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George Osborne has delivered his Autumn Statement and Spending Review. As always, there is plenty of time for things to unravel as the opposition, observers and journalists trawl through the documents for hidden bombshells. But as it stands, it looks to have been a broadly successful and politically savvy statement from the Chancellor.
After weeks of criticisms and concerns about his plans, Osborne systematically hopped over the various political booby-traps laid out for him. He u-turned on tax credits in an almost triumphal manner. He should never have got into this hole in the first place but he climbed out of it to the cheers of his backbenchers and the mild despair of an opposition front bench that realises it must now rehash its entire attack strategy with 45 minutes notice. To further cheers Osborne announced there would be no cuts to police budgets – having somewhat harshly noted that the Shadow Home Secretary had been proposing a 10% reduction.
He has also made some interesting policy announcements – continuing his ‘devolution revolution’ by announcing councils will be able to retain the proceeds of asset sales, and applying a higher rate of stamp duty to buy to let investors (something that is already hitting housebuilders share prices and may see a further cooling of parts of the London market.)
So what have we learnt?
Osborne has been hugely helped by improved expected figures for tax receipts, and lower than expected borrowing costs, giving him plenty of wiggle room to soften the impact of cuts. Osborne is taking a gamble that the projections will turn out to be correct – incorrect and he will be struggling to meet his own rules on the decifit and debt in future.
The Chancellor remains as much focused on the politics as the economics. For a supposed deficit hawk, it is notable that he has chosen the wiggle room noted above to primarily soften cuts, rather than accelerate deficit reduction. Cuts in this parliament will be around half those in the last. One Tory backbencher told us ‘austerity’s over then, isn’t it’, after leaving the chamber.
Labour continues to shoot itself in the foot with startling enthusiasm. It is possible they will uncover a pasty-tax style cock-up hidden in the detail of the documents. If they don’t, they will be remembered for only one thing in relation to this Spending Review – the extraoardinary sight of John McDonnell whipping a copy of Mao’s little red book out of his pocket and quoting from it. The 2020 Tory election adverts write themselves.
Osborne has not fully rehabilitated himself from the problems of recent months. Some will see the police announcement as a victory for his rival, Theresa May, and the tax-credits move a humiliation rather than the product of Osborne being pragmatic. But it feels as if the Government is back on track, and back to its unashamed attempt to colonise the centre-ground.