The Tory Fantasyland Version of Britain hits the buffers
Sunday Mail, March 20th 2016
George Osborne presented his eighth and potentially last Budget. Bad politics. Dodgy decisions and finances. All leading to Iain Duncan Smith’s sensational resignation sparking bitter Tory divisions.
Osborne is a very political chancellor, convinced of his own sure touch which his record doesn’t bear out. A mere 111 days before his budget he presented a glowing Autumn Statement which he has had to tear up and correct downward; by the sum total of £56 billion.
Even worse, he is missing the targets which he set himself – on debt and the welfare cap, and only meeting the third, on a fiscal surplus, by the end of this Parliament by a sleight of hand moving monies forward one year.
This was a more highly political budget than usual: with Osborne focused on the Euro referendum and coming Tory leadership contest when Cameron stands down. Already he had to drop ambitions for pension reform due to Tory nerves, and opposition to disability cuts began to make another U-turn likely – and led to the resignation of Iain Duncan Smith.
Middle income Britain was presented as earning £45,000 per year – the new threshold for top rate taxpayers (which the Scottish Government will have to decide to follow or not) – when the median income for those in full-time work is £27,195. Young people facing housing and employment problems, have now been redefined by Osborne as up to the age of 40 years. If they are affluent enough they can now invest £4,000 in an ISA and get £1,000 support from the state.
British politics have gone so far to the right, some rightwing opinion sees Osborne as ‘a socialist chancellor’. The case for this is his love of ingenious tax changes, inability to savage public spending and services by as much as they would like, and the extent of his micro-management – with an amazing 86 tax measures in the budget – Osborne’s biggest ever total.
This plays into the absence of any real economic thinking. The big issues facing the UK economy are long-term and structural. They include the historic failure of private sector investment, and in particular, research and development aiding bringing ideas and products to the wider market.
There is the productivity gap which springs from this lack of investment. The burgeoning jobs divide reinforces this with a high skill elite and explosion of low skill, low paid, insecure jobs with little prospect of advancement.
Britain’s Balance of Payments deficit haunted governments in the 1960s and 1970s, but now is just ignored. It is at its highest ever level – illustrating the poor performance of British exports, and that much growth has been fuelled by imports.
Conservative economic dominance has been so all-encompassing they have felt confident to ignore the above and trumpet the so-called ‘British jobs miracle’. Cameron and Osborne have held steady to a mix of New Labour populism and Thatcherite ‘household economies’ –aiming towards a shrunken state of 36.9% of GDP by the end of this Parliament; a size not consistently seen since the 1950s.
Jeremy Corbyn and John McDonnell reject this economic consensus, but they have no coherent alternative. Osborne’s public popularity is falling and his budget viewed sceptically, yet even 70% of Labour supporters have no opinion when asked to choose between Osborne and McDonnell as best chancellor.
There is a similar absence of ideas in Scotland. The independence debate has always been one step removed from economic considerations. The exchanges between the SNP and opposition parties on Scotland’s public finances are laden with problems about the huge amounts of money, arguments over facts, and the issue of the scale of the structural deficit between Scotland and the rest of the UK.
Some big questions need addressing. How long can Britain go along with a fantasyland version of the society fuelled by debt, consumer spending and a City of London which doesn’t make anything, but dominates the economy?
The Cameron-Osborne era which reshaped British and Conservative politics over the last decade is beginning to come to an end. IDS’s resignation touches on a number of faultlines, about welfare, public spending, how far those with the most money are rewarded and those with the least punished, and of course, Europe.
For all the hype of ‘compassionate conservatism’ that project now looks dead and discredited, while the limits of the Tories’ appeal has long been obvious. This is a party which has promoted a mean, lean, nasty view of Britain – and tried to cover it in the most soft language possible. ‘We are all in it together’ always looked a hollow claim. Now it has been used by IDS to expose its threadbare nature, and undermine the fiscal and political priorities of the Cameron project.
This may not be the beginning of the end quite yet, but we are witnessing the onset of the slow unraveling of the Cameron-Osborne dominance of the Tories and Britain – hoist by their own over-reach on welfare and public spending, as well as their European gamble. All of this leaves a party in government bitterly divided, obsessing on Europe, but as of yet, facing no real external opposition. That’s a toxic mix for British politics.