The key contradiction in the Tories’ deficit spin

Was there a Labour plan, or not?

Various half-truths, lies and myths about the deficit have been peddled by the Tories, the Liberal Democrats and their supporters in the press in recent months. Right-wing deficit hawks pretend that the deficit had already ballooned prior to the 2008 banking crash when, in fact, as Labour's new shadow chancellor, Alan Johnson, pointed out in the House of Commons yesterday, this country entered the financial crisis with the second-lowest Budget deficit in the G7.

They also claim that the Blair and Brown governments spent excessively and unwisely in the run-up to the crash, omitting to mention that Messrs Cameron and Osborne backed Labour's spending plans right up until November 2008. (See Jonathan Freedland's excellent column in yesterday's Guardian for further details and observations.)

But the biggest contradiction (lie?) at the heart of the Con-Dem spin strategy concerns their (mis)representation of the Labour Party position on deficit reduction.

In a round of interviews this morning, George Osborne claimed:

People keep saying, "Where's your plan B?" I've got a plan A – this country didn't have any plan at all a few months ago.

Yesterday, however, in his Spending Review in the Commons, he concluded:

I am pleased to tell the House it has been possible – and the average saving in departmental budgets will be lower than the previous government implied in its March Budget. Instead of cuts of 20 per cent there will be cuts of 19 per cent over four years.

So, let me get this straight. The Tories have been saying for months that Labour left the country in a mess, without a deficit reduction plan, that Labour frontbenchers are "deficit deniers", blah, blah, but then, yesterday, Osborne suddenly claims that Labour had planned for 20 per cuts in departmental spending and his 19 per cent cuts were therefore lower than those. But then, this morning, he reverts to form and starts droning on about the alleged absence of a deficit reduction plan until, God bless them, the Con-Dem coalition came to office in May.

This is as absurd as it is dishonest. They cannot claim, on the one hand, that they are making these draconian, swingeing and severe cuts because Labour didn't have the balls or the brains to do so, but then, on the other, claim that Labour's cuts would have been worse than theirs.


You can watch me debating the Spending Review with the Tory blogger Iain Dale and the Chatham House economist Vanessa Rossi on al-Jazeera's Inside Edition here.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

Getty Images.
Show Hide image

Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.