George Osborne has strewn the government’s path with policy landmines

The Chancellor glosses over the fact that working people feel the brunt of his benefit cuts as much as the jobless.

Chancellor George Osborne delivers his Autumn Statement in the House of Commons. Photograph: Getty Images.

One of David Cameron’s great concerns ahead of the Autumn Statement on 5 December was the need to avoid “split-screen moments”. This is No 10 code for policy reversals so stark that they might be ridiculed in an election campaign by broadcasting two images of the Prime Minister side by side – before and after – saying opposite things.  

That is why benefits enjoyed by the elderly – winter fuel payments, free bus passes and TV licences – are untouchable in discussions of welfare cuts. Cameron stared down the barrel of a TV camera in live pre-election debates in 2010 and promised to leave those privileges alone. Memory of that footage silences talk of a raid on pensioner perks.

When the Prime Minister’s personal dignity is not at stake, the government is unafraid of a U-turn. Whitehall stank of burning rubber for weeks after the last Budget, as the Treasury skidded 180 degrees over ill-considered tax wheezes – on pasties, on caravans, on charities. Cameron and George Osborne were determined to avoid a similar unravelling of the Autumn Statement.

Yet the whole thing was an epitaph for buried economic promises. None of the things that the Chancellor said would happen to growth, to the deficit or to the national debt is happening as forecast. His plan was to fix the public finances and restore prosperity before an election in 2015. Now he pleads for time, like a cowboy builder, surrounded by the rubble of a bodged repair, explaining to the appalled homeowner that the job is more complicated than it looked.

Midterm martyr

Osborne believes the public can be persuaded to stick with the current contractor as long as the risk of switching to someone else is painted in sinister enough terms. That optimism is underpinned, according to those who work with the Chancellor, by his self-image as a crusader, martyred in midterm opinion polls for the greater glory of Budget rectitude. “He is confident he will be remembered as a historic chancellor who took the difficult decisions for the sake of the country,” says one senior Treasury mandarin. Osborne hopes to cast Labour as the party that hides from the truth about its responsibility for the economic mess and what is required to fix it.

That might be a winning attack if Ed Mili­band’s campaign ignores the deficit and debt entirely. In public, senior Tories portray Labour’s position in those terms. Privately, they know the opposition will not make things so easy for them. The working assumption in Downing Street is that Ed Balls will offer to match the broad outline of coalition spending plans some time before the next election. The shadow chancellor’s team says it is too early to be talking about such commitments but there is unmistakable intent in Balls’s office to kill the “deficit denial” charge before 2015.
Meanwhile, the immediate priorities for Labour are pinning the badge of economic failure on the coalition and provoking public
outrage at the thought that ordinary families are footing the bill instead of the Tories’ millionaire chums.

Osborne is alert to the potency of that attack. He could hardly ignore the savage reception for his decision in March to cut the 50p top rate of income tax. Chastened, he inserted symbolic raids on wealth in his Autumn Statement – more tax on high-earner pension contributions, a bigger levy on banks. He boasted that the burden on low-income households would be eased with a freeze in petrol duty and a fresh rise in the income tax personal allowance.

Policy minds in No 10 are focused almostexclusively on ways to win the affections of the “squeezed middle” – those whose wages have not kept pace with the cost of living. Very senior Cameron advisers have made it clear to underlings that the Prime Minister will only look at new policy ideas if they speak to the concerns of those hard-pressed families.

The most urgent Downing Street discussions these days are about housing, childcare, energy bills and fuel costs. Gone are the nebulous
musings about the nature of the state that went on when Steve Hilton was Cameron’s quixotic head of policy. Hilton left Downing Street in May but his legacy formally expired with the damp-squib election of police and crime commissioners (PCC) last month. “PCC elections were the last, dying gasp of the Hilton project,” says one Downing Street insider. “Cameron is now dealing with bread-and-butter issues.”

Despite much polarised public polemicising, Labour and the Tories are converging on the same electoral terrain. Senior strategists in both parties are scouring data from a new online tool that maps public anxiety about household finances and confidence in the future. They know the election can be won with the right message for voters who feel pressed for time, strapped for cash and ripped off on all sides.

Broken promises

Labour’s handicap in reaching out to that group is voters’ wariness of a party that was so recently evicted from office. The Tories’ problem is that the coalition has already legislated for billions of pounds of cuts that will hit precisely the people they are now intent on wooing. Over the next year, cuts to tax credits, child benefit, housing benefit and council tax benefit will all make life harder for financially precarious families – including many with jobs.

The Chancellor glosses over the fact that working people feel the brunt of his benefit cuts as much as the jobless. In so doing, he has strewn the government’s path ahead with policy landmines – nasty fiscal traps that will detonate under the voters who already suspect the Tories are not on their side. They are unlikely to be persuaded by the Chancellor’s occasional, ostentatious displays of charity for the many and confiscation from the few.

Nor will their pain be easily justified as the necessary price for balancing the books, since the books will be unbalanced at the next election. No amount of fiddling in the margins can disguise the contrast between what the Tories said they would achieve and what has happened. It doesn’t look good however you play it. David Cameron is running a split-screen government.