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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Jeremy Corbyn appoints Shami Chakrabarti to lead inquiry into Labour and antisemitism

“Labour is an anti-racist party to its core," says leader.

Jeremy Corbyn has announced plans for an independent inquiry into antisemitism in the Labour party.

The review – led by Shami Chakrabarti, the former director of the human rights campaign group Liberty – will consult with the Jewish community and other minority groups, and report back within two months.

Its vice chair will be the director of the Pears Institute for the Study of Anti-semitism, Professor David Feldman.

The move follows a week in which the party suspended Bradford MP Naz Shah and former London mayor Ken Livingstone, amid claims that both had made antisemitic remarks.

But Corbyn told the Guardian: “Labour is an anti-racist party to its core and has a long and proud history of standing against racism, including antisemitism. I have campaigned against racism all my life and the Jewish community has been at the heart of the Labour party and progressive politics in Britain for more than 100 years.”

He added that he would not see the results of next Thursday's local elections as a reflection of his leadership, and insisted that he would not be held to arbitrary measures of success.

“I’m keeping going, I was elected with a very large mandate and I have a huge responsibility to the people who elected me to this position," he said.

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.