Who's after George?

Is George Osborne "nerdy", "nasty" and "overpromoted", as his Conservative critics would have it, or

Last December, when it looked as if Boris Johnson's mayoral campaign was in trouble, senior Tories were in despair. The media were accusing their candidate of laziness and lacking an appetite for the fight. Unable to take advantage of the obvious weaknesses in the Labour camp, the Tories were sleepwalking towards defeat. Enter George Osborne. Aides to the shadow chancellor and Conservative election supremo are said to have been astonished when they discovered that the Johnson team finished work at 6.30pm, leaving the office strewn with beer cans and 1980s-style Tory paraphernalia including, it is said, a hunting horn. "There was a sense of drift," said one party official. "George was the one who gave things a jolt." Crucially, Osborne was involved in bringing in the Australian election strategist Lynton Crosby, credited by some with turning the election around for Johnson.

The same official, who has worked closely with Osborne, mentions a trait in the 37-year-old shadow chancellor often mentioned by his supporters: "He spots problems very far ahead of the curve, which allows you to address issues well in advance. He has a very good radar."

Michael Gove, the shadow children's secretary and one of the architects of the "Cameroon" project, also identifies Osborne's political intuition as his greatest quality. In his running of Cameron's leadership election, his close study of Gordon Brown's psychology, his assiduous help in preparing for Prime Minister's Questions and his tireless modernising of the party, Osborne has done little wrong. "I've seen George operate at every level," says Gove. "He has the best judgement of anyone in the party apart from David Cameron."

So where has Osborne's political radar gone in the past three weeks? Wrong-footed by Peter Mandelson over his dealings with the Russian billionaire Oleg Deripaska, criticised from within his own party for failing to keep pace with the government's response to the economic crisis and apparently unable to construct a distinctive Conservative economic vision, Osborne is in a tight bind. Like Mandelson, Osborne has never made it a priority to make himself popular in his party, so it is little surprise that he now finds himself isolated. His critics within the party are vicious in their attacks on him. One former frontbencher told the New Statesman: "Every day George is in place as shadow chancellor, he does drip-drip damage to the party. He is damaged goods."

Osborne has enemies on both the right and the left of the party; from those close to David Davis and John Redwood, as well as those on the pro-European left of the party who are irritated by the stranglehold that Cameron's close circle holds over the main policy areas. It is a mark of Osborne's vulnerability that he is under attack from both wings. His opponents on the back benches and in the Lords are happy to describe him as "nasty", "nerdy", "spiky and aggressive", "a child" and - above all - "overpromoted". Some critics in the City go even further: "Unworldly. Parochial. Naive. Cocky. Complacent. Self-regarding," said a senior City figure who knows the shadow chancellor and asked not to be named.

Various scenarios are being discussed in Tory circles about the future of the boy wonder as he once was. Some are suggesting that Cameron should show his mettle and cut his long-standing friend and ally loose. In so doing, the argument goes, he would demonstrate his ruthlessness in doing what Tony Blair was never able to do with Gordon Brown. Osborne could then be shifted to party chairman and devote himself to what he does best: political strategy. The reshuffle of Osborne would also lead to the removal of Caroline Spelman, the present chairman, who faces her own difficulties over expenses and has failed to operate effectively for some time.

In Downing Street, the Brown camp faces a conundrum. There is nothing the Prime Minister and those around him would like more than the scalp of the man who has tormented Brown for three years. The personal dislike felt by the Chancellor, Alistair Darling, for Osborne is almost as visceral as that felt by the Prime Minister for David Cameron. The antagonism is partly founded on respect: they understand that Osborne is a huge political talent. And yet there is a growing feeling that he is also fast becoming a liability. "He's doing so much damage that we're thinking maybe it would better if he stayed where he was," said one No 10 aide.

