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Osborne tells the same old story but this isn't a "Same Old Tory" Budget

The Chancellor wants to sound as if he has stuck to a plan. But he's made it up as he goes along, which is why Labour attacks miss their target.

Much of politics is about telling stories and one of the most successful tales woven in recent years is the one by the Chancellor about the spendthrift Labour government and the frugal coalition. The metaphors change – sometimes Gordon Brown didn’t mend the roof; sometimes he maxed out the national credit card; sometimes he crashed a car – but the underlying message is simple and it works. It is that Britain has no money because the last government spent it all, which explains why we are all feeling the pinch now, why life has been tough and, above all, why it would be a terrible idea to vote for Ed Miliband.

In historical and economic terms this account is silly and mendacious. It has proved, however, to be bloody effective. Crucially, it permitted an alignment of people’s understanding of their domestic finances – when you’ve borrowed too much you have to stop spending – with an accessible narration of the national financial challenge. It made sense of the need for austerity.

Now, at this point the Keynesians tear out their hair. The opposite is true, they cry. When the private sector retrenches, government must step in. If everyone stopped spending all at once, including the state, there would be a shortage of demand and the economy would grind to a halt. As indeed it did in the early years of this parliament. But as has been written countless times, Keynes’s Paradox of Thrift is a lot harder to explain in pithy soundbites than Osborne’s Parable of Paying Down Debts, (which, incidentally, he hasn’t done).

There was a moment in 2012 when it looked very much as if Osborne’s plan was over. The economy was stagnant; all of his original targets for deficit reduction and debt containment had been abandoned. At the time, the Treasury was saying that eurozone turbulence and other unforeseen events - snow; extra bank holidays - had blown things off course a little but the underlying programme was the right one and everything would be alright in time. Labour derided the Tories for suffocating growth by cutting “too far, too fast.” As it turns out, senior Tories were much more anxious at that time than they were letting on. (“Shitting themselves that growth wasn’t coming back,” is how one former advisor recently described the mood to me. Perhaps this is what Osborne had in mind when he boasted today that “we held our nerve.”)

All of that preamble helps make sense of the big political message in today’s Budget.

Labour somehow failed to pin the blame for stagnation on the government. Or rather, Ed Balls and Ed Miliband didn’t manage to scrub themselves clean of the pre-emptive blame that had been heaped on Labour. And now the economy is recovering, with growth established and unemployment falling. Osborne slipped the noose, which means he is free to tell the next chapter of his story. This time it is about saving. The Chancellor’s most significant announcements today were aimed at people – mostly but not exclusively pensioners – whose biggest complaint in recent years has been that interest rates are too low. For anyone with a variable rate mortgage, that has been a blessing and, as Osborne said in his speech, keeping money cheap has been a very deliberate strategy to support the economy. But it does mean savers and anyone planning to retire on the basis of their savings has felt pretty ripped off. Hence new super ISAs, special pensioner bonds, tax cuts and reliefs that make it easier for older people to earn better rates on their money and access more of their pension pot without being stung by HMRC.

At one level this is a straightforward pitch to older, middle class voters who were once reliably Tory but might now be leaning towards Ukip. It is the Chancellor looking after his party’s people, which is exactly what Chancellor’s always do. But the clever part is how it fits into the bigger narrative of national repair. It is a technical move – complex enough that many political journalists’ faces dropped as the prospect of an afternoon of numerical intricacy loomed. But it is also a thematic gesture, supporting Osborne’s longer narrative of prudence and frugality in implicit contrast with Labour’s wastefulness. He is renewing his domestic simile. He wants people to continue thinking of the national economy as they think of their own finances – after the belt-tightening comes the saving for a rainy day.

Although the Chancellor was careful not to declare that his austerity mission is anything like accomplished, he does claim that progress so far has been substantial and that only the Conservatives can be trusted not to blow it all. Osborne spoke about “gains that were hard-won by the British people” and warned against “going back to square one.” This  plea to let the incumbent  team (minus Lib Dems, ideally) finish the job is the central plank of the Tories 2015 general election offer.

To reinforce that message the Chancellor had to sound as if he was thinking for the long term. Much of the budget was dedicated to the ambition to rebalance the economy, which is something all parties claim they want to do. It means supporting regional growth, boosting exports and helping manufacturers, thus ending Britain’s traditional reliance on financial services and credit-fuelled consumer spending.

The interesting thing here is that Osborne’s language was all about intervention. He wants to build houses, underwrite exports, found research centres, fund local enterprise zones, fill pot holes and lay train tracks. This is more Heseltine than Thatcher (a feature of Treasury thinking I’ve written about before). Of course Labour will say it's all for show – too little, too late, old announcements recycled and rehashed etc. Yet it is significant that the Chancellor is not anywhere near as dogmatically laissez faire as many of his critics presume. His recognition that the hand of government can and should be involved in the task of making Britain competitive would have been quite sacrilegious in top Tory circles before the last election.  But then again, this is the man who racked up deficit spending and borrowing at the bottom of a recession while bringing forward infrastructure investment in a desperate bid to kick-start growth.

Osborne’s little intellectual secret is that, back in 2012, when Treasury pants were being soiled about the state of the economy, Keynesian methods made a discreet, modest comeback. The Chancellor’s plan is now nothing like the one he had four years ago. It has been mangled and rewritten as a peculiar hybrid of Peter Mandelson-style “strategic state” intervention, orthodox tax-cutting dry Thatcherism and a bit of Gordon Brown-esque technical jiggery-pokery.

