The questions facing George Osborne in the Autumn statement

by Jonathan Todd

We all live in a George Osborne submarine. Or so he wishes. Doing his work beneath the surface, emerging periodically to bestride events, such as this week’s distinctly wintry Autumn statement.

Osborne saw Gordon Brown use these set piece occasions to determine the terms of political trade. He’s equally keen to exploit his bully pulpit. He faces, though, a number of challenges to doing so:

1.) Has the relationship between economic and Tory recovery broken?

The Autumn Statement is wintry in the sense that it’s being delivered in December. The economy, however, is more mid-March. The darkest days feel behind us and something better nearly upon us.

Given this, Benedict Brogan asked a pertinent question recently: Why are the Tories not doing better in the polls?

The Todd thesis – as Lewis Baston called it – appeared to break down as soon as it was expounded. This thesis was based on a regression analysis of economic sentiment and Labour’s lead over the Tories. It was expounded at the end of October and held that for every 1% increase in the proportion of the electorate reporting the economy as doing well, the Tories would close on Labour by 0.6%. Since then, there has been a 3% increase in the proportion of the electorate reporting the economy as doing well. But, while there is some fluctuation, Labour’s lead has held firm enough to prompt Brogan’s question.

It may be that the Todd thesis will reassert itself over a longer time horizon. If economic sentiment keeps improving, growth in Tory support will eventually catch up. Less positively for Osborne, it may be that the Todd thesis has collapsed because something has happened to disrupt the causality between improving economic sentiment and growing Tory support.

Ed Miliband’s focus on the cost of living may mean that even though people increasingly feel the economy is doing well, they don’t believe this improvement will benefit them, so it doesn’t translate into Tory support. Alternatively, the better people feel about the economy, the less Labour’s reputation for profligacy may trouble them. In better times, Labour becomes a risk worth taking.

2.) What’s the global race all about?

In advance of his chancellor delivering the Autumn statement, David Cameron is leading a trade delegation to China. This is part of the global race, which is in turn part of the Autumn statement’s narrative.

It’s not clear, though, that the global race is any better understood or more warmly welcomed than the big society. It also positions the BRIC economies as the problem to which this government is the answer, as oppose to Labour’s menace. While, as significant as China’s rise is, it’s of limited direct relevance to many working lives. Plumbers might think Bo Xilai an exotic u-bend.

3.) Should Osborne fight on the macro or the micro?

Osborne has moved closer to Labour on a series of micro issues: payday loan companies, energy prices, and plain cigarette packaging. This is less global race and more kitchen sink drama. Equally, this past week has also seen the Tories seem surer of themselves on other issues: freedom of movement within the EU and an EU referendum. These remain, though, essentially, micro issues.

The macro consists in key economic indicators – GDP, inflation, the deficit. Notwithstanding the Todd thesis’ potential breakdown, which implies rising GDP is not the Tory friend we might have thought, Osborne would probably feel happier if the political battle were fought on this terrain, not a series of micro battles. But how to get from those battles, which are currently dominant, to that terrain?

We must assume that the u-turns of the past week are an attempt to neutralise a series of issues that have become barriers to this return. What matters, therefore, from a Tory perspective, is whether these u-turns have been graceful enough to enable this return.

4.) How to bring it all together?

Life used to be so much simpler for the submarine. He was the solution to “the mess left by the Labour government”, anticipating the garlands of a grateful electorate. Now he asks these voters, many of whom feel they’ve already run their races, for sacrifice in the global race. But if globalisation motivates this, can the fiscal consequences of a global slump be wholly attributable to the last government?

And, if Labour are so awful, why is Osborne rushing to ape much Labour policy? Rather than returning to the stark simplicity of “tidying up Labour’s mess”, Osborne seems to be tying himself up in knots. As he scraps every barrel, from the hardly unprecedented spectacle of a banker taking drugs (Paul Flowers) to the ugly, yet no more remarkable skirmishes of a parliamentary selection (Falkirk), he’s subcontracted consumer policy to Stella Creasy, as he’s delegated EU policy to Peter Bone.

He’s not sure whether he wants us to be frightened of China or Labour, or whether Labour are more communist than the Chinese or a source of policy wisdom. But we are meant to be afraid of something, leaving Osborne far from the optimistic campaigner that he supposedly wants to be.

There is much for Osborne to straighten in his Autumn statement. Too much. Events are getting away from him.

Jonathan Todd is Deputy Editor of Labour Uncut  

Tags: , , , ,

3 Responses to “The questions facing George Osborne in the Autumn statement”

  1. Robert says:

    The task of this government was to reduce the deficit without doing too much damage to the economy and society. It tried to do this too quickly at first and the economy hardly grew for three years. They learnt from this mistake and both of the coalition parties will probably gain support as the economy recovers. Another Con-Lib coalition is looking increasingly likely.

  2. southern voter says:

    The government and labour must concentrate how they are going to create
    more skilled working class jobs in this economy.
    That is the test for both parties.
    Centre right policies by both parties in power have hollowed out the jobs
    working class people used to be able to rely on.

  3. BenM says:


    I don’t understand why people don’t grasp that three years of flatlining growth fatally undermined the coalition for a lot of voters.

    Add to that the suspicion that the grwoth we’re seeing is not sustainable or broadly felt and that’s pretty disastrous for the Tories.

    Many voters (particularly 2010 LD s who’ve since switched to Lab) aren’t going back to the fold regardless of what growth there may be.

Leave a Reply