In spite of his position as shadow chancellor, Osborne does not surround himself with economic advisers, something he may come to regret. It is his reliance on his close circle of hedge-fund friends, some City experts say, that has left him exposed and out of step with the mainstream financial world. In particular, they point to Osborne and Cameron's close relationship with the party treasurer, the billionaire money-broker Michael Spencer. As a result, swaths of the City are simply not on Osborne's radar: the insurance world, retail banking, pensions, for example.

The Tory commentator Tim Montgomerie, who runs the ConservativeHome blog, says that Osborne and Cameron's big mistake was deciding that the economy would not be an issue. "They concentrated on the crime and social reform agenda and talked about general well-being. Some of us did warn about that." But, for Montgomerie, the removal of Osborne from his post is out of the question: "He is indispensable to the project. He is also incredibly so political in what he does. Everything is about winning the next election. It's about tactics not great strategy, but he will mould an agenda to win the next election."

Cameron has taken a firm decision not to move Osborne. Despite his fury over Osborne's behaviour in Corfu, the Tory leader, rightly or wrongly, feels he owes a debt of loyalty to the shadow chancellor, who has been unable to comprehend the criticism that has finally ended his popularity with the metropolitan media. His obvious successor is Ken Clarke, a man Cameron would never appoint, partly because of professional rivalry. There is also an ideological problem. Clarke's pro-Europeanism stands in his way as much today as it did during his three failed attempts to win the leadership. As does his stance on markets, which has been revised more swiftly than those of Cameron or Osborne. This month, for example, he said during a speech to the City, organised by BGC Partners, that: "[Banking] is a fragile, fragile system. It's not an end to free markets but it's an end to free markets without sufficient rules."

Conventional wisdom has it that one of Osborne's faults has been his refusal to call for tax cuts. In reality, however, some in the City believe it is his, and the Conservatives', commitment to free-marketeerism and low-spending and reliance on interest rates to end the recession that leaves the party most exposed. "People in the City do not support George's line that it is absolutely outrageous to contemplate increased spending at this time," says one City boss. Further, as has been said elsewhere, the party's ideological commitment to "sharing the proceeds of growth" - designed to enable spending cuts - is seen as both out of step with the times, given the growth shortage, and on the wrong side of the spending argument.

A senior City figure explained: "The view of the serious people inside the Square Mile is that George doesn't appear to understand that we are in a very different climate now. From the implosion of Lehmans on 15 September, and the bailouts the following week, the economic weather has changed and yet the Tories under his watch have been completely incapable of escaping their old position."

There is another way of looking at it, however. The Tories may lack a grand economic vision and cannot claim, unlike Gordon Brown, that the world has been inspired by their example. But at least they have been consistent. They may have been forced to drop the mantra of "sharing the proceeds of growth" because there is no growth. Yet the principle remains. They have been forced to shift ground on matching Labour spending plans, but this is a tactical, not an ideological, shift, which will allow them to argue that the government's spending is likely to be profligate.

The Cameroon project has been built around mirroring the Blairite revolution of the mid-1990s. In this model, which has been in place from the beginning of Cameron's leadership bid, Osborne is very much the Brown figure, with an umbilical link to the party leader. However, the analogy isn't quite right. For a start, the relationship between the two Tories is far less volatile. There are no rows or brooding silences. In fact, the relationship is much closer to the one between Tony Blair and Peter Mandelson.

If Osborne continues to demonstrate a Mandelsonian knack for getting himself into embarrassing scrapes with the ultra-rich, Cameron may have no choice but to demote his closest ally. Remember, Blair may never have summoned up the courage to sack Brown, but he was twice ready to dispense with Mandelson.

Almost paraphrasing what Tony Blair once said of Man delson and the Labour Party, one government backbencher who knows the shadow chancellor well said: "The Tories don't appreciate what they have in George Osborne. They would be mad to get rid of him."

This article first appeared in the 24 November 2008 issue of the New Statesman, How to get us out of this mess

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Everyone's forgotten the one issue that united the Labour party

There was a time when Ed Miliband spoke at Momentum rallies.

