The real message of Osborne's Budget: as you were, only poorer

The Chancellor's gamble remains that the growth will come, that the pain will be followed by gain. But he has been wrong every time so far.

It always takes a few days for a clear picture to emerge of the economic measures that the Chancellor puts in his Budget. The Treasury is in the business of pushing its preferred analysis to the front; journalists and opposition parties are in the business of ferreting around for buried bodies out the back.

In this case we’ll have to wait even longer than usual because George Osborne’s fourth budget is really the first half of a story to be continued in the spending review in June. Today’s measures are advertised as fiscally neutral – meaning any tax cuts are balanced with rises elsewhere or equivalent cuts to spending. The Treasury says there is money available for some of the Chancellor’s giveaways from departmental “underspend”, from a crackdown on “aggressive tax avoidance” and from previously announced adjustments to the inheritance tax threshold. But the reality is that Osborne wanted to finish his Budget speech with the overall level of taxation lower than when he started, which he did – corporation tax, beer duty, fuel duty, the income tax threshold and employer national insurance contributions are the headline reductions. And in the absence of growth and no certainty that Excehquer revenues will rise any time soon, the pressure of desperately chasing a receding deficit-reduction target necessarily falls on the departments whose budgets are not “ring-fenced”.

The spending review will impose another £11.5bn in cuts on top of savings made in previous spending rounds and budgets. The negotiations between the Treasury and ministers and between the two coalition parties over what that means in practice and who takes the pain will dominate politics over the next three months. Tory ministers as much as Lib Dems are starting to get seriously Bolshie in resisting the axe blows raining down on their heads.

So what we heard today was above all a statement of political positioning by the Chancellor. He has no intention of conceding that his own policies are in any way responsible for the parlous state of the national finances (deficit reduction stalled; debt rising) so he is obliged to pretend that the broad outline of the strategy is the right one and that only extraneous and transient factors are to blame for disappointing economic performance.

Osborne was careful in his preamble to make sure the latest round of turbulence in the eurozone was well advertised. The mangy dog of a continental crisis, he seemed to be saying, ate his growth homework. This is consistent with conversations I’ve had with people in the Treasury in recent months who insist that the measures taken by the coalition so far are exactly the right ones to “create the conditions for growth” and that the only problem is that the growth itself is just a bit later arriving than they had hoped. I think a lot of them genuinely believe this to be the case and that good times – or at least better times – are around the corner. Then, like passengers queuing for a bus in the freezing rain, British voters will be so grateful for the arrival of a nice warm recovery that they will sink happily into their seats, forget the anger they were nursing just moments before and thank the Tory driver on polling day.

With that scenario in mind, the Chancellor was today sending signals of encouragement to people whose support the Tories desperately need but who might be losing faith. That is, in essence, people on low and middle incomes, struggling to get by on stagnant wages, with onerous childcare costs, worrying about how they might look after ageing parents and generally weighed down by the rising cost of living.

What Osborne’s study of opinion polls and focus groups will have told him is that many of these people are surprisingly stoical about the economy. They accept the Tory argument that Britain collectively “lived beyond its means” and they see honesty about the need for painful restraint on spending as the starting point for any politician wanting to be taken seriously as a manager of the economy. But separately, confidence in the coalition to run anything at all is slipping badly. The general aura of policy reversal, shambles, disunity and the gloom of prolonged stagnation has seen voters drifting away from the Tories, some to Labour, some to Ukip, many to floating abstention.

In particular, Osborne has his eye on voters who once flocked to the Thatcher message of self-reliance and enterprise – the “aspiration nation”. He wants to revive the idea that the Tory party is primarily for people who want to get on in life (as opposed to the current hazardous perception that it is run for people who have already arrived and are rolling in privilege). Hence the emphasis on mortgage underwriting devices to help people both get onto the property ladder and advance further up it; hence accelerating the rise in personal income tax allowance; hence also the emphasis on helping small enterprises take on more staff; hence the mini-favours on beer duty and fuel. This is a budget that is meant to feel like the Chancellor buying a pint for a family man with a van in a marginal seat in Essex and saying “I know it’s hard, but we’ll get there in the end.”

The problem, of course, is that there is no evidence that we are going anywhere at all. The underlying gamble is the same is it has been in Osborne’s previous three budgets – that the growth will come, that the pain will be followed by gain. He has been wrong every time so far and each time the net effect of cuts in services, freezes in wages and rising inflation is to make life that bit harder for the people the Chancellor is supposed to be wooing. The real message to most British people is bleak and simple: as you were, only poorer.

George Osborne poses for pictures outside 11 Downing Street in London, on March 20, 2013, as he prepares to unveil the Budget. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Erdogan’s purge was too big and too organised to be a mere reaction to the failed coup

There is a specific word for the melancholy of Istanbul. The city is suffering a mighty bout of something like hüzün at the moment. 