That is one reason why Labour finds it consistently difficult to attack. Ed Miliband’s response in parliament didn’t even bother with the detail of what had just been announced. (Fair enough, really, given that didn’t get to see any of it in advance.) The opposition leader instead played out the greatest hits album of Labour attack lines: out of touch Etonians, tax cuts for millionaires, cost of living crisis and the all time classic Same Old Tories. Except it didn’t work on this occasion because, much though he looks and sounds the part, Osborne isn’t the typical old Tory from central casting. His thinking and his policy are more subtle than that and more complex. What disorients and enrages Labour is his capacity to sell it as a simple story.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Britain has built a national myth on winning the Second World War, but it’s distorting our politics

The impending humiliation of Brexit is going to have a lot more in common with Suez.

The Crown, Peter Morgan’s epic drama covering the reign of Elizabeth II, ended its first series with a nemesis waiting just off-stage to shake up its court politics. In the final episode, Egyptian president Gamal Nasser gives a rip-roaringly anti-imperialist – and anti-British – speech. The scene is set for the Suez Crisis to be a big plot point in Season 2.

Suez has gone down in history as the great foreign policy debacle of postwar Britain. The 1956 crisis – which saw Israel, France and Britain jointly invade Egypt to take control of the Suez Canal, only to slink off again, nine days later, once it became clear the US wasn’t having any of it – is seen as the point at which it became clear that even the bigger states of Europe were no longer great powers in the world. “President Eisenhower’s humiliation of Britain,” Jack Straw wrote in his 2012 memoir, “had been total.”

This was, though, a fairly limited sort of humiliation. Britain was not invaded or occupied; there was no sudden collapse in living standards, let alone a significant body count. Our greatest national debacle is nothing more than the realisation that Britain could no longer do whatever it wanted without fear of reprisal. As humiliations go, this one’s up there with the loss of status men have faced from the rise of feminism: suddenly, Britain could do what it wanted a mere 80 per cent of the time.

The Crown begins in 1947, when Prince Philip gives up his Greek and Danish royal titles and becomes a British subject, so that he can marry Princess Elizabeth. That year saw another British foreign policy debacle, one on which the show remains oddly silent. In the partition which followed India’s independence from the British Empire, 70 years ago this week, upwards of a million people died; in the decades since, the borders drawn up at that time have been the site of numerous wars, and Kashmir remains a flashpoint.

All this, one might think, might count as a far bigger regret than Suez – yet it doesn’t feature in the national narrative in the same way. Perhaps because partition was about the withdrawal of British forces, rather than their deployment; perhaps it’s simply that it all happened a very long way away. Or perhaps we just care less about a body count than we do about looking bad in front of the Americans.

I think, though, there’s another reason we don’t talk about this stuff: the end of empire is hidden behind a much bigger part of our national myth. In the Second World War, Britain is undeniably one of the good guys; for 12 months, indeed, Britain was the only good guy. Never mind that it still had the largest empire the world had ever seen to fall back on: Britain stood alone.

The centrality of the Second World War to the national myth warps our view of history and our place in the world in all sorts of ways. For starters, it means we’ve never had to take an honest account of the consequences of empire. In a tale about British heroes defeating Nazi villains, British mistakes or British atrocities just don’t fit. (Winston Churchill’s role in the 1943 Bengal famine – death toll: three million – by ordering the export of Indian grain to Britain rarely comes up in biopics.) In this dominant version of the national story, the end of empire is just the price we pay to defeat fascism.

More than that, our obsession with the Second World War creates the bizarre impression that failure is not just heroic, but a necessary precursor to success. Two of the most discussed elements of Britain’s war – the evacuation of Dunkirk, and the Blitz – are not about victory at all, but about survival against the odds. The lesson we take is that, with a touch of British grit and an ability to improvise, we can accomplish anything. It’s hard not to see this reflected in Brexit secretary David Davis’s lack of notes, but it’s nonsense: had the Russians and Americans not arrived to bail us out, Britain would have been stuffed.

Most obviously, being one of the winners of the Second World War infects our attitude to Europe. It’s probably not a coincidence that Britain has always been both one of the most eurosceptic EU countries, and one of the tiny number not to have been trampled by a foreign army at some point in recent history: we don’t instinctively grasp why European unity matters.

Once again, Suez is instructive. The lesson postwar France took from the discovery that the imperial age was over was that it should lead a strong and unified Europe. The lesson Britain took was that, so long as we cosied up to the US – Athens to their Rome, to quote Harold Macmillan – we could still bask in reflected superpower.

Until recently, Britain’s Second World War obsession and national ignorance about empire didn’t really seem to affect contemporary politics. They were embarrassing; but they were also irrelevant, so we could cope. Brexit, though, means that hubris is about to run headlong into nemesis, and the widespread assumption that Britain is a rich, powerful and much-loved country is unlikely to survive contact with reality. India will not offer a trade deal for sentimental reasons; Ireland is not a junior partner that will meekly follow us out of the door or police its borders on our behalf. The discovery that Britain is now a mid-ranking power that – excepting the over-heated south-east of England – isn’t even that rich is likely to mean a loss of status to rival Suez.

Morgan says he has planned six seasons of The Crown. (This looks entertainingly like a bet the Queen will be dead by 2021; if not, like Game of Thrones before it, he might well run out of text to adapt.) It’ll be interesting to see how the show handles Brexit. It began with the royal family facing up to a vertiginous decline in British power. As things stand, it may have to end the same way. 

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Brexit. You can find him on Twitter or Facebook.

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