George Osborne arrives in Downing Street as an emergency security meeting is held following the deadly attacks on tourists in Tunisia, on 26 June. Photograph: Getty Images.
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As Osborne prepares further austerity, Greece has come to his aid again

The Chancellor can cite the country's fate as a permanent justification for cuts. But he shouldn't overreach. 

In the five years since his austerity programme began, George Osborne has had no greater ally than Greece. The fate of that benighted nation has served as a permanent justification for retrenchment at home. “You can see in Greece an example of a country that didn’t face up to its problems, and that is the fate that I want to avoid,” the Chancellor said before his first Budget in 2010. Ahead of his seventh, he was able to resurrect this argument, citing the crisis as proof of the need to “get our own house in order”.

Opposition politicians and economists rightly contend that it is a surfeit, rather than a dearth, of austerity that has immiserated Greece. Though one would not know it from Osborne’s statements, the country’s cyclically adjusted primary budget surplus (which assumes a normal level of economic activity and excludes debt interest payments) is the largest in Europe at 6 per cent of potential GDP. It is the absence of stimulus for a depressed economy that explains the overall shortfall in revenue. Greece, on this basis, has been far more fiscally responsible than the UK government (which has failed to achieve a surplus of any kind). Indeed, had Osborne not reduced the pace of the cuts, the recovery that he lauds would have been weaker.

But as Labour learned to its cost, political stories trump economic realities. The narrative that the UK and Greece spent like drunken sailors – and that only one has had the fortitude to sober up – resonates more with voters than Keynes’s paradox of thrift.

For Osborne, the latest and most severe stage of the Greek crisis has arrived with uncannily good timing. It is harder to justify continued austerity when the economy is expanding. Those voters who lose out begin to wonder where the proceeds of growth are going. Yet the spectre of Greece enables Osborne to argue that fiscal consolidation must continue in order to establish an insurance fund against future crises. The public might not like austerity but, as the last parliament demonstrated, it is prepared to tolerate it as a necessary treatment.

How Labour confronts this political reality is one of the defining questions of its leadership contest. In her speech at Reuters on 30 June, Liz Kendall sought to redefine fiscal responsibility as “proud Labour tradition”, rather than a Conservative trope. The newest MP in the race recalled how budgetary prudence ran like a thread through the party’s history: in its 1923 manifesto, in Stafford Cripps’s 1948 Budget (“We must secure an exceptionally large Budget surplus”), in Harold Wilson’s 1964 manifesto and under Tony Blair and Gordon Brown in 1997. “Sound public finances are not an alternative to Labour values: they are Labour values,” Kendall declared.

When I asked her to name the tax rises and spending cuts that she would impose to fulfil this mission, she declined, insisting that this was not the time for “individual details”. It is easier to be fiscally responsible in theory than in practice. Yet Kendall can be forgiven for not wanting to enter an austerity arms race with Osborne. There are few votes to be won and many to be lost among the Labour selectorate in doing so. As she fights to prevent the contest from irrevocably hardening into a two-horse race between Andy Burnham and Yvette Cooper, the most pessimistic of her supporters fear that she may be beaten into fourth place by the left-wing backbencher Jeremy Corbyn.

Osborne’s emergency Budget on 8 July will resemble a direct sequel to that of 2010. Greece again provides the apocalyptic backdrop; Harriet Harman returns as the doughty leader of the ravaged opposition; the second half of the deficit remains to be eliminated. But it will differ in one significant respect. Osborne’s Budget will be the first delivered by an all-Conservative government since Kenneth Clarke’s final statement in November 1996. No longer will the Chancellor’s measures require the imprimatur of the Liberal Democrats.

The onus is now on Osborne to deliver the policies that were previously struck down by Nick Clegg and Danny Alexander. Foremost among them is the reduction of the top rate of income tax from 45p to 40p (following the previous cut from 50p) – an issue of totemic political significance. Osborne is known to have advocated the policy in 2012 but the Lib Dems (who demanded a mansion tax in return) forced him to meet them halfway. “George has no excuse not to act now,” one of the 160 Conservative MPs demanding a 40p rate told me. As a likely future leadership candidate, Osborne has a political incentive to prove his credentials as a free-market Conservative. He has long believed that the 45p rate is an economic hindrance that is outmoded in a globalised world (few EU member states have a higher rate). By reducing it to 40p, he could emulate his mentor Nigel Lawson who did the same in 1988 (from 60p).

Osborne will not have a better opportunity to act than his first Budget: “If it were done when ’tis done, then ’twere well it were done quickly.” The Tories are in the grace period of the electoral cycle and Labour and the Lib Dems are leaderless. Should the opposition protest, Osborne will be able to point out that he has merely returned the rate to its level for 155 of the 156 months that Labour was in power. The “millionaires’ tax cut” of 2012 did not stop the Conservatives winning a majority. Any damage from again cutting the top rate will likely have dissipated by 2020.

But a reduction in taxes for the top 1.5 per cent of earners risks appearing hideously incongruous as others have their in-work benefits shredded. One Tory sceptic tells me that it would be “political masochism” to act now. David Cameron’s ambition to reclaim the mantle of “one nation” would be better served by a reduction in taxes for the poorest. The National Insurance threshold, which stands at just £7,956, is regularly cited by Conservatives.

