The lesson from history that is shaping Osborne's response to Miliband's price freeze

Labour won no credit when it tried to mimic Osborne's inheritance tax cut in 2007. The Chancellor is determined not to fall into the same trap with Miliband's gambit.

There was an audible sound of heads being scratched across Westminster last night as MPs and aides in all parties tried to work out what Sir John Major was up to. The former Prime Minister took the opportunity of a lunch with journalists to make what politicians like to call an "intervention" – lobbing a feral cat into a room full of particularly excitable pigeons.

There isn’t even agreement on what the better story from Major’s comments was. Tories who are obsessed with the European Union thought it was his revisiting old grudges from the Maastricht rebellions. Everyone else thought it was his suggestion of a windfall tax on energy companies. That was a recognition of the extent to which onerous gas and electricity bills – among other living costs – threaten to deprive the Tories of an economic feel-good factor even in a growing economy.

In recent years, Sir John has rationed his public pronouncements very carefully. When he has appeared on the Today programme it is usually to lend his elder statesman heft to David Cameron when the Prime Minister is under pressure (usually from somewhere in his own party). So naturally, the first response of many yesterday was to ask if this was supposed to be a spot of helpful out-riding – creating a safe political space for No.10 to move into the energy company-bashing business in pursuit of Ed Miliband. The Labour leader’s pledge to freeze bills has discombobulated Tory strategists who want to be on the side of profitable enterprise against lefty ideologues and have ended up siding with loathed corporations against consumers.

Labour MPs and aides were even texting their Tory friends and contacts to ask if that was their interpretation. It wasn’t and Downing Street fairly quickly hosed down any suggestion that it was planning something along the lines that Major proposed. The Treasury is especially disinclined to go down that route. Why?

I do not know what goes on inside George Osborne’s head but someone with a better claim than me to understand his thinking explained it roughly as follows. To best understand why the Chancellor will not want to cook up some policy wheeze to thwart Miliband’s energy offensive requires a brief trip back to autumn 2007.

A defining moment in Osborne’s career was the decision at the Conservative conference that year to call for a cut in inheritance tax. It was, famously, a popular move that disoriented Labour and led, in part, to Gordon Brown’s decision to abandon plans for a snap election. The then Prime Minister’s reputation never recovered from that humiliation. It was, in terms of Osborne’s status in his own party, a famous victory. So what does that have to do with the price of energy?

Well, what is often forgotten in the narration of that episode is that, in addition to freaking out about their election plans, Labour responded with their own half-baked inheritance tax plan. People who were close to the decision at the time insist it was something they had meant to do all along (well they would, wouldn’t they). No matter. The effect was to make the Treasury look more rattled and ineffective than it already did. Labour were never going to get any credit for a reactive inheritance tax move because the simple fact of trying only reinforced the impression that the opposition was setting the agenda and that the government had run out of ideas.

Naturally, Osborne has scrutinised this gambit from every angle. He has played it as a winner and war-gamed it from the perspective of the loser. What he will have concluded is that the Conservatives should not allow themselves to be bounced into any "big energy move". That doesn’t mean that they shouldn’t think of ways to address the fact that people think their bills are too high or that the Tories are on the side of corporate fat cats or that cost-of-living issues will play an important role in the next election. It simply means that they would be ill-advised to aim for one noisy, headline-grabbing initiative to counter Labour’s noisy headline-grabbing initiative. The very last think Osborne wants is to do is come across as a Miliband tribute act. That would be the effect of adopting Major’s windfall tax idea, even if the details of the policy – and the practicalities of implementation – are very different.

The Chancellor’s preferred response is to underline that a return to growth will be the single biggest factor alleviating the squeeze on household finances. He wants to cast the Tories as the party of grown-up economic management as contrasted with Labour’s reliance on desperate and unworkable gimmicks. He knows the Tories cannot afford to be seen as callous when people are suffering from rising living costs. Some response is required. But he also knows that any response needs to be seen to be originally Tory in inception and distinct enough from Miliband’s effort to avoid the charge of panic.

The pressure on Osborne to do something about energy prices might grow so intense that he relents and comes up with some showy response for his Autumn Statement on 4December. But for the time being his instincts and his study of recent history tell him that would be a mistake.

George Osborne at the Conservative conferene in Manchester last month. Photograph: Getty Images.

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

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Theresa May's "clean Brexit" is hard Brexit with better PR

The Prime Minister's objectives point to the hardest of exits from the European Union. 

Theresa May will outline her approach to Britain’s Brexit deal in a much-hyped speech later today, with a 12-point plan for Brexit.

The headlines: her vow that Britain will not be “half in, half out” and border control will come before our membership of the single market.

And the PM will unveil a new flavour of Brexit: not hard, not soft, but “clean” aka hard but with better PR.

“Britain's clean break from EU” is the i’s splash, “My 12-point plan for Brexit” is the Telegraph’s, “We Will Get Clean Break From EU” cheers the Express, “Theresa’s New Free Britain” roars the Mail, “May: We’ll Go It Alone With CLEAN Brexit” is the Metro’s take. The Guardian goes for the somewhat more subdued “May rules out UK staying in single market” as their splash while the Sun opts for “Great Brexpectations”.

You might, at this point, be grappling with a sense of déjà vu. May’s new approach to the Brexit talks is pretty much what you’d expect from what she’s said since getting the keys to Downing Street, as I wrote back in October. Neither of her stated red lines, on border control or freeing British law from the European Court of Justice, can be met without taking Britain out of the single market aka a hard Brexit in old money.

What is new is the language on the customs union, the only area where May has actually been sparing on detail. The speech will make it clear that after Brexit, Britain will want to strike its own trade deals, which means that either an unlikely exemption will be carved out, or, more likely, that the United Kingdom will be out of the European Union, the single market and the customs union.

(As an aside, another good steer about the customs union can be found in today’s row between Boris Johnson and the other foreign ministers of the EU27. He is under fire for vetoing an EU statement in support of a two-state solution, reputedly to curry favour with Donald Trump. It would be strange if Downing Street was shredding decades of British policy on the Middle East to appease the President-Elect if we weren’t going to leave the customs union in order at the end of it.)

But what really matters isn’t what May says today but what happens around Europe over the next few months. Donald Trump’s attacks on the EU and Nato yesterday will increase the incentive on the part of the EU27 to put securing the political project front-and-centre in the Brexit talks, making a good deal for Britain significantly less likely.

Add that to the unforced errors on the part of the British government, like Amber Rudd’s wheeze to compile lists of foreign workers, and the diplomatic situation is not what you would wish to secure the best Brexit deal, to put it mildly.

Clean Brexit? Nah. It’s going to get messy. 

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