Labour goes on the attack with new Cameron poster

New poster mocks Tory election line, stating: "I'm cutting the NHS. Not the deficit."

With the Tories preparing to gather in Birmingham, the Labour attack machine has sprung into life with the launch of a new poster and a borrowing counter. Following her Q&A with Andy Burnham earlier this week, my colleague Caroline Crampton revealed that Labour was planning a parody of the famous "airbrushed" image of Cameron - and here it is.

The line "I'm cutting the NHS" is based on Treasury figures showing that since 2010, health spending has fallen from £105,073 million to £104,333 million in real terms, while the line "not the deficit" is based on the most recent borrowing figures from the ONS, which showed that borrowing so far this financial year was 21.8% (£10.6bn) higher than in the same period last year.

Labour states:

This means that in the first five months of the year the UK was borrowing:

o        £69.3 million more a day
o        £2.9 million more an hour
o        £48,112 more a minute
o        £802 more a second

In response, we can expect the Tories to point out that they have reduced the deficit by a quarter since coming to office (from £159bn in 2009-10 to £119.3bn in 2011-12), while arguing that the NHS figures are merely the result of an underspend, not a deliberate decision to cut.

But while George Osborne may have a good story to tell on the deficit at the moment (polling found that voters were more inclined to support the coalition's austerity measures when told that annual borrowing had fallen by a quarter), the disappearance of growth means that this trend will not continue. Forecasters expect the government to miss its deficit target for this year (£119.9bn) by as much as £30bn. For the first time since Osborne entered No. 11, borrowing is set rise in annual terms, a significant blow to his political narrative of "balancing the books". By 2015, the Tories hope, the situation will have improved, but for now, this is a powerful attack line for Labour.

George Eaton is political editor of the New Statesman.

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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.