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. 

Photo: Getty
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A year on from the Brexit vote it’s striking how little we know about where it will lead

So many questions, so few answers.

One year one. Anyone who hoped we’d know what Brexit might look like or even, heaven, forbid, that we’d be inhabiting a post-EU UK by now, must be thoroughly disappointed. Even those with more modest expectations are feeling slightly uncomfortable. Because, a year on, we don’t know that much more about what Brexit means  than we did on 23 June last year (well, we know it means Brexit, I suppose).  

We do know some things. First, that divorce talks are preceding trade talks, as the EU insisted – and David Davies denied – all along. Second what the European Union wants in the initial negotiations is crystal clear and indeed on their website, if you’re interested.

Third, the government, for the moment, remains committed to the kind of hard Brexit it has laid out since the Conservative Party conference. Nothing that has been said or done since the election indicates a softening of that position.

That’s it. That’s essentially all we have to show for the last year. This isn’t to say that stuff hasn’t been done. Both the European Commission and the British civil service have been beavering away on the Brexit issue. Papers have been written, careful, detailed analysis carried out. In fact Brexit has dominated the work of Whitehall since the fateful vote.

But for all this work, it’s striking how little we know about where this process will lead. The government’s commitment to a hard Brexit might not survive. Whether it does so or not will depend on what happens with the things we don’t know. The known unknowns, to coin (well, quote) a phrase.

First, we don’t know how long the prime minister will remain in post. This is obviously important, not least given Theresa May herself has seemingly singlehandedly been defining the kind of Brexit Britain should seek. Yet there is more to it than that. A leadership election would take time, and eat up yet more of the two years stipulated by the EU for the Article 50 process. It would also open the rift within the Conservative party over Brexit. Always a good spectator sport. Never a recipe for effective government.

Second, we don’t know how parliament will behave. Much has been made of the "soft Brexit majority" in the Palace of Westminster. But remember last June? When the significant majority of pro-remain MPs were expected to kick up a fight over Brexit? The same MPs who nodded the triggering of article 50 through with hardly a glance? We just do not know yet how MPs will behave.

And their behaviour will be shaped by both inter and intra-party dynamics. Both the large parties are internally divided over Brexit. The Labour leadership seems happy to leave the single market. Many Labour MPs, in contrast, are fundamentally, and publicly, opposed to the idea. Whether loyalty (not least given the prospect of another election) triumphs over opinions on the EU remains to be seen.

As it does for the Tories. I imagine the phrase "do you really want to risk a Corbyn government" will soon trip off the tongue of every government whip. Whether this threat will prove effective is anyone’s guess. Tory Remainers certainly seemed to rein in their criticism of the prime minister following the "chocolate trousers" affair. Maybe this was simply a case of keeping their powder dry until the legislation needed to make Brexit work hits parliament in the autumn. We’re about to find out. And it will matter much more now the Tories have lost their majority.  Indeed, I think this, more than anything else, is why the prime minister called the election in the first place.

One crucial determinant of how MPs behave will be what public opinion does. Regular polling by YouGov since the referendum has, until recently, shown virtually no movement in attitudes towards Brexit. Around 52 per cent think it was a good idea, and around 48 per cent a bad one. Sound familiar? There has in recent weeks been what could best be described as a slight wobble. What we don’t know is what will happen in the weeks to come. Should the polls show a swing away from Brexit, might politicians swing with it, increasing the pressure on the PM to modify and soften her stance?

Turning from Westminster to Whitehall, will a government with no majority adopt a different style to a government with a small one? This matters, particularly when it comes to business. The May Government before the election was notable for the way it put politics above economics, focusing on the need to ‘take back control’ even if this meant the potential for real economic damage. A number of business leaders report getting short shrift when they visited ministers to voice their concerns.

But can a weak government be so dismissive? We know what most businesses want – certainly the kinds of business that get to knock on ministerial doors. They want single market and customs union membership. They want, in other words, a soft Brexit. Chancellor Philip Hammond, it would seem, has been listening to them from the start. Will his colleagues now start to do so too?

And if government policy does start to shift, this in turn will open up a whole host of new unknowns. Most importantly, might the EU be open to some sort of deal whereby we limit free movement but get some kind of single market membership? That discussion has simply not happened, because of the way in which Theresa May closed it off by stipulating a hard Brexit.

Most EU observers think a compromise is unlikely in the extreme. Yet while the EU won’t be more generous to a non-member state than to a member state, there is no reason a non-member state should buy into all of core EU principles entirely, so there might be some room for compromise. Again, we don’t know. And we won’t unless we decide to ask.

So many questions, so few answers. That is the story of Brexit to date. One year on, and those answers are about to get clearer.

Anand Menon is the director of The UK in a Changing Europe. Read their report: EU referendum: one year on to find out more.

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