George Osborne targeted his fire firmly on Ed Miliband in the strongest proof yet that the Labour leader’s successful oration last week has rattled the Conservative party.
Miliband had spent “a third of his life working for Gordon Brown”; he did not mention the word “deficit” in his conference speech; he was Brown “reincarnated”, the chancellor of the exchequer told the Birmingham conference hall.
Until recently many in Conservative HQ had believed that “geeky” or “odd” Miliband would be their secret weapon in the 2015 election campaign and that the public would never warm to their rival.
The Miliband speech in Manchester, where he spoke confidently without notes for over an hour, has put a dent in that assumption, which now looks rather complacent.
Osborne sought to claim back the phrase “One Nation” – the phrase that Miliband had sought to make his own last week – repeating it again and again, and adding that his party believed “we are all in this together”. But he sneered at the idea that Labour’s use of the phrase meant it was capable of delivering a unified nation.
He claimed that the Tories believed in entrepreneurs, or workers who resented neighbours “sleeping off a life on benefits”, or pensioners who had scraped to get by. Osborne is convinced that Miliband simply does not sound convincing on the need to reduce the welfare budget.
In a blatant piece of political cross-dressing, the chancellor claimed that he had pushed up taxes on the rich in every Budget since winning the 2010 election. (As one business figure said: “Am I really at Tory conference?”) He had only scrapped the 50p rate because it was not raising any money, he argued – a claim that was instantly questioned by critics.
The chancellor threw out an innovative policy; an employment contract called an “employee-owner” where workers could exchange their employment rights in return for shares in their company.
This was Osborne at his most uncompromising, warning that the fiscal choice for Britain was “sink or swim”. Britain was a country “confronted by great difficulties”, he said.
He had warned the country three years ago that there would be tough choices, and a “hard road ahead”. If he had not wielded the scalpel on public spending the country could now be “all but ungovernable,” he added.
Now, the message continued, the deficit was down, there were a million more private sector jobs and the economy was “healing”. This medical analogy is the phrase of the week at Tory conference – it was used by defence secretary Philip Hammond on Sunday. (The previous favoured phrase, ‘green shoots’, is now banned by politicians on the grounds of complacency.) GDP figures for the third quarter are imminent; this language suggests the Treasury may be confident of better data.
Believing this narrative means turning a blind eye to the fact that the Treasury will soon have to plug another large hole in the public finances, extending austerity to 2018 and maybe beyond.
The FT this morning has replicated the models used by the Office for Budget Responsibility and found that the government is likely to miss its target of seeing the burden of public debt falling by 2015/16 compared to GDP – and if the economy remains weak the target may also be missed in 2016/17.
Osborne described as “dubious” the idea – put forward by Labour and others – that “a few billion more of spending” would make a bigger difference against Britain’s total debts of around a trillion pounds.
The counter-argument, of course, is that it is because spending a few billion pounds would make little difference to the total debt – in the scheme of things – that it is worth diverting slightly from Plan A.
For now, however, Osborne is playing the role of Iron Chancellor; and he is not for turning. “We shall overcome,” he said.
Jim Pickard
Kiran Stacey