Osborne echoes Miliband as he calls for government to set "the rules" of the market

The Chancellor's announcement of a cap on payday loan charges undermines the coalition's attack on the Labour leader's "Marxist universe".

It was as recently as last year that George Osborne was arguing against a cap on payday loan charges. He told MPs on 6 March 2012: 

I completely understand the concern about excessive and very high interest charges, which have been a problem for many years. I think it is better to tackle the specific abuses. The Government are conducting a review of the cost of credit to consumers, but by tackling very specific abuses such as the roll-over of loans and the use of continuous authority, we think we are getting to the really hard cases and abuses that we want to see ended. I have to say—this was certainly the view of the previous Government, too—that although it could be worth looking at, simply introducing a cap might have the effect of pushing a lot of people into a completely unregulated black economy. I am not sure that any of us would want to see that.

But a cap is precisely what the coalition has announced today, declaring that there is "growing evidence" in support of the move. Interviewed on the Today programme, George Osborne confirmed that the cap would apply not just to the usurious interest rates charged by Wonga and co but also to arrangement fees, penalty fees and rollovers. He also rather euphemistically acknowledged the role "individual MPs" had played in the decision, before (after some prompting from Evan Davis) eventually referencing Stella Creasy by name.

The Walthamstow MP, who has campaigned relentlessly on this issue for three years, is rightly declaring victory today. She said this morning: "Just two months ago this Government criticised Ed Miliband for wanting to reform broken markets, and now today we see them following Labour's lead on the need to act against legal loan-sharking...That the Government is today admitting it got it wrong in opposing these measures and is still playing catch up on how to combat these problems shows it is Labour who have the ideas and determination to tackle Britain's cost of living crisis."

On Today, Osborne sounded remarkably Miliband-esque as he spoke of how government "needs to step in to create the rules of the market" and to ensure that capitalism "works for hardworking people". The Chancellor's rhetoric was all the more surprising given his private warnings to Conservative MPs not to play on Labour's turf by mimicking Miliband's focus on living standards. 
 
Osborne might be right when he argues that those who support a free market system have never believed in "complete laissez-faire" but the problem for him is that the government has often given the impression that they should. After Miliband called for a freeze on energy prices, David Cameron accused him of living in a "Marxist universe where you control these things" and declared that he needed a "basic lesson in economics".
 
The Treasury's response to those noting this irony is to argue that the government will intervene in markets (as in the case of Help to Buy) when it can do so to the genuine benefit of people; a cap on energy prices remains a "gimmick" that will help no one. But after taking action in this area and conceding that the state has a duty to set "the rules" of the market, it will become harder for the Tories to dismiss Miliband's calls for it to do so elsewhere too. 
George Osborne speaks at the Conservative conference in Manchester last month. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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An Irish Sea border – and 3 other tricky options for Northern Ireland after Brexit

There is no easy option for Northern Ireland after Brexit. 

Deciding on post-Brexit border arrangements between Northern Ireland and the Irish Republic is becoming an issue for which the phrase "the devil is in the detail" could have been coined. Finding a satisfactory solution that delivers a border flexible enough not to damage international trade and commerce and doesn’t undermine the spirit, or the letter, of the Good Friday Agreement settlement is foxing Whitehall’s brightest.

The dial seemed to have settled on David Davis’s suggestion that there could be a "digital border" with security cameras and pre-registered cargo as a preferred alternative to a "hard border" replete with checkpoints and watchtowers.

However the Brexit secretary’s suggestion has been scotched by the new Irish foreign minister, Simon Coveney, who says electronic solutions are "not going to work". Today’s Times quotes him saying that "any barrier or border on the island of Ireland in my view risks undermining a very hard-won peace process" and that there is a need to ensure the "free movement of people and goods and services and livelihoods".

The EU’s chief Brexit negotiator, Michel Barnier, has made dealing with the Irish border question one of his top three priorities before discussions on trade deals can begin. British ministers are going to have to make-up their minds which one of four unpalatable options they are going to choose:

1. Hard border

The first is to ignore Dublin (and just about everybody in Northern Ireland for that matter) and institute a hard border along the 310-mile demarcation between Northern Ireland and the Irish Republic. Given it takes in fields, rivers and forests it’s pretty unenforceable without a Trump-style wall. More practically, it would devastate trade and free movement. Metaphorically, it would be a powerful symbol of division and entirely contrary to the spirit of the Good Friday Agreement. The Police Federation in Northern Ireland has also warned it would make police officers "sitting ducks for terrorists". Moreover, the Irish government will never agree to this course. With the EU in their corner, there is effectively zero chance of this happening.

2. Northern EU-land

The second option is to actually keep Northern Ireland inside the EU: offering it so-called "special status". This would avoid the difficulty of enforcing the border and even accord with the wishes of 56 per cent of the Northern Irish electorate who voted to Remain in the EU. Crucially, it would see Northern Ireland able to retain the £600m a year it currently receives from the EU. This is pushed by Sinn Fein and does have a powerful logic, but it would be a massive embarrassment for the British Government and lead to Scotland (and possibly London?) demanding similar treatment.

3. Natural assets

The third option is that suggested by the Irish government in the Times story today, namely a soft border with customs and passport controls at embarkation points on the island of Ireland, using the Irish Sea as a hard border (or certainly a wet one). This option is in play, if for no other reason than the Irish government is suggesting it. Again, unionists will be unhappy as it requires Britain to treat the island of Ireland as a single entity with border and possibly customs checks at ports and airports. There is a neat administrate logic to it, but it means people travelling from Northern Ireland to "mainland" Britain would need to show their passports, which will enrage unionists as it effectively makes them foreigners.

4. Irish reunification

Unpalatable as that would be for unionists, the fourth option is simply to recognise that Northern Ireland is now utterly anomalous and start a proper conversation about Irish reunification as a means to address the border issue once and for all. This would see both governments acting as persuaders to try and build consent and accelerate trends to reunify the island constitutionally. This would involve twin referendums in both Northern Ireland and the Republic (a measure allowed for in the Good Friday Agreement). Given Philip Hammond is warning that transitional arrangements could last three years, this might occur after Brexit in 2019, perhaps as late as the early 2020s, with interim arrangements in the meantime. Demographic trends pointing to a Catholic-nationalist majority in Northern Ireland would, in all likelihood require a referendum by then anyway. The opportunity here is to make necessity the mother of invention, using Brexit to bring Northern Ireland’s constitutional status to a head and deal decisively with the matter once and for all.

In short, ministers have no easy options, however time is now a factor and they will soon have to draw the line on, well, drawing the line.

Kevin Meagher is a former special adviser at the Northern Ireland Office and author of "A United Ireland: Why unification is inevitable and how it will come about"

Kevin Meagher is associate editor of Labour Uncut and a former special adviser at the Northern Ireland office.