Osborne's failure could cost the Tories a majority

The Chancellor will no longer be able to wipe the slate clean and offer tax cuts.

This morning's papers make grim reading for George Osborne. Unemployment is at a 17-year high and is likely to rise further. Growth is now expected to be just 1 per cent this year and next. Worst of all for the Chancellor, a deficit hawk, the government will be forced to borrow around £109bn more than forecast at the time of Spending Review and billions more than Alistair Darling would have. In addition, it is thought that Osborne will miss his target to eliminate the structural deficit by 2014-15 - the part of the deficit that remains even after growth has returned to normal - owing to the fact that the output gap - the difference between potential GDP and actual GDP - was smaller than thought. For the Tories, whose political fortunes are intertwined with those of economy, these are troubling times.

Osborne's pledge to eliminate the structural deficit in one parliament was based on a political timetable, not an economic one. By 2015, Osborne envisaged that the Tories would be able to boast that they had claned up "the mess" left by Labour - a powerful political narrative - and offer cuts in personal taxation. But anaemic growth, higher unemployment and, consequently, higher borrowing mean that this is an increasingly distant dream. Osborne's ultimate goal - a Tory majority - is slipping out of reach. As Peter Oborne writes in his Telegraph column this morning:

If the Chancellor gets it right, David Cameron's Conservative Party will probably command a majority after the next general election. If Osborne gets it wrong, his friend Cameron will go down in history as an Old Etonian version of Gordon Brown: a one-term prime minister who never won a general election ... Eighteen months after David Cameron entered Downing Street, it can be stated with stone cold certainty that George Osborne's economic strategy is not working.

Despite Labour's consistent lead in the opinion polls, there is a default assumption in Westminster that the next election is likely to result in a Tory majority. But several factors mean that this is no longer the case. The Tories continue to struggle in the north, where Labour leads by 28 points, and in Scotland, where Labour leads by 16 points. Ukip's recent surge in support - the party is on 6 per cent in the latest YouGov poll - is also troubling Tory strategists. Nigel Farage's party cost the Tories up to 21 seats at the last election (there were 21 constituencies in which the Ukip vote exceeded the Labour majority) and could cost them even more next time round. Finally, as Andrew Cooper, Cameron's pollster, knows all too well, the Tories remain the most toxic party. While 70 per cent of the electorate say they would be prepared to vote for Labour, just 58 per cent say they would consider voting Conservative. As ConservativeHome's Tim Montgomerie noted recently, "In order to win an election we need to convert a good three quarters of our potential voters while Labour only needs to capture a much smaller proportion."

The hope among the Tories was that the success of Osborne's economic plan would override all of this. A grateful electorate would rush to thank the Iron Chancellor for balancing the books. But the near-collapse of growth means that there is no chance of Osborne wiping the slate clean. The question the electorate, facing the biggest squeeze on living standards since the 1920s, will ask is "what was all the pain for?" The Tories had better have a very good answer.

George Eaton is political editor of the New Statesman.

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Zac Goldsmith to quit as Tory MP after Heathrow decision announced

The environmentalist is expected to stand as an independent candidate.

Zac Goldsmith, the MP for Richmond Park and North Kingston, and a committed environmentalist, has announced his resignation after the government backed a third runway at Heathrow. 

He has told his local Conservative association of the decision, according to The Huffington Post. The group has reportedly agreed to back him as an independent in a by-election.

Goldsmith tweeted: "Following the Government's catastrophic Heathrow announcement, I will be meeting my constituents later today before making a statement."

Goldsmith had previously pledged to resign if the government went ahead with the decision. By quitting, he will trigger a by-election, in which he is expected to stand as an independent candidate. 

Speaking in the Commons, he said the project was "doomed" and would be a "millstone" around the government's neck. He said: "The complexities, the cost, the legal complications mean this project is almost certainly not going to be delivered."


However, there is no guarantee it is a by-election he will win. Here's Stephen Bush on why a Richmond Park and Kingston by-election could be good news for the Lib Dems.

After years of speculation, the government announced on Tuesday it was plumping for Heathrow instead of Gatwick. Transport secretary Chris Grayling called it a "momentous" decision.

The announcement will please business groups, but anger environmentalists, and MPs representing west London constituencies already affected by the noise pollution. 

In a recent post on his constituency website, Goldsmith highlighted the noise levels, the risk of flying so many planes over densely-populated areas, and the political fallout. He declared: "I promised voters I would step down and hold a by-election if Heathrow gets the go-ahead and I will stand by that pledge."

Once a Tory "nice boy" pin up, Goldsmith's reputation has suffered in the past year due to his campaigning tactics when he ran against Sadiq Khan for London mayor. Advised by strategist Lynton Crosby, Goldsmith tried to play on racial divisions and accused Khan of links to extremists. Despite enjoying support from London's Evening Standard, he lost.

The former mayor of London, Boris Johnson, once declared he would lie down "in front of those bulldozers" but has toned down his objections since becoming foreign secretary.

Green MP Caroline Lucas urged him to follow Goldsmith and resign, so he could team up with her in opposing the extension at Heathrow.

Labour, in contrast, has welcomed the decision. The shadow Transport secretary Andy McDonald said: “We welcome any decision that will finally give certainty on airport expansion, much needed in terms of investment and growth in our country." He urged the government to provide more detail on the proposals.

But London's Labour mayor Sadiq Khan accused the government of "running roughshod" over Londoners' views. He said: "Heathrow expansion is the wrong decision for London, and the wrong decision for the whole of Britain."

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.