Osborne can stop voters worrying by learning to love the state
Soon, the Tories will have no choice but to think of government not as part of the problem, but the
How long after taking power can a government continue to dodge difficult questions by complaining about the legacy of the previous administration? The record is 12 years, ten months and eight days, set by Gordon Brown in parliament on 10 March 2010. He was challenged on reports that British troops in Afghanistan were starved of resources. It was the Conservatives, he retorted, who had cut the defence budget in the decade before 1997.
George Osborne would gladly still be complaining about his parlous budgetary inheritance from Labour in 2023. He certainly won't drop the attack 18 months after entering the Treasury. It has worked for him so far. Opinion polls show that a clear majority thinks that the country's economic problems are Labour's fault, which is to be expected, given that the party was in charge when the bankers went rogue, boom turned to bust, the national debt ballooned and the deficit soared. The Chancellor will wallow in partisan retelling of that story when he delivers his autumn statement on the economy on Tuesday 29 November.
Sleight of hand
Labour's defence is that the public finances were hollowed out by a global financial meltdown, not reckless government spending. A recovery was under way, Ed Balls argues, and has been stifled by Osborne's premature cuts, which have sapped confidence and increased unemployment. For not properly regulating the City, Labour can only apologise, which Balls has done, but on the question of who had the wiser response to the credit crunch, the shadow chancellor feels vindicated. And while the government is minded to blame weak growth on the eurozone crisis, Labour retorts that stagnation was apparent months before Continental turbulence could have shown up in the data.
The problem with this argument is that it is hypothetical and forensic, while voters respond to political messages that are emotional and rooted in the present. They do not want to hear about a parallel universe where Balls was in charge and his plans worked better, nor do they look at graphs to work out when the coalition became responsible for their pain.
The Tories have sidestepped technical debate with neat parables of collective belt-tightening, trumping Labour's economic arguments with piggy-bank politics. Although Osborne has never promised that healing Britain's economy would be painless, he has implied that the remedy is simple.Some Tories are nervous that the Chancellor has raised false hopes with his homily of the maxed-out national credit card. MPs say that their constituents are stoic about cuts, because they imagine that the government is paying off the national debt, when in reality the goal is to hold it at a sustainable level. No 10 is managing expectations downward. "Getting debt under control is proving harder than anyone envisaged," the Prime Minister said in a speech on 21 November.
That warning contains a recognition that the Tories' political strategy has been undermined by economic stagnation. Osborne was counting on a "mission accomplished" moment when he could declare victory over the deficit in a pre-election budget and celebrate with tax cuts. He is still probably on course to fulfil his formal "fiscal mandate" of eliminating the structural deficit over five years, as judged by the Office for Budget Responsibility (OBR). That is because, by an accounting sleight of hand, the five-year horizon rolls forward every time the OBR passes judgement. (So we are now in year one and will be again next year.) But the Chancellor looks less likely to fulfil the pledge that people remember - to repair the public finances by the end of this parliament. The deal was clear: voters would take the pain if the UK's overdraft was cleared by polling day.
That can't happen without growth, which was supposed to appear spontaneously as private investment filled the space vacated by shrinking government spending. Most Conservatives are still persuaded that cuts and deregulation alone can unlock frustrated enterprise and that unemployment is high because firms are made reluctant to recruit by laws that protect employee rights. That view will be reflected in the Chancellor's statement but balanced with more active intervention to jump-start the economy. There will be promises to upgrade Britain's infrastructure and use Treasury guarantees to increase lending to small businesses through "credit easing". Having slashed budgets last year, the Treasury is trying to accelerate what little spending is permitted under the deficit-reduction programme. As one senior government figure puts it, "[the Treasury Chief Secretary] Danny Alexander has been running around Whitehall, frantically turning the taps on."
This does not indicate some belated conversion to the economics of fiscal stimulus, only a banal realisation that when times are hard, people want to know that their leaders are doing something about it and not just making it easier for their bosses to sack them.
That should not have come as a surprise to Cameron and Osborne but they were made complacent by the ease with which the Tories appeared to win the argument with Labour over the deficit. They mistook the success of attacks on Brown's profligacy for endorsement of the Conservative view that government itself was a malign force. If that were the case, Cameron's vision of a "big society" would have resonated with people. It baffled them. In Tory focus groups conducted after the election, floating voters were unimpressed by promises to "shrink the state". "Lopping off Cornwall?" was one flummoxed interpretation.
Osborne will never stop telling the public that the last government caused the nation's woes, but that approach will come to sound desperate, just as it did when Brown used it, and probably sooner. Meanwhile, the Chancellor is quietly ceding ground to Labour on one of the big ideological arguments of the moment. Voters were sold austerity as a quick remedy to a one-off fiscal emergency, to be dealt with on a clear timetable. As the deadline slips, it will get harder for the Tories to persist in the view that government is part of the problem. They have no choice but to imagine ways in which it can be the solution.