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

Photo: Getty
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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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