight fiscal policy (spending cuts and tax rises). He was clearer than ever on this point today. "We are fiscal conservatives and monetary activists," he declared.

The biggest difficulty for the government is that Osborne has few monetary weapons at his disposal. Interest rates are already at record lows and the exchange rate has fallen sharply since the crisis began in 2008. By contrast, after the savage cuts of the 1981 Budget, Geoffrey Howe was able to loosen the money supply by cutting interest rates by 2 per cent. Insofar as the government has a plan B, it is for further quantitative easing (QE). But with the cost of unsecured loans significantly higher than before the crisis, it is far from certain that another monetary injection will have the desired effect. Today, Osborne promised to begin "credit easing" - government lending to small businesses - a tacit admission that Project Merlin - the government's much-vaunted agreement with the banks - has failed.

It was telling that the most effective passages in his speech were not on the economy but on politics. Like his predecessor, the Chancellor is never happier than when identifying a dividing line (see Rafael's blog for more on this) or a partisan jibe. He quipped that Labour had ceased to be a "producer or a predator", one of the best attack lines of the conference season. He rebuked Vince Cable, who described some Tories as the "ideological descendants of those who sent children up chimneys", by noting that it was a Conservative who abolished the practice and that the Liberals objected. And he described Manchester as the city where Rutherford split the atom and the Miliband brothers split the Labour Party (a decent gag by his standards).

Unlike Cable, who spoke only of "grey skies" in his speech, Osborne ended by turning his gaze to the sunlit uplands, "the calmer, brighter seas beyond". Channeling Jim Morrison, he insisted that we would "ride out the storm together". One can only respond, not with your plan, we won't.

George Eaton is political editor of the New Statesman.

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Richmond is a victory for hope - now let's bring change across the country

The regressives are building their armies. 

Last night a regressive alliance was toppled. Despite being backed by both Ukip and the Conservative Party, Zac Goldsmith was rejected by the voters of Richmond Park.

Make no mistake, this result will rock the Conservative party – and in particularly dent their plans for a hard and painful Brexit. They may shrug off this vote in public, but their majority is thin and their management of the post-referendum process is becoming more chaotic by the day. This is a real moment, and those of us opposing their post-truth plans must seize it.

I’m really proud of the role that the Green party played in this election. Our local parties decided to show leadership by not standing this time and urging supporters to vote instead for the candidate that stood the best chance of winning for those of us that oppose Brexit. Greens’ votes could very well be "what made the difference" in this election (we received just over 3,500 votes in 2015 and Sarah Olney’s majority is 1,872) - though we’ll never know exactly where they went. Just as importantly though, I believe that the brave decision by the local Green party fundamentally changed the tone of the election.

When I went to Richmond last weekend, I met scores of people motivated to campaign for a "progressive alliance" because they recognised that something bigger than just one by election is at stake. We made a decision to demonstrate you can do politics differently, and I think we can fairly say that was vindicated. 

There are some already attacking me for helping get one more Liberal Democrat into Parliament. Let me be very clear: the Lib Dems' role in the Coalition was appalling – propping up a Conservative government hell bent on attacking our public services and overseeing a hike in child poverty. But Labour’s record of their last time in office isn't immune from criticism either – not just because of the illegal war in Iraq but also their introduction of tuition fees, privatisation of our health service and slavish worship of the City of London. They, like the Liberal Democrats, stood at the last election on an austerity manifesto. There is a reason that we remain different parties, but that doesn’t mean we shouldn't also seize opportunities like this to unite behind what we have in common. Olney is no perfect candidate but she has pledged to fight a hard Brexit, campaign against airport expansion and push for a fair voting system – surely progressives can agree that her win takes us forward rather than backwards?

Ultimately, last night was not just defeat of a regressive alliance but a victory for hope - a victory that's sorely needed on the back of of the division, loss and insecurity that seems to have marked much of the rest of this year. The truth is that getting to this point hasn’t been an easy process – and some people, including local Green party members have had criticisms which, as a democrat, I certainly take seriously. The old politics dies hard, and a new politics is not easy to forge in the short time we have. But standing still is not an option, nor is repeating the same mistakes of the past. The regressives are building their armies and we either make our alternative work or risk the left being out of power for a generation. 

With our NHS under sustained attack, our climate change laws threatened and the increasing risk of us becoming a tax haven floating on the edge of the Atlantic, the urgent need to think differently about how we win has never been greater. 

An anti-establishment wave is washing over Britain. History teaches us that can go one of two ways. For the many people who are utterly sick of politics as usual, perhaps the idea of politicians occasionally putting aside their differences for the good of the country is likely to appeal, and might help us rebuild trust among those who feel abandoned. So it's vital that we use this moment not just to talk among ourselves about how to work together but also as another spark to start doing things differently, in every community in Britain. That means listening to people, especially those who voted for Britain to leave the EU, hearing what they’re saying and working with them to affect change. Giving people real power, not just the illusion of it.

It means looking at ways to redistribute power and money in this country like never before, and knowing that a by-election in a leafy London suburb changes nothing for the vast majority of our country.

Today let us celebrate that the government's majority is smaller, and that people have voted for a candidate who used her victory speech to say that she would "stand up for an open, tolerant, united Britain".  But tomorrow let’s get started on something far bigger - because the new politics is not just about moments it's about movements, and it will only work if nobody is left behind.

 

Caroline Lucas is the MP for Brighton Pavilion.