Osborne's reputation continues to unravel

The "pasty tax" U-turn shows Osborne is now losing the politics as well as the economics.

Until recently, the received wisdom was that George Osborne was losing the economic battle (the economy has shrunk by 0.4 per cent since the Spending Review) but winning the political war. Labour's poll lead seemed fragile (remember Cameron's veto bounce?) and the Tories were still more trusted on the economy. Now, as the sudden U-turn on the "pasty tax" confirms, the politics have became problematic too.

The coalition's previous U-turns - on the forests sell-off, school milk, Bookstart, school sports, anonymity for rape suspects and NHS direct - were at least made from a position of relative strength. The government could plausibly argue that it was "listening" to public opinion and observe that U-turns are an occupational hazard of coalitions. But after the "omnishambles" precipitated by Osborne's Budget, the latest policy reversals (on the pasty tax, the caravan tax and secret courts) feel like a desperate (and likely worthless) attempt to regain public approval. They will also create an unrealistic hope among voters of U-turns on similarly controversial issues.

In the case of Osborne, we can expect the U-turns to provoke another series of jibes about "the part-time Chancellor" (Osborne is both Chancellor and the Tories' chief election strategist). Had he burned a little more midnight oil, rather than jetting off, less than a week before the Budget, to join David Cameron's US junket, some of the damage could have been prevented.

Yet Osborne's decision to cut the 50p tax rate (which polls showed even Tory voters supported) meant the Budget was always destined to be a political disaster. Voters always resent new taxes but Osborne's willingness to cut taxes for the 1 per cent meant their resentment was even greater. "We are not all in this together" was the conclusion they rightly drew.

As a result, the public are also now less willing to give Osborne the benefit of the doubt on deficit reduction and growth - the Chancellor's previous stronghold. A poll in today's Independent finds that seven out of 10 people want Osborne to adopt a "plan B" to give growth priority over cuts, while elsewhere, YouGov shows that Labour maintains its new-found lead on the economy.  The Chancellor, once regarded as the natural successor to Cameron, will struggle to restore his political reputation.

A baker holds a tray of pastries as she joins supporters outside Downing Street in London on April 26, 2012 to protest and deliver a petition against the so-called 'pasty tax'. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Show Hide image

Leader: The angry middle

As a sense of victimhood extends even to the middle classes, it makes Western democracies much more difficult to govern.

Two months after the United Kingdom’s vote to leave the European Union, it remains conventional wisdom that the referendum result was largely a revolt by the so-called left behind. Yet this is not the full picture. Many of the 52 per cent who voted Leave were relatively prosperous and well educated, yet still angry and determined to deliver a shock to the political system. We should ask ourselves why the English middle class, for so long presumed to be placid and risk-averse, was prepared to gamble on Brexit.

Populism has long appealed to those excluded from political systems, or from a share in prosperity. In recent years, however, its appeal has broadened to young graduates and those on above-average incomes who also feel that they have not benefited from globalisation. The sense of middle-class victimhood has become a major strand in Western politics.

In the United States, middle-class anger has powered support for Bernie Sanders and Donald Trump. The former drew his activist base mostly from young liberals. And while Mr Trump’s success in the Republican primaries was often attributed to a working-class insurrection against “the elites”, exit poll data showed that the median yearly income of a Trump voter was $72,000, compared with a national average of $56,000. (For supporters of Hillary Clinton, the figure was roughly $61,000.) It is not the have-nots who have powered Mr Trump’s rise, but the have-a-bits.

In the UK, similar forces can be seen in the rise of Jeremy Corbyn. Indeed, research shows that three-quarters of Labour Party members are from the top social grades, known as ABC1. About 57 per cent have a degree.

Mr Sanders, Mr Trump and Mr Corbyn have very different policies, ideologies and strategies, but they are united by an ability to tap into middle-class dissatisfaction with the present order. Some of that anger flows from politicians’ failure to convey the ways in which society has improved in recent years, or to speak truthfully to electorates. In the UK and much of the West, there have been huge gains – life expectancy has risen, absolute poverty has decreased, teenage pregnancy has fallen to a record low, crime rates have fallen, and huge strides have been made in curbing gender, sexual and racial discrimination. Yet we hear too little of these successes.

Perhaps that is why so many who are doing comparatively well seem the most keen to upset the status quo. For instance, pensioners voted strongly to leave the EU and are the demographic from which Ukip attracts most support. Yet the over-65s are enjoying an era of unprecedented growth in their real incomes. Since 2010, the basic state pension has risen by over four times the increase in average earnings. 

Among young people, much of their anger is directed towards tuition fees and the iniquities of the housing market. Yet, by definition, tuition fees are paid only by those who go into higher education – and these people receive a “graduate bonus” for the rest of their lives. Half of school-leavers do not attend university and, in a globalised world, it is their wages that are most likely to be undercut by immigration.

However, we should not be complacent about the concerns of the “angry middle”. The resentment exploited by Donald Trump is the result of 40 years of stagnant median wages in the United States. In Japan and Germany, median wages have not increased in the past two decades. In the UK, meanwhile, the median income for those aged 31-59 is no greater than it was in 2007, and those aged 22-30 are 7 per cent worse off, according to the Institute for Fiscal Studies.

To compound the problem, the wealthy keep getting wealthier. In 1980, American CEOs were paid 42 times the wage of the average worker. They are now paid 400 times as much. In the UK, the share of household income going to the top 1 per cent has more than doubled since 1979. Because of our hyperconnected, globalised media culture, we see more of the super-rich, fuelling feelings of resentment.

As a sense of victimhood extends even to the middle classes, it makes Western democracies much more difficult to govern, with voters oscillating between populists of the left and the right. The political centre is hollowing out. Rather than pander to the populists, we must do more to quell the politics of victimhood by addressing the root of this corrosive sense of grievance: entrenched inequality. 

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser