George Osborne and the risky politics of chutzpah

The Chancellor is right that people don't demand ideological consistency but they do like politicians to believe in something.

The Chancellor’s position is clear enough. He doesn’t think it is the government’s job to meddle in markets except when he does. As my colleague George Eaton noted yesterday, George Osborne’s decision to cap payday loan charges sits in splendid contradiction with his objections to Ed Miliband’s proposal to freeze energy prices. When Labour wants to mandate lower prices, it’s Bolshevism; when Tories give in to the same impulse, it’s addressing the concerns of ordinary citizens.

The volte face has been greeted with scepticism across the political spectrum. Orthodox Thatcherites fear that the Chancellor is dabbling in anti-enterprise Milibandism, while Labour, cherishing a moment of intellectual vindication, are confident Osborne can never beat them in an arms race over the cost of living and responsible capitalism.

So, Left Populism 1 – 0 Market Fundamentalism? Not necessarily.

There isn’t anything particularly new about this ideological plasticity in the Chancellor. Help to Buy is a market intervention to buoy up house prices by stimulating demand with government guarantees. When Osborne’s deficit-reduction programme veered of course, he simply abandoned his targets. As I wrote earlier this year, the economy has been run to a plan A-minus (or B-plus) ever since the decision was made to let automatic fiscal stabilisers compensate for disappointing growth and to bring forward infrastructure spending to counteract the threat of perpetual stagnation. There is no doubt that Osborne’s economic instincts are deeply Conservative, but his political impulses are ruthlessly pragmatic. He would rather win an election by sacrificing a point of Thatcherite dogma here or there than gratify libertarian purists and lose. One of the Chancellor’s defining political traits is the embrace of chutzpah – that excellent Yiddish word to describe the bare-faced cheek of someone who combines offence with self-righteousness. (One way to understand chutzpah is to imagine a shoplifter taking his stolen item back to the store for a refund because it doesn’t work properly.)

Osborne’s lack of intellectual consistency naturally irritates the kind of people who admire doctrinal rigour. But does it really matter to anyone else? It matters to Labour, of course. That is partly because there is a habit of mind on the left that seeks an almost aesthetic gratification in theoretical coherence, but largely because exposing the Chancellor’s discreet capitulations to what Miliband has been saying all along strengthens the argument that he ought to be given a turn at running the country. A central part of the story that Miliband’s team wants to tell about his march on Downing Street is that he identified deep structural problems with the economy before anyone else and that the Tories, blinkered by their obsolete pro-market dogmas, are incapable of matching his perspicacity. (In this context, they like to recall that Osborne was accusing Labour of going back the 1970s when Gordon Brown intervened to rescue the entire banking system from collapse in 2008, so his antennae for what constitutes radical leftism are a bit warped.) In other words, Labour want the Chancellor’s economic flip-flops to be seen as much more than conventional flakiness. They want it to be a disqualification from holding the office he has at such a critical moment in the nation’s destiny.

It is far from clear that voters are ready to see it that way. For one thing, only the kind of people who use “wedded to the neo-liberal paradigm” as a term of abuse will readily understand the argument and they are almost certainly voting Labour already. Miliband may be making progress in highlighting the way that the economy isn’t adequately trickling wealth down to households who feel a financial squeeze but that doesn’t mean he has persuaded the country that a drastic change of direction – and a return to Labour rule – is the remedy.

The Chancellor’s supporters, meanwhile, remain confident that Britain is still a very capitalist society; that if you hold it up to the light you see the watermark of pro-enterprise, aspirational Thatcherism. In that context, even if voters do feel that something has gone awry with some dysfunctional markets, they’d rather have them repaired by bona fide capitalists than the people who lost all the arguments in the 1980s, never got over it and are just waiting for a chance to turn the clock back. Osborne’s calculation is surely that he can feint a bit to the left when it comes to regulating the likes of Wonga precisely because there is a bedrock of confidence in the Tories not to get carried away in that direction. The argument would be that Conservatives regulate reluctantly, when they have to, while Labour regulates indiscriminately because that’s all it knows.

The danger for Osborne is probably not that millions of people will be aghast at his failure to uphold the purity of liberal market theory, nor even that they think he is cynically chasing Miliband’s agenda. There isn’t much evidence that unyielding intellectualism is a quality that is supremely prized by voters in their politicians. It certainly isn’t one they expect. On the contrary, properly spun, a bit of flexibility in the face of the facts is potentially quite appealing. The problems only begin when flexibility is coupled with a pre-existing reputation for lacking principle. This is where the Tories are in danger.

Only last week, David Cameron was reported to be trash-talking environmental policy as “green crap.” Naturally that doesn’t go down well with the very small number of people for whom ecological rectitude is the greatest asset to be hoped for in a Prime Minister. But it also goes down badly with anyone who remembers that Cameron once professed to care very deeply about greenery, which is anyone who was even half-paying attention to politics in the period 2005-2008. The issue itself is secondary to the casual abandonment of the commitment.

Osborne’s u-turn over pay-day lenders is not as flagrant in most people’s eyes as the butchery of Cameron’s once hugged huskies. But it stems from the same brand of cynicism. I doubt many people will be dismayed because the Chancellor appears to have changed – or even betrayed – his old beliefs. It is a problem when, over time, it becomes impossible to suppose that the Chancellor or the Prime Minister really believe in anything very much at all.

George Osborne addresses the Mansion House dinner in London. Photograph: Getty Images.

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

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Everyone's forgotten the one issue that united the Labour party

There was a time when Ed Miliband spoke at Momentum rallies.

To label the row over the EU at Thursday’s Labour leadership hustings "fireworks" would be to endow it with more beauty than it deserves. Owen Smith’s dogged condemnation of John McDonnell’s absence from a Remain rally – only for Corbyn to point out that his absence was for medical reasons – ought to go down as a cringing new low point in the campaign. 

Not so long ago, we were all friends. In the course of the EU referendum, almost all of the protagonists in the current debacle spoke alongside each other and praised one another’s efforts. At a local level, party activists of all stripes joined forces. Two days before polling day, Momentum activists helped organise an impromptu rally. Ed Miliband was the headline speaker, and was cheered on. 

If you take the simple version of the debate, Labour’s schism on the EU appears as an aberration of the usual dynamics of left and right in the party. Labour's left is supposedly cheering a position which avoids advocating what it believes in (Remain), because it would lose votes. Meanwhile, the right claims to be dying in a ditch for its principles - no matter what the consequences for Labour’s support in Leave-voting heartlands.

Smith wants to oppose Brexit, even after the vote, on the basis of using every available procedural mechanism. He would whip MPs against the invocation of Article 50, refuse to implement it in government, and run on a manifesto of staying in the EU. For the die-hard Europhiles on the left – and I count myself among these, having run the Another Europe is Possible campaign during the referendum – there ought to be no contest as to who to support. On a result that is so damaging to people’s lives and so rooted in prejudice, how could we ever accept that there is such a thing as a "final word"? 

And yet, on the basic principles that lie behind a progressive version of EU membership, such as freedom of movement, Smith seems to contradict himself. Right at the outset of the Labour leadership, Smith took to Newsnight to express his view – typical of many politicians moulded in the era of New Labour – that Labour needed to “listen” to the views Leave voters by simply adopting them, regardless of whether or not they were right. There were, he said, “too many” immigrants in some parts of the country. 

Unlike Smith, Corbyn has not made his post-Brexit policy a headline feature of the campaign, and it is less widely understood. But it is clear, via the five "red lines" outlined by John McDonnell at the end of June:

  1. full access to the single market
  2. membership of the European investment bank
  3. access to trading rights for financial services sector
  4. full residency rights for all EU nationals in the UK and all UK nationals in the EU, and
  5. the enshrinement of EU protections for workers. 

Without these five conditions being met, Labour would presumably not support the invocation of Article 50. So if, as seems likely, a Conservative government would never meet these five conditions, would there be any real difference in how a Corbyn leadership would handle the situation? 

The fight over the legacy of the referendum is theatrical at times. The mutual mistrust last week played out on the stage in front of a mass televised audience. Some Corbyn supporters jeered Smith as he made the case for another referendum. Smith accused Corbyn of not even voting for Remain, and wouldn’t let it go. But, deep down, the division is really about a difference of emphasis. 

It speaks to a deeper truth about the future of Britain in Europe. During the referendum, the establishment case for Remain floundered because it refused to make the case that unemployment and declining public services were the result of austerity, not immigrants. Being spearheaded by Conservatives, it couldn’t. It fell to the left to offer the ideological counter attack that was needed – and we failed to reach enough people. 

As a result, what we got was a popular mandate for petty racism and a potentially long-term shift to the right in British politics, endangering a whole raft of workplace and legal protections along the way. Now that it has happened, anyone who really hopes to overcome either Brexit, or the meaning of Brexit, has to address the core attitudes and debates at their root. Then as now, it is only clear left-wing ideas – free from any attempt to triangulate towards anti-migrant sentiment– that can have any hope of success. 

The real dividing lines in Labour are not about the EU. If they were, the Eurosceptic Frank Field would not be backing Smith. For all that it may be convenient to deny it, Europe was once, briefly, the issue that united the Labour Party. One day, the issues at stake in the referendum may do so again – but only if Labour consolidates itself around a strategy for convincing people of ideas, rather than simply reaching for procedural levers.