Even at the worst of times Istanbul is a beautiful city, and the Bosphorus is a remarkable stretch of sea. Turks get very irritated if you call it a river. They are right. The Bosphorus has a life and energy that a river could never equal. Spend five minutes watching the Bosphorus and you can understand why Orhan Pamuk, Turkey’s Nobel laureate for literature, became fixated by it as he grew up, tracking the movements of the ocean-going vessels, the warships and the freighters as they steamed between Asia and Europe.

I went to an Ottoman palace on the Asian side of the Bosphorus, waiting to interview the former prime minister Ahmet Davu­toglu. He was pushed out of office two months ago by President Recep Tayyip Erdogan when he appeared to be too wedded to the clauses in the Turkish constitution which say that the prime minister is the head of government and the president is a ceremonial head of state. Erdogan was happy with that when he was prime minister. But now he’s president, he wants to change the constitution. If Erdogan can win the vote in parliament he will, in effect, be rubber-stamping the reality he has created since he became president. In the days since the attempted coup, no one has had any doubt about who is the power in the land.

 

City of melancholy

The view from the Ottoman palace was magnificent. Beneath a luscious, pine-shaded garden an oil tanker plied its way towards the Black Sea. Small ferries dodged across the sea lanes. It was not, I hasten to add, Davutoglu’s private residence. It had just been borrowed, for the backdrop. But it reminded a Turkish friend of something she had heard once from the AKP, Erdogan’s ruling party: that they would not rest until they were living in the apartments with balconies and gardens overlooking the Bosphorus that had always been the preserve of the secular elite they wanted to replace.

Pamuk also writes about hüzün, the melancholy that afflicts the citizens of Istanbul. It comes, he says, from the city’s history and its decline, the foghorns on the Bosphorus, from tumbledown walls that have been ruins since the fall of the Byzantine empire, unemployed men in tea houses, covered women waiting for buses that never come, pelting rain and dark evenings: the city’s whole fabric and all the lives within it. “My starting point,” Pamuk wrote, “was the emotion that a child might feel while looking through a steamy window.”

Istanbul is suffering a mighty bout of something like hüzün at the moment. In Pamuk’s work the citizens of Istanbul take a perverse pride in hüzün. No one in Istanbul, or elsewhere in Turkey, can draw comfort from what is happening now. Erdogan’s opponents wonder what kind of future they can have in his Turkey. I think I sensed it, too, in the triumphalist crowds of Erdogan supporters that have been gathering day after day since the coup was defeated.

 

Down with the generals

Erdogan’s opponents are not downcast because the coup failed; a big reason why it did was that it had no public support. Turks know way too much about the authoritarian ways of military rule to want it back. The melancholy is because Erdogan is using the coup to entrench himself even more deeply in power. The purge looks too far-reaching, too organised and too big to have been a quick reaction to the attempt on his power. Instead it seems to be a plan that was waiting to be used.

Turkey is a deeply unhappy country. It is hard to imagine now, but when the Arab uprisings happened in 2011 it seemed to be a model for the Middle East. It had elections and an economy that worked and grew. When I asked Davutoglu around that time whether there would be a new Ottoman sphere of influence for the 21st century, he smiled modestly, denied any such ambition and went on to explain that the 2011 uprisings were the true succession to the Ottoman empire. A century of European, and then American, domination was ending. It had been a false start in Middle Eastern history. Now it was back on track. The people of the region were deciding their futures, and perhaps Turkey would have a role, almost like a big brother.

Turkey’s position – straddling east and west, facing Europe and Asia – is the key to its history and its future. It could be, should be, a rock of stability in a desperately un­stable part of the world. But it isn’t, and that is a problem for all of us.

 

Contagion of war

The coup did not come out of a clear sky. Turkey was in deep crisis before the attempt was made. Part of the problem has come from Erdogan’s divisive policies. He has led the AKP to successive election victories since it first won in 2002. But the policies of his governments have not been inclusive. As long as his supporters are happy, the president seems unconcerned about the resentment and opposition he is generating on the other side of politics.

Perhaps that was inevitable. His mission, as a political Islamist, was to change the country, to end the power of secular elites, including the army, which had been dominant since Mustafa Kemal Atatürk created modern Turkey after the collapse of the Ottoman empire. And there is also the influence of chaos and war in the Middle East. Turkey has borders with Iraq and Syria, and is deeply involved in their wars. The borders do not stop the contagion of violence. Hundreds of people have died in the past year in bomb attacks in Turkish cities, some carried out by the jihadists of so-called Islamic State, and some sent by Kurdish separatists working under the PKK.

It is a horrible mix. Erdogan might be able to deal with it better if he had used the attempted coup to try to unite Turkey. All the parliamentary parties condemned it. But instead, he has turned the power of the state against his opponents. More rough times lie ahead.

Jeremy Bowen is the BBC’s Middle East editor. He tweets @bowenbbc

This article first appeared in the 28 July 2016 issue of the New Statesman, Summer Double Issue