Budget briefings, Osborne’s unpopularity and a bleak future for Cyprus
Laura Kuenssberg's diary.
Decisions, decisions, decisions. As is the norm, if I stop to think about it, most of the week has been spent observing the often agonising, sometimes bewildering and occasionally farcical ways in which decisions are anticipated, discussed, leaked and then, eventually, made in Britain. As I write, we are well into the government’s planned Budget routine. Even the decisions over what to brief – or leak – to create a sense of momentum before the big day are not easy. Housing? Childcare? The confusing pensions policy? Another £2.5bn taken from government departments to be put towards capital spending? Hell, why not brief the lot?
As the Budget feels rather empty, apart from the bleak economic outlook, it’s understandable that the Treasury has got into the habit of giving away rather a lot ahead of time. Team Osborne knows perfectly well that most of us only pay attention to what happens on the day, looking for ourselves among the winners and losers, but officials still strive to create a sense of activity in the run-up.
Whether the sight of David Cameron and Nick Clegg in front of finger paintings at a nursery school as they announce tax breaks for working parents that will begin in over two years’ time really creates a sense of activity is another question. Isn’t an announcement the day before a Budget of an idea for after the next general election an election pledge? At any rate, the decision to reveal some of the nicer bits of the Budget won’t save Osborne from a difficult day.
A man without love
Three years in to the coalition, the public is rather less willing than it was to defend the Chancellor’s decisions. At ITV News, we have been tracking attitudes to the government’s economic plan every week. Our latest findings suggest that nearly half the public would shove the Chancellor out of his job, if it were up to them. Trust in him to see the economy through has ebbed to a new low. A group of punters of mixed political persuasions was divided over whether it would make any difference if the Prime Minister junked his best friend. What the group did agree on was that Osborne was perhaps the “least loved man in the land”.
It isn’t the Chancellor’s job to be popular but faith in him has clearly fallen over time. A chat with a senior business figure, unimpressed by the coalition’s daily distractions but supportive of the overall mission, reminded me of the lessons of politicians past. The former US president Lyndon Johnson, who knew a thing or two about ploughing on in the face of resistance, once said that being in charge is “like being a jackass in a hailstorm. There’s nothing to do but stand there and take it.”
The political tug of war has tried for months now to pull the Chancellor in two directions and it certainly won’t be resolved this week. Away from the big ideological debates –either tearing up the plans and piling debt up even faster or hacking out much more from the public budget, so that spending can start to fall – there are policy decisions that, taken or not taken, could make a difference.
One of the most perverse illustrations of political delay I have ever seen crossed my path recently. There can’t be many of us who don’t yet know about the serious shortages in power supply that threaten to cause havoc in a couple of years’ time. I’m increasingly aware of the frustration in government that big business won’t get out the chequebook. “It can’t have it all its way,” goes the cry. “We are doing our best and big business has a responsibility to start spending, too,” the argument goes. But why would it, when it can’t be sure what will happen next?
Station to station
On 15 March, Cockenzie Power Station in Scotland was closed by ScottishPower – its lights went off, the gates were chained up, the workers were sent home. The company doesn’t want it to stay that way for long. Two years ago, in the glory days of coalition, it was granted planning permission to build a new power station on the same site. It has the cash to do so and is eager to get on with it. Yet without ministers completing the long, very important but tortuous project known as the Energy Bill, the firm won’t spend and the new power station simply will not be built.
Even the planning approval that Ed Davey has given to the mammoth new Hinkley Point C power plant in Somerset doesn’t mean it will go ahead, for similar reasons. EDF still doesn’t have an agreement with the government over whether or not the deal will be worth its while or whether it will pull the plug.
On your marks
At least our politicians haven’t been making decisions as disastrous as those of their counterparts in Cyprus. It was one thing for Brussels to impose unelected technocrats on the voters, as it did in Italy and Greece – but it is quite another to suggest taking cash out of their bank accounts without permission. Just because some of them are allegedly Russian money launderers, it doesn’t make it any less shocking. It was hardly surprising that people who’d stashed away their hard-earned cash were horrified – and that the politicians almost immediately had to redraw the plan.
Although the idea was excruciating, it was at least a way of making up the money. Without a bailout plan that adds up, Cyprus is in deep trouble. German taxpayers don’t want to give it any more. Yet even the faintest whisper of a grand proposition to relieve savers of their money may have killed off any trust that the banks had left. With no faith in the institutions today, why would Cypriot savers leave any of their money in the bank tomorrow? One senior trader told me darkly, “The run is unavoidable. The question is where the money will go and who will take it.” Eurocrats and the Cypriot government may have just made a very bad decision that will be impossible to unpick.
Laura Kuenssberg is the business editor of ITV News