Sketch: sickly George fails to rouse the Tory faithful

Even mentioning Margaret Thatcher brought the Chancellor only desultory applause.

As befits someone whose career had crashed and burned in just six months, he arrived looking like he had come straight from being sick in the toilets. White-faced, rictus grin in place, the Chancellor of the Exchequer stumbled onto the stage at the Tory Party conference looking as if he had been propelled from the wings by some erstwhile friend.
 
The Birmingham venue for the conference is an unhappy looking place reminiscent of the City Varieties in Leeds, where the BBC used to run a music hall programme for those whose careers were dipping. So perhaps it was fitting that the man who had once hoped to follow BF Dave to the top job in British politics should be forced to face his former friends in such a spot.
 
The Prime Minister himself slipped in just seconds before George started to speak, following a vain attempt to warm up the audience by MP Michael Fallon, recently promoted to the government for being able to find good things to say about the Tories on anything from Newsnight to Match of the Day. M Fallon had trotted out three company bosses to explain just how successful the government was proving and the conference, which loves bosses and success, ate it up.
 
Further attempts to deflect attention were made by the man who almost ran the Olympics, shortly to join the government via the House of Lords, who spoke of his desire to bring joined-up thinking to Whitehall. (He is not to be confused with Seb Coe, who did run the Olympics, and who will be brought out on Wednesday to ease the way into the PM's speech.)
 
But it was still as chilly as a Saturday night out in Newcastle as the Chancellor started to speak. The conference is used to being warmed up by ritual denunciation of hate figures like Bob Crow or anybody else the Daily Mail dislikes but George remarkably chose one of their own to try and ease himself off the hook.
 
Former Tory PM Ted Heath was dissed to death as the Chancellor declared that giving into the unions and bending under pressure was not his way. Instead it was the toughness of the Tory PM who followed, Margaret Thatcher, that he intended to follow. Mentioning Mrs T at a Tory Party conference is usually a "get-out of-jail" free card, but even this brought George only desultory applause.
 
He managed to get them going a bit with a bash at those on benefits, but lost them again when he said the rich might have to pay some more. The audience clapped when he said no to a mansion tax but squirmed when he mentioned the poor. And they positively withered away when, for some reason, which will clearly only become obvious when the deals with the Lib Dems are done, he decided to pay them credit. "We could have done none not it without the coalition, " he said and at least six people applauded.
 
There were several more low points in his speech as he reminded them that the hard times were not over by a long shot, that more cuts were needed and that the Hubble Space Telescope would be needed to see the sunlit uplands. By now, the panicked Chancellor must have thought all of his audience were either rolling their eyes or staring off into space as no-one had apparently realised the effect of sticking the big screen, onto which his twitching body was projected, 10 feet above his head. And so, underwhelmed by applause, he finally stopped rather than finished, wisely paused for only five seconds for the official standing ovation and left just before the big hook appeared from the wings to drag him off.
 
Chancellor George Osborne delivers his speech during the second day of the annual Conservative conference in Birmingham. Photograph: Getty Images.

Peter McHugh is the former Director of Programmes at GMTV and Chief Executive Officer of Quiddity Productions

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR