costIn today’s Autumn Statement, Chancellor George Osborne confidently announced to the House of Commons that “Britain’s economic plan is working” and, in a speech that was largely devoid of flashy announcements or headline measures, he then set about making an overt pitch to voters that the current Government – and more specifically the Conservative Party – are the ‘sensible grown-ups’ who should be trusted with the economy.
His confidence was not without reason. For the first time since becoming Chancellor, Osborne has been able to provide an economic statement to the House of Commons against the backdrop of rising growth forecasts. The OBR has revised up its estimated GDP figures growth to 1.4 per cent for 2013 and delivered more good news on borrowing, with the figures for the deficit being revised down. Osborne used these figures as vindication of the Government’s economic strategy and indeed reported the OBR’s forecasts as “the hard evidence that shows our economic plan is working”. He added that critics – and, in particular, the Labour Party – who had argued that there would be no growth whilst the Government was pursuing its plan of fiscal consolidation “have been proved comprehensively wrong”.
However, despite the improved GDP and borrowing figures, the Chancellor was keen to stress that the job is not done; noting that the deficit was still too high and there would need to be more difficult decisions in order to bring it down and deliver the “responsible recovery.” Emphasis was placed on securing the economy for the long term, which involved announcements regarding more capital spending on infrastructure, energy, reforms to education and business taxation. One particular area of long-term Government spending which the Chancellor sought to address concerned the basic state pension, and Osborne outlined plans to increase the state pension age in order to guarantee that it remained affordable despite the predicted demographic changes in coming decades.
Whilst there were a few measures designed to demonstrate the Government are on the side of hard working people (most of which had been trailed prior to the Chancellor’s Statement), involving free school meals, marriage tax allowances and limits on energy bill rises, there were no significant measures on tax cuts or spending increases. This was largely expected. With 18 months and two Budgets to go before the election, Osborne was not under any pressure to make any big eye catching announcements or political gestures which attempted to match Labour’s proposals to address the cost of living crisis. Instead, the political message of the Chancellor’s statement was almost entirely focused on positioning the current Government as ‘the grown ups’, the ones with the serious plan for the country, as opposed to any incoming Labour Government, who would squander the economic recovery through reckless spending. Indeed, it could be argued that Osborne’s election strategy depends on persuading the British people that big fiscal and economic dangers remain and that voters cannot afford to take a risk with Labour in 2015.
Conversely, the Shadow Chancellor Ed Balls, who in his response accused the Chancellor of “utterly breath taking complacency,” sought to focus on the issue of falling living standards for the majority of working people under the Coalition Government over the past three years. The ‘cost of living crisis’ has clearly been Labour’s focus ever since Miliband’s announcement on an energy price freeze at the Labour Party Conference in September and it continues to make a considerable impact on the political agenda.
Today’s events neatly illustrated how these two narratives – the economy and deficit on the one hand, the cost of living on the other – are likely to define the political battleground for the next 18 months. Indeed these two issue discussed extensively by the panel at Newgate’s ‘Britain in 2014’ event last month. Ultimately, it is up to the British public which set of issues are deemed more important.