Because of the enduring shock that the Tories have a majority of any kind, its modesty (12 seats) is too easily forgotten. By cutting the top rate, a policy for which he has no mandate, Osborne could immediately overreach. The task of imposing further austerity is formidable enough without gifting some voters an exemption. Greece has given the Chancellor the script he needs: one of shared sacrifice to stave off a comparable national humbling. He should resist all inducements to depart from it.

George Eaton is political editor of the New Statesman.

This article first appeared in the 01 July 2015 issue of the New Statesman, Crisis Europe

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Meet Anne Marie Waters - the Ukip politician too extreme for Nigel Farage

In January 2016, Waters launched Pegida UK with former EDL frontman Steven Yaxley-Lennon (aka Tommy Robinson). 

There are few people in British political life who can be attacked from the left by Nigel Farage. Yet that is where Anne Marie Waters has found herself. And by the end of September she could well be the new leader of Ukip, a party almost synonymous with its beer-swilling, chain-smoking former leader.

Waters’s political journey is a curious one. She started out on the political left, but like Oswald Mosley before her, has since veered dramatically to the right. That, however, is where the similarities end. Waters is Irish, agnostic, a lesbian and a self-proclaimed feminist.

But it is her politics – rather than who she is – that have caused a stir among Ukip’s old guard. Former leader Paul Nuttall has said that her views make him “uncomfortable” while Farage has claimed Ukip is “finished” if, under her leadership, it becomes an anti-Islam party.

In her rhetoric, Waters echoes groups such as the English Defence League (EDL) and Britain First. She has called Islam “evil” and her leadership manifesto claims that the religion has turned Britain into a “fearful and censorious society”. Waters wants the banning of the burqa, the closure of all sharia councils and a temporary freeze on all immigration.

She started life in Dublin before moving to Germany in her teens to work as an au pair. Waters also lived in the Netherlands before returning to Britain to study journalism at Nottingham Trent University, graduating in 2003. She subsequently gained a second degree in law. It was then, she says, that she first learnt about Islam, which she claims treats women “like absolute dirt”. Now 39, Waters is a full-time campaigner who lives in Essex with her two dogs and her partner who is an accountant.

Waters’s first spell of serious activism was with the campaign group One Law for All, a secularist organisation fronted by the Iranian feminist and human rights activist Maryam Namazie. Waters resigned in November 2013 after four years with the organisation. According to Namazie, Waters left due to political disagreements over whether the group should collaborate with members of far-right groups.

In April 2014, Waters founded Sharia Watch UK and, in January 2016, she launched Pegida UK with former EDL frontman Steven Yaxley-Lennon (aka Tommy Robinson). The group was established as a British chapter of the German-based organisation and was set up to counter what it called the “Islamisation of our countries”. By the summer of 2016, it had petered out.

Waters twice stood unsuccessfully to become a Labour parliamentary candidate. Today, she says she could not back Labour due to its “betrayal of women” and “betrayal of the country” over Islam. After joining Ukip in 2014, she first ran for political office in the Lambeth council election, where she finished in ninth place. At the 2015 general election, Waters stood as the party’s candidate in Lewisham East, finishing third with 9.1 per cent of the vote. She was chosen to stand again in the 2016 London Assembly elections but was deselected after her role in Pegida UK became public. Waters was also prevented from standing in Lewisham East at the 2017 general election after Ukip’s then-leader Nuttall publicly intervened.

The current favourite of the 11 candidates standing to succeed Nuttall is deputy leader Peter Whittle, with Waters in second. Some had hoped the party’s top brass would ban her from standing but last week its national executive approved her campaign.

Due to an expected low turnout, the leadership contest is unpredictable. Last November, Nuttall was elected with just 9,622 votes. More than 1,000 new members reportedly joined Ukip in a two-week period earlier this year, prompting fears of far-right entryism.

Mike Hookem MEP has resigned as Ukip’s deputy whip over Waters’ candidacy, saying he would not “turn a blind eye” to extremism. By contrast, chief whip, MEP Stuart Agnew, is a supporter and has likened her to Joan of Arc. Waters is also working closely on her campaign with Jack Buckby, a former BNP activist and one of the few candidates to run against Labour in the by-election for Jo Cox’s former seat of Batley and Spen. Robinson is another backer.

Peculiarly for someone running to be the leader of a party, Waters does not appear to relish public attention. “I’m not a limelight person,” she recently told the Times. “I don’t like being phoned all the time.”

The journalist Jamie Bartlett, who was invited to the initial launch of Pegida UK in Luton in 2015, said of Waters: “She failed to remember the date of the demo. Her head lolled, her words were slurred, and she appeared to almost fall asleep while Tommy [Robinson] was speaking. After 10 minutes it all ground to an uneasy halt.”

In an age when authenticity is everything, it would be a mistake to underestimate yet another unconventional politician. But perhaps British Muslims shouldn’t panic about Anne Marie Waters just yet.

James Bloodworth is editor of Left Foot Forward

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear