He is the master tactician. As Chancellor of the Exchequer, George Osborne is responsible for Britain’s economic policy. To think of Osborne merely as an economic manager, however, would be mistaken. He is not a Chancellor who is easily swayed by technocratic minutiae. He is, rather, one of the most political Chancellors we have ever seen.
Take the Labour Party’s recent U-turn on the fiscal responsibility charter. It amplified and exposed the challenges facing Labour under its new leadership: doubts over its economic credibility, a lack of frontbench experience, and open party disunity. There was no official requirement for a Commons vote on the fiscal responsibility charter, which simply expresses a general commitment to run a surplus in good economic conditions. We still have a huge budget deficit, let alone a surplus, so how to handle one is very much a hypothetical question at this stage.
So why did it go to a vote? Political tactics. Osborne knew that, one way or another, a formal vote would be a nightmare for Labour – and at the very time the party had the greatest opportunity to spell out precisely what it stood for under its new leader. If Labour voted for the Chancellor’s fiscal responsibility charter, as it initially pledged to do, it would make it look as if the party was somehow as committed to tackling the deficit as the ‘nasty’ Conservatives. How could that be squared with Labour’s anti-austerity agenda? On the other hand, if Labour voted against the charter, as it eventually did, it would look as though the party didn’t care much about sound public finances and doesn’t see sense in fixing the roof when the sun is still shining.
With Labour’s 180 degree U-turn, Osborne couldn’t have believed his luck. Not only did the Opposition find itself playing along to the Chancellor’s clever game, it played it badly. This wasn’t just about scoring a win over Labour, nor even about Osborne setting the political agenda. It was about sending a clear signal to voters, alert to Labour’s change of leadership, that Labour is the party of economic incompetence and the Conservatives the party of economic competence – to everyone’s disadvantage and advantage respectively.
Difficult as it is for politicos to admit, most people don’t really follow politics much. They pay attention at key moments, and then switch off again. The next time most people will switch back on will be just before the next general election. Osborne knows this and that’s why he has been so desperate to frame Labour as early as possible during this Parliament. Labour has just produced a dramatic change of leadership about which people are developing their initial, often lasting, impressions. If the government can effectively depict the Opposition under Jeremy Corbyn as economically incompetent and hopelessly divided, it will be hoping that people’s general impressions will change little over the next five years, no matter what Labour does and no matter what policies it unveils.
Of course, it’s not just the Labour Party that Osborne and the wider Conservative Party have been trying to ‘frame’. Well aware of its continued ‘nasty’ party stigma and of the huge opportunity afforded by Labour’s left turn, it has been eagerly trying to frame itself as the party of the centre and the true party of working people.
With his Budget in July, Osborne was sending a crucial signal to voters as they forged their initial impressions of the new Conservative majority government. He did everything he could to steal traditional Labour territory. The watershed announcement was the new Living Wage of £9 per hour by 2020. It was a remarkable and highly welcome turnaround for a party that initially opposed the minimum wage, let alone a living wage.
But this is where George Osborne’s tactical signals are coming under significant pressure as he presses ahead with changes to tax credits, which the Institute for Fiscal Studies estimates could cost three million families £1,000 per year. The increasingly obvious tension in the Conservatives’ claim to be a champion for both working people and a guarantor of sound public finances was boldly captured in the maiden speech of Heidi Allen, newly elected for the Conservatives in May. “To pull ourselves out of debt we should not forcing those working families into it,” she warned. “I worry that our single-minded determination to reach a budget surplus is betraying who we are.”
Just who are the Conservatives? Many of its MPs, particularly from the most recent intakes and those who are closest to David Cameron’s way of thinking, think of themselves as One Nation Conservatives. That’s precisely how David Cameron presented his new majority government on May 8th, and it’s precisely how the party must continue to position itself if it hopes to form further majority governments. Governing as a One Nation party is the overarching goal.
George Osborne is a master tactician. But sometimes the greatest political tacticians just can’t see when their tactics end up harming their intended goals. Margaret Thatcher couldn’t see why the poll tax was such a bad idea, and was duly ousted as party leader. Just last week, Stephen Harper lost Canada’s premiership after a divisive election campaign. Harper had been the brains behind the Canadian Conservative Party’s success over recent years, turning his government’s minority into a majority in 2011. But smart election tactics weren’t enough to return him as Prime Minister. Tactics are only effective if the goal is sound, and if the tactics serve that goal.
This matters a big deal for George Osborne – and for the Conservative Party as a whole. If Osborne is serious about his leadership ambitions, and if the Conservative Party is genuine in its attempts to advance the interests of workers of all income brackets and social backgrounds, then the government’s tax credit plans will require serious revision.
No politician likes to perform a U-turn. No matter how principled, it is inevitably embarrassing. Ask John McDonnell. Just a few weeks ago George Osborne could hardly contain his glee at the chaos within the Labour Party over its economic policy. They fell for his trap and he scored an important political win. That win will turn out to be much less important if he fails to deliver the One Nation vision that he and his party have championed. He now needs to avoid falling into an almighty trap of his own. The short-term embarrassment will be uncomfortable, but revising the proposed tax credit changes is essential if this government really wants to define itself as the real party for working people.