Why is the Spending Review being held now? So Osborne can try and beat up Ed Balls

The Chancellor's decision to set out plans for 2015-16 nearly two years in advance has everything to do with politics and nothing to do with economics.

One question that has been asked all too rarely in coverage of the Spending Review is "why it is being held now?" There is no constitutional or economic requirement for George Osborne to set out spending plans for 2015-16 this far in advance. The current spending period (2011-15) doesn't end until April 2015 and it would have been prudent to wait until the preceding October (as in the case of the previous two reviews) when more recent forecasts will have been produced. 

Osborne's decision not to do so has everything to do with politics and nothing to do with economics. By announcing spending limits for the first year after the election, the Conservatives’' chief political strategist is seeking to draw the battlelines in his party's favour. He knows that if Labour accepts his plans it will be accused of intellectual surrender and that if it rejects them it will be accused of fiscal recklessness.

As apprentices of Gordon Brown, who similarly used the baseline as a weapon of political war, Ed Miliband and Ed Balls were well prepared for this trap. Their pre-emptive response was to accept Osborne's current spending limits, while leaving open the possibility of greater capital investment. For both political and economic reasons, it was the right decision. While the public remain sceptical of the Keynesian case for higher borrowing, polls show that they recognise the benefits of investing in areas such as housing, which boost output in the short and long run, generate employment and ultimately aid deficit reduction. With its own currency, its own independent monetary policy and its above average debt maturity, Britain can afford to borrow for growth without fear of a dangerous rise in bond yields. The risks of inaction, in the form of permanently lower growth and higher unemployment, far outweigh the risks of action.
 
Nearly two years before the end of the current spending period, Osborne's relentless focus should have been on generating growth (as ConservativeHome's Mark Wallace also argues this morning), not on squeezing £11.5bn of cuts out of ministers who may not even be around to implement them. But ever since he entered office, the Chancellor has rarely been able to resist the temptation to put politics before economics. Forget growth, forget jobs, forget deficit reduction even, Osborne has got an election to win and he thinks beating up Ed Balls will help. Your fate, dear voter, is the last thing on his mind today. 
George Osborne walks along The Strand towards a branch of Lloyds bank. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Theresa May is paying the price for mismanaging Boris Johnson

The Foreign Secretary's bruised ego may end up destroying Theresa May. 

And to think that Theresa May scheduled her big speech for this Friday to make sure that Conservative party conference wouldn’t be dominated by the matter of Brexit. Now, thanks to Boris Johnson, it won’t just be her conference, but Labour’s, which is overshadowed by Brexit in general and Tory in-fighting in particular. (One imagines that the Labour leadership will find a way to cope somehow.)

May is paying the price for mismanaging Johnson during her period of political hegemony after she became leader. After he was betrayed by Michael Gove and lacking any particular faction in the parliamentary party, she brought him back from the brink of political death by making him Foreign Secretary, but also used her strength and his weakness to shrink his empire.

The Foreign Office had its responsibility for negotiating Brexit hived off to the newly-created Department for Exiting the European Union (Dexeu) and for navigating post-Brexit trade deals to the Department of International Trade. Johnson was given control of one of the great offices of state, but with no responsibility at all for the greatest foreign policy challenge since the Second World War.

Adding to his discomfort, the new Foreign Secretary was regularly the subject of jokes from the Prime Minister and cabinet colleagues. May likened him to a dog that had to be put down. Philip Hammond quipped about him during his joke-fuelled 2017 Budget. All of which gave Johnson’s allies the impression that Johnson-hunting was a licensed sport as far as Downing Street was concerned. He was then shut out of the election campaign and has continued to be a marginalised figure even as the disappointing election result forced May to involve the wider cabinet in policymaking.

His sense of exclusion from the discussions around May’s Florence speech only added to his sense of isolation. May forgot that if you aren’t going to kill, don’t wound: now, thanks to her lost majority, she can’t afford to put any of the Brexiteers out in the cold, and Johnson is once again where he wants to be: centre-stage. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.