The chancellor managed to do a U-turn of majestic proportions yesterday. In his rush to sneak cuts in tax credits through parliament in July this year George Osborne underestimated both the economic and the political realities of his ill-judged policies. In response to cries of protests, from the House of Lords, the opposition benches, and even from many of his own party members, the chancellor has been forced into a complete U-turn on his economic strategy.
It turns out that the chancellor had completely ignored the brutal impact of his policies on the hard working poor. He had also underestimated the vehemence of the ensuing protests against his policies.
The shining face of the chancellor betrays no sense of shame or embarrassment as he is forced to back down and reverse his economic strategy. Has he forgotten how, in vengeful retaliation, he threatened members of the House of Lords with every possible form of retribution when the House dared to speak out against both his policies and his methods, against his cynical attempt to rush his tax credit cuts through parliament unchallenged?
In another complete about-turn the chancellor has raised taxes in his autumn statement in order to avoid swingeing cuts to several areas of public spending. Osborne has, temporarily at least, totally abandoned his staunch far right policies in favour of a far more moderate approach. His mid term review is characterised by less austerity and higher taxes than anyone had come to expect from the chancellor. He has raised council tax and stamp duty to fund community care, NHS spending and to maintain spending on the police force.
Has the chancellor finally started to see sense? Has the penny finally dropped? Too much austerity is not good for business or good for growth. We desperately need investment in infrastructure to support private sector investment. Perhaps he is at last starting to see the light. The chancellor has been forced either by the pleas of the opposition or by the call of the consensus of international expertise to moderate his policies.
Why has Labour not made more of this complete reversal? Perhaps it is hard to pour scorn and derision on good news. The inclination may be to sigh with relief rather than to make the government squirm. The Labour Party clearly needs tougher resolve and more brutal tactics when it comes to capitalising fully on the chancellor’s U-turn!
There remains plenty to be concerned about with Cameron’s government and with Osborne’s economic policies. The chancellor remains intent on seeing the budget deficit turn into a surplus of £10 billion by 2020. He is unlikely to see revenues flowing into the treasury to cover government spending in the coming years given the precariousness of the international economy. Of particular concern is China, that erstwhile engine of economic growth.
At best, forecasts are giving Osborne a 50:50 chance of attaining the surplus he seeks if he continues on the current course. Once disappointments arise, which they surely will, Osbourne is likely to revert to his economically illiterate ways and use austerity measures to drive the economy back into recession. Though he has loosened the iron-fisted grip around the neck of spending his inclinations must surely be to revert to type at the first hiccup.
The chancellor remains an ideologue with respect to public expenditure and he remains intransigeant when it comes to distributional concerns, however, the mid term review has shown that he can be forced to back down by a strong enough public outcry.
This may be the start of a ground swell of something new in politics. The public is beginning to wake up the fact that we are not ‘all in this together’ as the government has claimed. It has been proven today that public outrage can have an impact on government policy. The important thing now is to keep the pressure up and not let the chancellor off the hook in the next budget.