Don't expect Osborne to play a "trump card" at the Budget

The Chancellor's fiscal conservatism means he won't deliver the tax cuts demanded by the right or the spending increases demanded by the left.

On all sides of the coalition, next month's Budget is viewed as the last chance to make a significant difference to growth before the general election. Conservative MPs are urging George Osborne to make radical tax cuts (this week's NS leader looked at Robert Halfon's call for a reinstated 10p tax band; others are pushing for dramatic cuts to corporation tax and capital gains tax), while the Lib Dems are arguing for a major increase in infrastructure spending. As the Times's Rachel Sylvester writes in her column today, the pressure is on Osborne to play "a trump card" when he steps up to the despatch box on 20 March.

But even with Britain facing a triple-dip recession at worst and prolonged stagnation at best, it is doubtful that he will deliver. While Tory MPs argue that any tax cuts would be self-financing and, therefore, that Osborne could act without abandoning his commitment to deficit reduction, the Chancellor does not accept their logic. As he remarked during a recent event at the US-based Manhattan Institute: 

I am more of a Thatcherite than a Reaganite when it comes to tax policy...I'm a fiscal conservative and I don't want to take risks with my public finances on an assumption that we are at some point in the Laffer curve. What I would say is let's see the proof in the pudding, in other words. I'm a low tax conservative, I want to reduce taxes but I basically think you have to do the hard work of reducing the cost of government to pay for those lower taxes.

For Osborne, tax cuts follow successful deficit reduction; they do not precede it.  

On the spending side, while it's possible and even probable that Osborne will raise planned spending on infrastructure (as he did at last year's Autumn Statement), he will only do so by squeezing current spending, limiting the effectiveness of any stimulus. 

To make a difference at this stage, Osborne would finally need to accept the Keynesian argument that governments should intentionally run deficits at times of economic stagnation. But borrowing for growth would be a tacit admission that his nemesis, Ed Balls, was right and he was wrong. And, for largely political reasons, that is something Osborne is not prepared to do. 

George Osborne attends the launch of the OECD's latest economic survey of the UK at the Treasury. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Metro mayors can help Labour return to government

Labour champions in the new city regions can help their party at the national level too.

2017 will mark the inaugural elections of directly-elected metro mayors across England. In all cases, these mayor and cabinet combined authorities are situated in Labour heartlands, and as such Labour should look confidently at winning the whole slate.

Beyond the good press winning again will generate, these offices provide an avenue for Labour to showcase good governance, and imperatively, provide vocal opposition to the constraints of local government by Tory cuts.

The introduction of the Mayor of London in 2000 has provided a blueprint for how the media can provide a platform for media-friendly leadership. It has also demonstrated the ease that the office allows for attribution of successes to that individual and party – or misappropriated in context of Boris Bikes and to a lesser extent the London Olympics.

While without the same extent of the powers of the sui generis mayor of the capital, the prospect of additional metro-mayors provide an opportunity for replicating these successes while providing experience for Labour big-hitters to develop themselves in government. This opportunity hasn’t gone unnoticed, and after Sadiq Khan’s victory in London has shown that the role can grow beyond the limitations – perceived or otherwise - of the Corbyn shadow cabinet while strengthening team Labour’s credibility by actually being in power.

Shadow Health Secretary and former leadership candidate Andy Burnham’s announcement last week for Greater Manchester was the first big hitter to make his intention known. The rising star of Luciana Berger, another member of Labour’s health team, is known to be considering a run in the Liverpool City Region. Could we also see them joined by the juggernaut of Liam Byrne in the West Midlands, or next-generation Catherine McKinnell in the North East?

If we can get a pantheon of champions elected across these city regions, to what extent can this have an influence on national elections? These new metro areas represent around 11.5 million people, rising to over 20 million if you include Sadiq’s Greater London. While no doubt that is an impressive audience that our Labour pantheon are able to demonstrate leadership to, there are limitations. 80 of the 94 existing Westminster seats who are covered under the jurisdiction of the new metro-mayors are already Labour seats. While imperative to solidify our current base for any potential further electoral decline, in order to maximise the impact that this team can have on Labour’s resurgence there needs to be visibility beyond residents.

The impact of business is one example where such influence can be extended. Andy Burnham for example has outlined his case to make Greater Manchester the creative capital of the UK. According to the ONS about 150,000 people commute into Greater Manchester, which is two constituency’s worth of people that can be directly influenced by the Mayor of Greater Manchester.

Despite these calculations and similar ones that can be made in other city-regions, the real opportunity with selecting the right Labour candidates is the media impact these champion mayors can make on the national debate. This projects the influence from the relatively-safe Labour regions across the country. This is particularly important to press the blame of any tightening of belts in local fiscal policy on the national Tory government’s cuts. We need individuals who have characteristics of cabinet-level experience, inspiring leadership, high profile campaigning experience and tough talking opposition credentials to support the national party leadership put the Tory’s on the narrative back foot.

That is not to say there are not fine local council leaders and technocrats who’s experience and governance experience at vital to Labour producing local successes. But the media don’t really care who number two is, and these individuals are best serving the national agenda for the party if they support A-listers who can shine a bright spotlight on our successes and Tory mismanagement.

If Jeremy Corbyn and the party are able to topple the Conservatives come next election, then all the better that we have a diverse team playing their part both on the front bench and in the pantheon of metro-mayors. If despite our best efforts Jeremy’s leadership falls short, then we will have experienced leaders in waiting who have been able to afford some distance from the front-bench, untainted and able to take the party’s plan B forward.