George Osborne presents the red box to cameras. Photo: Getty Images
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George Osborne has made a big gamble - Labour must make sure he pays for it

Amidst the noise about a living wage and the Labour leadership race, George Osborne has left a big hostage to fortune. Labour must hold him to it.

Budget time, and the aftermath, is horrible for opposition staffers. 

Endless meetings with politicians asking ‘what do we expect in the budget’ and evenings drafting multiple briefings just in case of each plausible scenario. A day locked in a stuffy shadow cabinet room on neo-lithic laptops, neck deep in crisps and biscuits poring over budget documents. 

Days afterwards of impatient journalists demanding stories about it falling apart and endless talk of rabbits, shot foxes and gamechangers. This budget will have been no different. 

The brains of the operation are the same as at my first budget in 2011. John Wrathmell, Ali Moussavi and Maighread McCloskey can skin and fillet a budget with their eyes closed. They are the brightest of all the bright people at Labour headquarters. 

But the consequence of Labour's leadership hiatus is that for all the chatter about increases to the minimum wage a significant gamble George Osborne has taken has been missed.

I used to spend time gently suggesting to Shadow Cabinet colleagues that their quote on an obscure new tax break could wait while we made sure there was a single clear and coherent budget response from Labour. 

This time, Harriet Harman and Chris Leslie have as usual done a hugely professional job. But as an unavoidable consequence of a leadership election each of the candidates has also responded. So Labour’s response will seem fuzzy to both media and electorate. 

That presented an opportunity for George Osborne. Budgets always have fireworks - under which the Chancellor could have hoped to bury the scale of the bad news. He could have taken significantly tougher decisions than his targets required of him and thus left himself space to cope with the inevitable events that a Chancellor has to face. 

Instead he made what could be a defining decision of this Parliament - and of his career. 

He has still made some highly controversial and in my view unpleasant choices. But overall he has slowed the pace of deficit reduction to the point where even on his old fiscal mandate of a current surplus by 2017/8 he is only just meeting it. This is the mandate which until the planned vote in the autumn remains legally binding. 

Indeed – he is only meeting it because of his stealth tax rises including on pensions’ contributions, energy bills and insurance premiums. Despite having disavowed the need for any tax rises pre-election. 

Contrast this with June 2010 when he scrapped EMA, raised £12bn from VAT and in total announced £40bn in fiscal tightening by 2014/15. As a result when, in the face of events, he relaxed some of this he had bought himself the space to do so. And had left flexibility in his fiscal rules to get away with it. 

This time whilst broadly sticking to his plan of an absolute surplus within this Parliament he has used up almost all of the wiggle room he had booked in at the March budget. 

The new fiscal charter he intends to legislate for requires him to have an absolute surplus in 2019/20 - a specific date which is at least a change from any of his various fiscal plans in the last Parliament. 

Yet following yesterday’s budget he is projected to only just achieve surplus in that year of £10 billion. That may feel like a lot but over four years there are many ways things could go wrong. 

First, finding £17bn from departmental spending may sound less dramatic than the £41bn suggested in the March budget. But protecting defence, schools and DfiD spending – and adding £8bn to health spending – means the spending review and actually delivering it will be very tough. Not least as the services – social care, the police, sure start – most directly in the firing line have already borne the brunt over five years. 

Furthermore the OBR has highlighted the revenue risk of his tax raising measures. Greece and China are competing to be the most worrying economic headwind. And with productivity and exports being revised down further how confident can the Chancellor be of even the current anaemic growth forecasts for the coming years?   

If any or all of those things do go wrong then tax revenues will not deliver, welfare will overshoot and at some point George Osborne will be back in the commons asking people to vote for his fifth (yes, fifth) “long term” fiscal framework in two Parliaments. No doubt he will seek to make a virtue of it by claiming yet again to be laying a 'trap' for Labour. 

Clearly, the reverse could also happen. Jonathan Portes has pointed out that before a recession economic forecasters often under-estimate the coming shortfall in growth – but in recovery they often under-estimate the bounce back. 

If that latter happens then ‘Lucky General Osborne’ may find he can deliver his plans with room to spare. 

I suspect that George Osborne thinks that that is likely. That would explain the Tory kitchen sink approach to their manifesto with more than £20bn in unaccounted for spending commitments. And it would explain him leaving so little room for error in meeting the surplus he is now legislating for.

A political journalist pointed out to me this week that George Osborne’s former adviser Rupert Harrison was always keen when setting such targets to leave a bit of flexibility for the inevitable events which are the curse of politicians. 

In March I took a photo of our budget team in the Shadow Cabinet room knowing it would be my last there. I hoped it would also be George Osborne's last. I wonder if Rupert did the same knowing that whatever the result he was going to leave the Treasury. 

And I wonder whether he’s taken the Chancellor’s ‘luck’ with him. If so then something - tax cuts, two per cent of GDP defence spending, the NHS or his fiscal targets - will have to give. 

The job of the next Labour leader will be to make him pay for it. I can promise - having worked on the 2012 Omnishambles budget - that no matter how successful they are it won't be enough to win the next election on its own. And that their staff will still hate every minute of budget week.  

