by Kevin Meagher
“When the facts change, I change my mind” remarked the great John Maynard Keynes. Easy for economists. As George Bernard Shaw noted, if you laid them all end to end they still could not reach a conclusion.
Chancellors, on the other hand, cannot readily change their minds. They have to come to a conclusion; and then they have to stick to it. Their personal judgement is indelibly stamped on the government’s macroeconomic policy. They are locked into their strategies and directions of travel. Any deviation risks a fatal leaching of trust and credibility.
Of course, nothing changes with economic policy until it all changes. Which begs the question: does George Osborne have a Plan B in case the economy runs out of puff?
If he does, he’s not telling. Hardly surprising really; chancellors cannot be “a little bit pregnant”. It’s either one plan or the other.
Either way, Osborne is no slouch. He knows the economic outlook is precarious. And whatever else he is, the chancellor is a politician first and foremost. Economics – the dismal science, according to Carlyle – is a second order priority for him. He knows that the ice beneath his feet is thinning and he does not intend to sink.
If growth falters and requires a revision in policy, Osborne cannot afford for it to be on his watch. Although it would kill him to do so, he should heed Gordon Brown’s warning: there are two sorts of chancellor: those who fail and those who get out in time.
When he was chancellor in the early 90s, Norman Lamont famously saw mythical “green shoots of recovery”. Osborne doesn’t even have that. He could only summon up the image of a snowy December to excuse the anaemic state of the economy at the turn of the year.
Since then, he has downgraded his growth forecast. And although the IMF and European commission have supported him on deficit reduction this week, they have both raised concerns about future growth prospects. The IMF is suggesting tax cuts to bolster the recovery and the EU recommending “growth enhancing expenditure” on infrastructure projects.
Would this amount to a Plan B; or simply Plan A (i)?
Either way, Osborne will have been damaged if growth founders and the economy requires defibrillation. Clearly, he is not going to coast on personal charm and charisma alone; so he needs a political Plan B as much as an economic one.
The spectre of Norman Lamont on black Wednesday in September 1992 haunts all chancellors. His harried and faltering performance before the cameras, wiping away a lick of hair from his bloodless face as he explained it had been “a difficult and turbulent day”, as sterling crashed out of the exchange rate mechanism, has been played back endlessly in the intervening decades.
His is an extreme example; but it confirms Brown’s Law. Lamont failed while his predecessor, John Major, architect of the faulty ERM policy, got out of the treasury in the nick of time.
As prime minister, Major was ultimately willing to send his old friend (and former campaign manager) along the plank in the interests of the government drawing a line under the catastrophe. That lesson will not have been lost on David Cameron, Lamont’s special adviser at the time.
Is George Osborne similarly expendable to the government?
Cameron has already said he could sack Osborne if he needed to. If the decision is made that rebooting economic policy is necessary to rescue the government’s wider fortunes, then it will need a new salesman to do it.
But there can be life after the treasury. Chancellors who get out while the going is good can go on to prosper; Major himself being a good example (well, of sorts).
Geoffrey Howe, Thatcher’s first chancellor, was shuffled off to the foreign office after unleashing monetarist shock therapy on the economy and ended up as deputy prime minister.
When devaluation cut short James Callaghan’s tenure at the treasury in 1967, he seamlessly migrated to the home office, then eventually the foreign office before reaching number ten (still the only person to hold “the big four” offices of state).
If the economy remains sluggish and recovery is tentative, Cameron’s political imperatives will trump Osborne’s economic ones. This week has already seen Cameron disown Andrew Lansley’s health reforms (after previously endorsing them), eviscerating the health secretary’s political authority in the process.
So what would happen to a post-treasury Osborne?
He could “do a Callaghan” and get shifted sideways to the home office or the FCO. Indeed, Osborne may relish a return to a more overtly political role. He clearly finds it hard to break old habits. The Independent’s Steve Richards wrote earlier this week that the chancellor’s fingerprints are all over weekend political briefings to journalists.
At 40, George Osborne is still ridiculously young. As Uncut’s Politician of the Year last year, a begrudging respect is due to this feline operator. But the walls of the treasury may be closing in on him. If he waits until events define him, as Lamont did, then his exit from office may be equally permanent.
So a political Plan B is needed as well as an economic one.
Perhaps, as the Tories start to panic about their faltering credentials on law and order, we may be in line for a new home secretary?
Kevin Meagher is associate editor of Labour Uncut.
Tags: George Osborne, Kevin Meagher, Plan B
Interesting, although I’m not sure how they can pull it off in terms of they’re claim that they’re not going to move people. They really need something to happen to make a reshuffle viable while keeping their 100% record, although obviously I’m not suggesting they would deliberately order a minister’s death to force an opening.
Plus there’s Lib Dem Equation making reshuffles more complicated. I suppose in extremis, offering the job to a Lib Dem they could trust might be one way of pleasing increasingly bolshy Lib Dems and selling a hospital pass all at once. One thing missing from this article is who is daft enough to take the job. Laws, your country may need you.
Osborne’s plan A is fraught with risk. For the voters, he has characterized his policy as ‘clearing the Uk’s maxed out credit card’. Every non-nerd I have spoken with believes that Osborne’s benchmark is clearing the deficit. Zero deficit, all gone.
What Osborne has actually said he’ll do is clear the structural deficit. A clever bit of politics? Not really – because perception is everything. Therefore he’s definitely going to spend time explaining to voters that he hasn’t actually failed, they were just too stupid to understand that ‘clearing the Uk’s maxed out credit card’ didn’t actually mean what they thought it did.
And, long before Osborne gets called on his sleight-of-hand, Labour needs a Plan A & a Plan B. I hope Ed B & team are already working hard on it.
😎
Where is Her Majesty’s Opposition Plan A, or B, or C?What if the government’s policies appear to be working before the next election?Do you think the electorate are basically stupid,and will automatically vote Labour even though the party inflicted the country with the ‘no more boom and bust merchant?Is there no policy rethink going on,just speculation about the next Cabinet office to be held by a Minister iN POWER?