Changing the conversation in 2012

Might a party leader attend to the growing dissonance between Westminster rhetoric and the daily rea

Low growth, high unemployment, deeper cuts, falling wages, and a further reduction in the living standards of working families. Just in case you were under any doubt, 2012 is going to feel like one long Groundhog Day, a darker version of its grim predecessor.

There will, of course, be many new twists and turns. But the raw material of the economy-driven news cycle is likely to have a certain haunting familiarity, even if it is far harder to predict the political ramifications and Westminster winners and losers.

Yet the very persistence and severity of the economic situation may start to force previously unmentionable issues and arguments onto the agenda. More of the same might -- just possibly -- prompt something different: that is, a slightly more honest conversation between politicians and the public.

Leading figures in all parties have long been told not to talk about certain issues, or to frame them in particular ways, in order to avoiding having to confront what is judged to be entrenched popular opinion. In relation to housing policy the iron law is to talk exclusively about home ownership, never implying that this will remain out of reach for millions of families. In relation to the long-term future of the jobs market, the received wisdom is to always talk about advanced manufacturing and low-carbon industries as a major source of new high-skilled employment, as well as beacons of a new economic modernity that lies just around the corner. In relation to generational politics, particularly how the pain arising from spending cuts is distributed across different age groups, the rule that must not be broken is never offend the grey vote -- their benefits must be protected above all else.

To a far greater degree than any of the party leaders would like to admit, these are the shared assumptions of today's politics (there are many others). They bind all parties close together at the same time as they move them further apart from growing ranks of the public. In a vibrant political culture, each of these (and other) nostrums would, at the very least, be subject to challenge; some already sound like political edicts from a bygone era.

The reason they persist, of course, is the continuing power given to opinion polls or, more accurately, what politicians often imagine public sentiment to be.

Take housing policy. It is perfectly sensible for someone on a low income to tell a pollster (as 86 per cent of the public do) that they want to own their own home, at the same time as they may be incredulous that no leading politician in Britain speaks on behalf of the swelling ranks who raise families in rented accommodation with little or no security. (The proportion of low to middle income households under 35 privately renting has almost trebled since 1988, so that now 41 per cent are privately renting).

Equally, large swathes of the public will of course say that it would be a good thing if there were more highly-skilled jobs that involved "making something" (even if all the key studies point to continued long-term decline in manufacturing employment) at the same time as they observe that in the town where they live it is low-skilled service sector work that dominates. They may think it would be good for the economy if there was job growth in new industries; but they might also yearn for someone to look like they have a plan for improving the prospects of those in insecure low-paid work.

Or take the question of how the burden of deficit reduction is shared across the generations. The current cross-party consensus (recently ruffled by Nick Clegg) is not much more sophisticated than "older people vote, and there are a growing number of them, so we should therefore be willing to do whatever we can to avoid upsetting them even if it means defending entitlements for more affluent pensioners at the same time as younger people and working families face swinging cuts". Again, it is perfectly possible for at least some middle-class pensioners to state in a focus group that they wouldn't be much pleased with the removal of their winter-fuel allowance, at the same time as they might be profoundly concerned about the diminishing prospects for their children and grand-children. They might, however grumpily, countenance some change in their own position if it helped soften the blow to those younger than them.

All this prompts the question of whether another dismal economic year might see some of these settled assumptions challenged. Might one of the party leaders decide the growing dissonance between Westminster rhetoric and the daily reality of large parts of the electorate is so large that that it is now in their interests to take a risk? Westminster sages from all sides are likely to snort with derision at this: as if political leaders would be seen making a fuss about rented accommodation, or highlighting the inevitability and importance of new retail jobs.

Inertia and conservatism may win out as they often do in contemporary politics. Perhaps, as some pollsters think, our economic position will have to get far worse, for far longer, before politicians decide to take risks with the electorate. But I'm not so sure. As 2012 drags on and people's sense of anger about their prospects intensifies, and with it their frustration with politicians who endlessly empathise about "the squeeze" but have very little practical to say about what to do about it -- indeed, as leading politicians themselves become ever more disillusioned with the inadequacy of their own words -- then the established rules of the game will come under pressure as never before. Is Clegg really going to go carry on feigning support for deeper cuts to working families at the same time as the most affluent pensioners are unscathed? Will yet more wheezes for first-time buyers continue to be presented by all parties as the real answer to the housing problems of families who have as little a prospect of getting to the top of the social housing list as they do raising a deposit to purchase a home?

Here's hoping that amidst the impending gloom of 2012 there are some growing flickers of political candour.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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How austere will Philip Hammond be?

The Chancellor must choose between softening or abandoning George Osborne's approach in his Autumn Statement. 

After becoming Chancellor, Philip Hammond was swift to confirm that George Osborne's budget surplus target would be abandoned. The move was hailed by some as the beginning of a new era of fiscal policy - but it was more modest than it appeared. Rather than a statement of principle, the abandonment of the 2019-20 target was merely an acceptance of reality. In the absence of additional spending cuts or tax rises, it would inevitably be missed (as Osborne himself recognised following the EU referendum). The decision did not represent, as some suggested, "the end of austerity".

Ahead of his first Autumn Statement on 23 November, the defining choice facing Hammond is whether to make a more radical break. As a new Resolution Foundation report notes, the Chancellor could either delay the surplus target (the conservative option) or embrace an alternative goal. Were he to seek a current budget suplus, rather than an overall one (as Labour pledged at the last general election), Hammond would avoid the need for further austerity and give himself up to £17bn of headroom. This would allow him to borrow for investment and to provide support for the "just managing" families (as Theresa May calls them) who will be squeezed by the continuing benefits freeze.

Alternatively, should Hammond merely delay Osborne's surplus target by a year (to 2020-21), he would be forced to impose an additional £9bn of tax rises or spending cuts. Were he to reject any further fiscal tightening, a surplus would not be achieved until 2023-24 - too late to be politically relevant. 

The most logical option, as the Resolution Foundation concludes, is for Hammond to target a current surplus. But since entering office, both he and May have emphasised their continuing commitment to fiscal conservatism ("He talks about austerity – I call it living within our means," the latter told Jeremy Corbyn at her first PMQs). For Hammond to abandon the goal of the UK's first budget surplus since 2001-02 would be a defining moment. 

George Eaton is political editor of the New Statesman.