Karim Palant was head of policy to Ed Balls. 

Getty.
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Hannan Fodder: This week, Daniel Hannan gets his excuses in early

I didn't do it. 

Since Daniel Hannan, a formerly obscure MEP, has emerged as the anointed intellectual of the Brexit elite, The Staggers is charting his ascendancy...

When I started this column, there were some nay-sayers talking Britain down by doubting that I was seriously going to write about Daniel Hannan every week. Surely no one could be that obsessed with the activities of one obscure MEP? And surely no politician could say enough ludicrous things to be worthy of such an obsession?

They were wrong, on both counts. Daniel and I are as one on this: Leave and Remain, working hand in glove to deliver on our shared national mission. There’s a lesson there for my fellow Remoaners, I’m sure.

Anyway. It’s week three, and just as I was worrying what I might write this week, Dan has ridden to the rescue by writing not one but two columns making the same argument – using, indeed, many of the exact same phrases (“not a club, but a protection racket”). Like all the most effective political campaigns, Dan has a message of the week.

First up, on Monday, there was this headline, in the conservative American journal, the Washington Examiner:

“Why Brexit should work out for everyone”

And yesterday, there was his column on Conservative Home:

“We will get a good deal – because rational self-interest will overcome the Eurocrats’ fury”

The message of the two columns is straightforward: cooler heads will prevail. Britain wants an amicable separation. The EU needs Britain’s military strength and budget contributions, and both sides want to keep the single market intact.

The Con Home piece makes the further argument that it’s only the Eurocrats who want to be hardline about this. National governments – who have to answer to actual electorates – will be more willing to negotiate.

And so, for all the bluster now, Theresa May and Donald Tusk will be skipping through a meadow, arm in arm, before the year is out.

Before we go any further, I have a confession: I found myself nodding along with some of this. Yes, of course it’s in nobody’s interests to create unnecessary enmity between Britain and the continent. Of course no one will want to crash the economy. Of course.

I’ve been told by friends on the centre-right that Hannan has a compelling, faintly hypnotic quality when he speaks and, in retrospect, this brief moment of finding myself half-agreeing with him scares the living shit out of me. So from this point on, I’d like everyone to keep an eye on me in case I start going weird, and to give me a sharp whack round the back of the head if you ever catch me starting a tweet with the word, “Friends-”.

Anyway. Shortly after reading things, reality began to dawn for me in a way it apparently hasn’t for Daniel Hannan, and I began cataloguing the ways in which his argument is stupid.

Problem number one: Remarkably for a man who’s been in the European Parliament for nearly two decades, he’s misunderstood the EU. He notes that “deeper integration can be more like a religious dogma than a political creed”, but entirely misses the reason for this. For many Europeans, especially those from countries which didn’t have as much fun in the Second World War as Britain did, the EU, for all its myriad flaws, is something to which they feel an emotional attachment: not their country, but not something entirely separate from it either.

Consequently, it’s neither a club, nor a “protection racket”: it’s more akin to a family. A rational and sensible Brexit will be difficult for the exact same reasons that so few divorcing couples rationally agree not to bother wasting money on lawyers: because the very act of leaving feels like a betrayal.

Or, to put it more concisely, courtesy of Buzzfeed’s Marie Le Conte:

Problem number two: even if everyone was to negotiate purely in terms of rational interest, our interests are not the same. The over-riding goal of German policy for decades has been to hold the EU together, even if that creates other problems. (Exhibit A: Greece.) So there’s at least a chance that the German leadership will genuinely see deterring more departures as more important than mutual prosperity or a good relationship with Britain.

And France, whose presidential candidates are lining up to give Britain a kicking, is mysteriously not mentioned anywhere in either of Daniel’s columns, presumably because doing so would undermine his argument.

So – the list of priorities Hannan describes may look rational from a British perspective. Unfortunately, though, the people on the other side of the negotiating table won’t have a British perspective.

Problem number three is this line from the Con Home piece:

“Might it truly be more interested in deterring states from leaving than in promoting the welfare of its peoples? If so, there surely can be no further doubt that we were right to opt out.”

If there any rhetorical technique more skin-crawlingly horrible, than, “Your response to my behaviour justifies my behaviour”?

I could go on, about how there’s no reason to think that Daniel’s relatively gentle vision of Brexit is shared by Nigel Farage, UKIP, or a significant number of those who voted Leave. Or about the polls which show that, far from the EU’s response to the referendum pushing more European nations towards the door, support for the union has actually spiked since the referendum – that Britain has become not a beacon of hope but a cautionary tale.

But I’m running out of words, and there’ll be other chances to explore such things. So instead I’m going to end on this:

Hannan’s argument – that only an irrational Europe would not deliver a good Brexit – is remarkably, parodically self-serving. It allows him to believe that, if Brexit goes horribly wrong, well, it must all be the fault of those inflexible Eurocrats, mustn’t it? It can’t possibly be because Brexit was a bad idea in the first place, or because liberal Leavers used nasty, populist ones to achieve their goals.

Read today, there are elements of Hannan’s columns that are compelling, even persuasive. From the perspective of 2020, I fear, they might simply read like one long explanation of why nothing that has happened since will have been his fault.

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.