Osborne's rhetorical shift

The Chancellor insists that "flexibility" is built into his plan.

George Osborne conceded little ground to his critics on the Today programme this morning, but there was a notable shift in his rhetoric. To those who have demanded that he produce a "plan B", the Chancellor replied that "flexibility" was already built into his economic strategy.

There is flexibility built into the plan that I announced a year ago... We're talking about the structural deficit, so in other words we allow the automatic stabilisers to operate, which means that the economy can move up and down with the cycle, the government spending can move up and down with the cycle.

It's a point that Osborne could have made at any time over the past year - the government can eliminate the structural deficit (the part of the deficit that remains when the economy returns to growth) even if the overall deficit, owing to higher spending on unemployment benefits (the "automatic stabilisers"), is higher-than-expected. But it's telling that he chose to make it now. Of course, should economic growth continue to disappoint, there's every possibility that Osborne will miss his flagship pledge to eliminate the structural deficit by the end of this Parliament. As I've noted before, anaemic growth means a slower pace of deficit reduction.

Osborne also came close to admitting that the success of his strategy depends on loose monetary policy (interest rates and the exchange rate) compensating for tight fiscal policy (spending cuts and tax rises). He noted: "We of course have an independent monetary policy committee and tighter fiscal policy gives the monetary policy committee greater freedom to operate monetary policy."

Despite the growing clamour for interest rate rises from some quarters, it's clear that the Chancellor both hopes and expects rates to remain at record lows. But how will ministers respond if the Bank of England raises rates prematurely? What is their plan B? That question, sadly, was not put to Osborne today.

As an aside, it's worth noting that Osborne berated the BBC for its allegedly negative coverage of the economy. It's a complaint that almost any politician could make (the truth is that bad news makes for better copy) but Osborne is on less than solid ground here. An economy that was growing at an annual rate of 4 per cent when Labour left office has not grown for the past six months. If the BBC has focused on reporting bad news, it's partly because there really hasn't been much good news. But it's also unwise for the man who repeatedly talked down the British economy in opposition (erroneously describing it as "bankrupt"), to complain of others doing the same.

George Eaton is political editor of the New Statesman.

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Recess confidential: Labour's liquid party

Sniffing out the best stories from Westminster, including Showsec, soames, and Smith-side splits.

If you are celebrating in a brewery, don’t ask Labour to provide the drinks. Because of the party’s continuing failure to secure a security contractor for its Liverpool conference, it is still uncertain whether the gathering will take place at all. Since boycotting G4S, the usual supplier, over its links with Israeli prisons, Labour has struggled to find an alternative. Of the five firms approached, only one – Showsec – offered its services. But the company’s non-union-recognition policy is inhibiting an agreement. The GMB, the firm’s antagonist, has threatened to picket the conference if Showsec is awarded the contract. In lieu of a breakthrough, sources suggest two alternatives: the police (at a cost of £59.65 per constable per hour), or the suspension of the G4S boycott. “We’ll soon find out which the Corbynites dislike the least,” an MP jested. Another feared that the Tories’ attack lines will write themselves: “How can Labour be trusted with national security if it can’t organise its own?”

Farewell, then, to Respect. The left-wing party founded in 2004 and joined by George Galloway after his expulsion from Labour has officially deregistered itself.

“We support Corbyn’s Labour Party,” the former MP explained, urging his 522,000 Facebook followers to sign up. “The Labour Party does not belong to one man,” replied Jess Phillips MP, who also pointed out in the same tweet that Respect had “massively failed”. Galloway, who won 1.4 per cent of the vote in this year’s London mayoral election, insists that he is not seeking to return to Labour. But he would surely be welcomed by Jeremy Corbyn’s director of communications, Seumas Milne, whom he once described as his “closest friend”. “We have spoken almost daily for 30 years,” Galloway boasted.

After Young Labour’s national committee voted to endorse Corbyn, its members were aggrieved to learn that they would not be permitted to promote his candidacy unless Owen Smith was given equal treatment. The leader’s supporters curse more “dirty tricks” from the Smith-sympathetic party machine.

Word reaches your mole of a Smith-side split between the ex-shadow cabinet ministers Lisa Nandy and Lucy Powell. The former is said to be encouraging the challenger’s left-wing platform, while the latter believes that he should make a more centrist pitch. If, as expected, Smith is beaten by Corbyn, it’s not only the divisions between the leader and his opponents that will be worth watching.

Nicholas Soames, the Tory grandee, has been slimming down – so much so, that he was congratulated by Tom Watson, Labour’s deputy leader, on his weight loss. “Soon I’ll be able to give you my old suits!” Soames told the similarly rotund Watson. 

Kevin Maguire is away

I'm a mole, innit.

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