To label the row over the EU at Thursday’s Labour leadership hustings "fireworks" would be to endow it with more beauty than it deserves. Owen Smith’s dogged condemnation of John McDonnell’s absence from a Remain rally – only for Corbyn to point out that his absence was for medical reasons – ought to go down as a cringing new low point in the campaign. 

Not so long ago, we were all friends. In the course of the EU referendum, almost all of the protagonists in the current debacle spoke alongside each other and praised one another’s efforts. At a local level, party activists of all stripes joined forces. Two days before polling day, Momentum activists helped organise an impromptu rally. Ed Miliband was the headline speaker, and was cheered on. 

If you take the simple version of the debate, Labour’s schism on the EU appears as an aberration of the usual dynamics of left and right in the party. Labour's left is supposedly cheering a position which avoids advocating what it believes in (Remain), because it would lose votes. Meanwhile, the right claims to be dying in a ditch for its principles - no matter what the consequences for Labour’s support in Leave-voting heartlands.

Smith wants to oppose Brexit, even after the vote, on the basis of using every available procedural mechanism. He would whip MPs against the invocation of Article 50, refuse to implement it in government, and run on a manifesto of staying in the EU. For the die-hard Europhiles on the left – and I count myself among these, having run the Another Europe is Possible campaign during the referendum – there ought to be no contest as to who to support. On a result that is so damaging to people’s lives and so rooted in prejudice, how could we ever accept that there is such a thing as a "final word"? 

And yet, on the basic principles that lie behind a progressive version of EU membership, such as freedom of movement, Smith seems to contradict himself. Right at the outset of the Labour leadership, Smith took to Newsnight to express his view – typical of many politicians moulded in the era of New Labour – that Labour needed to “listen” to the views Leave voters by simply adopting them, regardless of whether or not they were right. There were, he said, “too many” immigrants in some parts of the country. 

Unlike Smith, Corbyn has not made his post-Brexit policy a headline feature of the campaign, and it is less widely understood. But it is clear, via the five "red lines" outlined by John McDonnell at the end of June:

  1. full access to the single market
  2. membership of the European investment bank
  3. access to trading rights for financial services sector
  4. full residency rights for all EU nationals in the UK and all UK nationals in the EU, and
  5. the enshrinement of EU protections for workers. 

Without these five conditions being met, Labour would presumably not support the invocation of Article 50. So if, as seems likely, a Conservative government would never meet these five conditions, would there be any real difference in how a Corbyn leadership would handle the situation? 

The fight over the legacy of the referendum is theatrical at times. The mutual mistrust last week played out on the stage in front of a mass televised audience. Some Corbyn supporters jeered Smith as he made the case for another referendum. Smith accused Corbyn of not even voting for Remain, and wouldn’t let it go. But, deep down, the division is really about a difference of emphasis. 

It speaks to a deeper truth about the future of Britain in Europe. During the referendum, the establishment case for Remain floundered because it refused to make the case that unemployment and declining public services were the result of austerity, not immigrants. Being spearheaded by Conservatives, it couldn’t. It fell to the left to offer the ideological counter attack that was needed – and we failed to reach enough people. 

As a result, what we got was a popular mandate for petty racism and a potentially long-term shift to the right in British politics, endangering a whole raft of workplace and legal protections along the way. Now that it has happened, anyone who really hopes to overcome either Brexit, or the meaning of Brexit, has to address the core attitudes and debates at their root. Then as now, it is only clear left-wing ideas – free from any attempt to triangulate towards anti-migrant sentiment– that can have any hope of success. 

The real dividing lines in Labour are not about the EU. If they were, the Eurosceptic Frank Field would not be backing Smith. For all that it may be convenient to deny it, Europe was once, briefly, the issue that united the Labour Party. One day, the issues at stake in the referendum may do so again – but only if Labour consolidates itself around a strategy for convincing people of ideas, rather than simply reaching for procedural levers.