Andy Westwood assesses a political transformation in the wake of the Autumn Statement.
2012 really was a big year for Britain. Politically, it was the moment that George Osborne tanked. First with the ‘Omnishambles’ Budget and its ill conceived Granny and Pasty taxes and second with a round booing at the Olympic Park. But it was a turning point and he obviously learned a lot from both. He sharpened up his political act, hired new advisers, lost weight and got a haircut. He also developed a very different approach to government.
In an interview with Jason Cowley in the New Statesman this September, Osborne described a new found faith in government itself. He described himself as ‘a Conservative who understands the positive role for government in making things happen, and using the enormous resources that the state spends, in very particular interventions that help areas, or indeed industries.’ He also related his attempts to combine the economic rationalism of Nigel Lawson with the vision of Michael Heseltine.
Yesterday’s Spending Review provides more evidence of Osborne’s evolution along such lines as well as his embracing the complexities and contradictions of ‘One Nation’ politics. His unexpected reverse over tax credits together with the OBR’s windfall of £27 billion has hastened his drive to the centre ground. It is just possible that at some point between last year’s Autumn statement and this year’s Spending Review, Osborne has realised that the country might prefer and be better off following a middle way.
The OBR’s assessment of how his spending plans have changed during the year are striking and it’s clear that the Chancellor has decided to spend his windfall on avoiding cuts that he might have previously undertaken with gusto. Of course the attacks in Paris may have had an effect, but so too have a variety of other things from revolting Lords to his vision for a Northern Powerhouse. All require sustained investment and the firm hand of the state, whatever its size.
In a lecture earlier this week, Robert Tombs, the Cambridge historian and author of ‘the English and their History’ said that Britain carries the contradiction of hosting both the largest free market in the world – the City of London – and the largest socialist organisation in the world – the NHS. Today’s Conservative party treasures them both. (It generally finds it much harder to know how it thinks about the BBC which is somewhere in between…)
Tombs also made the point that both David Cameron and Jeremy Corbyn are perfect examples of Englishness, embodying traditions of both the establishment and of radicalism. The free market and free trade together with the postwar Britain of Beveridge and Bevan. Osborne’s Spending Review seems to settle on a vision that incorporates almost all of these things. It’s a state that still spends a lot – and which will continue to do so. On housing, on pensions, on healthcare, on benefits, roads, rail and on defence. Some of it might be raised in new ways such as through Chinese or Indian investment or through the new apprenticeship levy (which of course is an old left of centre idea). Some of it will also be spent in new ways such as on more ‘soft’ loans (including to student nurses and businesses investing in innovation).
Bruce Katz of the Brookings Institute, speaking at an OECD conference in Manchester earlier in the summer described the US Federal Government as a healthcare system with an army. If you add in triple locked pensions, Osborne could have been on the way to creating something rather similar here in the UK. But he now appears to have chosen a different path, to avoid the 25-40% cuts he threatened, as well as some of the tough decisions that he’d promised. Tax credits reversed: Home Office, Defence and Science protected. Much more money to the NHS. Osborne has even managed to breach his own politically designed welfare cap after the revolt from right and left over in work benefits. He could have gone further and he could have gone faster but he’s now chosen not to do so.
There are cuts for sure. Some big ones too. They will have tangible effects on some services, some places and some people. There are notable shifts in the way we are governed and the way that tax and spending is managed through a new wave of devolution deals. But this doesn’t seem to be a radical new state, rather a patching together of older ones. Some from the golden Tory eras of the 1930s and 1950s but just as significantly, others from the mainly socialist decades of the 1940s and 1960s.
Onwards then to One Nation Britannia – fighting ignorance, want and disease with free trade, free markets, and free childcare. Building a new economy with the dynamism of British business, state funded science and old fashioned town halls. With low corporation taxes and increasing employer levies. Welcome to the messier more complicated middle ground. A patchwork of different, often contradictory ideas and values. And there’s something familiar about it. Men in big Victorian hats? Scientists, coders and nurses? It’s a Spending Review that might have been written by Danny Boyle. 2012 obviously left more of an impact on George Osborne than we thought.