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.

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Iain Duncan Smith says what most Brexiters think: economic harm is a price worth paying

The former cabinet minister demonstrated rare candour by dismissing the "risks" of leaving the EU.

Most economists differ only on whether the consequences of Brexit would be terrible or merely bad. For the Leave campaign this presents a problem. Every referendum and general election in recent times has been won by the side most trusted to protect economic growth (a status Remain currently enjoys).

Understandably, then, the Brexiters have either dismissed the forecasters as wrong or impugned their integrity. On Tuesday it was the turn of the Institute for Fiscal Studies (IFS), one of the most revered bodies in Westminster. In response to its warning that Brexit would mean a further two years of austerity (with the hit to GDP wiping out George Osborne's forecast surplus), the Leave campaign derided it as a "paid-up propaganda arm of the European commission" (the IFS has received £5.6m from Brussels since 2009). 

The suggestion that the organisation is corrupt rightly provoked outrage. "The IFS - for whom I used to work - is not a paid up propaganda arm of the EU. I hope that clears that up," tweeted Brexit-supporting economist Andrew Lilico. "Over-simplified messaging, fear-mongering & controversialism are hard-minded campaigning. Accusing folk of corruption & ill intent isn't." The Remain campaign was swift to compile an array of past quotes from EU opponents hailing the IFS. 

But this contretemps distracted from the larger argument. Rather than contesting the claim that Brexit would harm the economy, the Leave campaign increasingly seeks to change the subject: to immigration (which it has vowed to reduce) or the NHS (which it has pledged to spend more on). But at an event last night, Iain Duncan Smith demonstrated rare candour. The former work and pensions secretary, who resigned from the cabinet in protest at welfare cuts, all but conceded that further austerity was a price worth paying for Brexit. 

"Of course there's going to be risks if you leave. There's risks if you get up in the morning ...There are risks in everything you do in life," he said when questioned on the subject. "I would rather have those risks that we are likely to face, headed off by a government elected by the British people [and] governing for the British people, than having a government that is one of 27 others where the decisions you want to take - that you believe are best for the United Kingdom - cannot be taken because the others don't agree with you."

For Duncan Smith, another recession is of nothing compared to the prize of freedom from the Brussels yoke. Voters still reeling from the longest fall in living standards in recent history (and who lack a safe parliamentary seat) may disagree. But Duncan Smith has offered an insight into the mindset of a true ideologue. Remain will hope that many more emulate his honesty. 

George Eaton is political editor of the New Statesman.