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Osborne under assault from all sides

Alastair Campbell slams Boy George

It must count as some achievement to simultaneously attract the ire of Alastair Campbell and Simon Heffer. That's the unusual position in which George Osborne finds himself this morning, with Campbell writing a deliciously catty letter to the Financial Times and Heffer calling on David Cameron to sack his shadow chancellor.

The departure point for Campbell's letter is the growing awareness that Osborne is more concerned with grabbing headlines than he is with credible economic policy. His pledge to ban retail banks from paying out large cash bonuses may have translated well in our soundbite culture, but it was soon exposed by economists who pointed out that it would weaken planned curbs on the investment banks responsible for the most extravagent bonuses.

Osborne's claim that capping bonuses would lead banks to lend more similarly fell apart under scrutiny. Banks would almost certainly use any spare cash to build up their balance sheets.

Campbell astutely notes that Osborne's dual role as shadow chancellor and election co-ordinator may be responsible for his economic shortcomings:

In appointing Mr Osborne to both positions, David Cameron perhaps reveals his own weakness in failing to differentiate between strategy and tactics. It might be sensible for the Conservative leader to relieve Mr Osborne of one of his two posts. I sense that the City would like it to be the shadow chancellorship. The Labour Party will be hoping that's the one he keeps.

Some may be surprised to see a Labour tribalist like Campbell pop up in the FT, but as I've noted before the paper is not the free-market bible some imagine it to be. Thanks to a strong Keynesian faction, the title has backed Labour at every election since 1992.

I notice that Iain Martin, formerly of the Daily Telegraph and now of the Wall Street Journal, has launched an "FT Watch" on his blog. That the most economically literate paper on Fleet Street has turned its guns on the Tories says much about the state of Conservative policy.