Osborne's very limited apology

The problem with the Budget wasn't merely presentational.

George Osborne is proud of his reputation as the Conservatives' pre-eminent political strategist, so it will have been painful for him to admit that he mishandled the politics of the Budget - the event that precipitated the "omnishambles". In today's Mail on Sunday, he concedes that the decision to abolish the 50p tax rate overshadowed the increase in the personal allowance: "The way the Budget was presented meant this message (helping low-earners) wasn’t heard. I take responsibility for that."

But as Douglas Alexander argued on The Andrew Marr Show, the problem with the Budget wasn't (or wasn't only) one of style but one of substance. It was impossible for Osborne to deliver a Budget that cut taxes for the top one per cent of earners without this tarnishing every other measure. As apologies go, then, the Chancellor's is a very limited one. Nor will he accept that his excessive austerity measures bear any responsibility for the double-dip. Appearing on the Marr show this morning, he repeated the familiar mantra that the eurozone crisis and the 2008 financial crisis were wholly to blame.

In his analysis of the local election results, he rightly rejected the absurd claim by some Conservative backbenchers that David Cameron's support for gay marriage and House of Lords reform led to voters deserting the Tories ("simply not the case"). Osborne, a genuine social liberal, also dismissed the claim in today's Sunday Times (£) that the government is backtracking on gay marriage. There was never due to be legislation in the Queen's Speech and the consultation period isn't over. "We are socially progressive country and it's something I suppport but let's hear what people have to say," he said. At the same time, he strongly hinted that the government has little desire to pursue House of Lords reform. "Parliament can discuss these issues, Parliament is very good at debating constitutional reform but it is certainly not my priority, it is not the priority of the government," he said. There will be no cast-iron commitment to Lords reform in the Queen's Speech.

The most intriguing section of the interview, however, was on today's French election. Some on the right have portrayed François Hollande as a dangerous socialist (as opposed to a moderate social democrat) but Osborne observed: "he's not anti-austerity actually. He has not departed from the message that you've got to deal with the French deficit." Indeed, Hollande has pledged to eliminate his country's 5.2 per cent deficit by 2017, just a year later than Nicolas Sarkozy. The irony is that were Hollande a British politician, his commitment to a more balanced plan and to fiscal stimulus would see Osborne dismiss him as a "deficit denier".

George Osborne chats with aides before the start of the G20 Finance Ministers and Central Bank Governors Meeting. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.