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Fraser Nelson reviews the week in politics

29 October 2008

12:00 AM

29 October 2008

12:00 AM

A nanosecond is easily measured in Westminster as the time between a politician’s hearing of a colleague’s impending resignation and wondering ‘What’s in it for me?’ It takes perhaps a full second to construct a theory as to why the unfortunate soul had it coming and probably deserved it. It takes about a minute to draw up a shortlist of potential successors, and half an hour to start some gentle plotting. Sympathy comes last, if at all.

So for the few hours when George Osborne’s future was in doubt last week, the corridors and the urinals of Westminster were abuzz with versions of his political obituary. If he went, one shadow cabinet member told me, it would be not so much for his sins on board a Corfu yacht, but for his failure to take the fight to Gordon Brown on the economy or supply the party with a message. Names like William Hague and even Kenneth Clarke were mentioned as older, more experienced successors.

It is hard to exaggerate the dismay that gripped the party as it was outmanoeuvred by a Prime Minister who, only a few weeks ago, had been written off as political dead meat. As one Conservative privy councillor told me: ‘Things have come to a pretty pass when Alex Salmond is able to make a more coherent and pointed critique of the government than anyone on [our] front bench.’ And while Mr Osborne survived, he emerged a humbled man. So the challenge he faces now is not just to cut down on the time he spends on oligarchs’ super-yachts, but to rethink his whole strategy and operation.

As if being shadow chancellor were not enough of a job in the current climate, Mr Osborne has two other huge roles in the Cameron team. He is general election co-ordinator, a remit which has expanded as that of the party chairman has contracted. Caroline Spelman, who holds this increasingly honorific position, has now spent five months under investigation for allegedly abusing her parliamentary allowances in 1997. It is widely assumed that she will resign whatever the outcome, so her authority — never great — has shrivelled to zero.

Mr Osborne’s third job is de facto party policy chief and, in this capacity, he has effectively supplanted his former boss in the Tory Treasury team, Oliver Letwin, who now defers to him in policy meetings. Such is his stature that shadow cabinet members grumble about being outranked even by Mr Osborne’s aides, who have accrued the de facto power to approve or reject proposals in his absence.

The only consolation is that Team Osborne includes perhaps the best and brightest in the Tory party — an elite squad including Matt Hancock, Eleanor Shawcross, Rohan Silva and Rupert Harrison — whose members are seconded from time to time to other party responsibilities. Few shadow cabinet members could dream of gathering around them such a staff.

A year ago it looked as if Mr Osborne could do all three jobs standing on his head. Now, none is going well. Take policy development. An email was sent out from Tory HQ earlier this week blaming Lord Mandelson for the increased number of Labour initiatives getting into the newspapers. To counter this, a request was made for a ‘strong and steady flow of our own policy ideas to release between now and Christmas’. And in the true Cameroon spirit of recycling, such ideas ‘do not necessarily need to be brand new’. Hardly the battle roar of a party brimming with intellectual energy.

It is not that Mr Osborne lacks talent: quite the opposite. Staff in Tory central office say he brings clarity and enthusiasm to campaigning strategy. Those who attend policy meetings report that he is an indispensable corrective to Mr Letwin, who tends to complicate things. Yet there remains widespread confusion about who does what at the top of the Tory hierarchy, thanks to the Cameroons’ penchant for doubling up and doing each other’s jobs. Rumours swirl about tensions among them, and yet another reorganisation of the Conservative Research Department is now on the cards.

Given the new economic context, for Mr Osborne to do all the jobs he does properly would be incredible. But what the party really needs now is a shadow chancellor who focuses on that task and that task alone. Everything has been changed by the global meltdown and the national recession, and the soundbite Mr Osborne originally crafted — ‘sharing the proceeds of growth’ — now looks risibly anachronistic. We have entered an era of recession politics, in which there is no prospect of a balanced budget for five years. The question now is how debt financing is handled.

Mr Brown wants to exploit this crisis to embark on super-Keynesian, massive public works projects, as Japan did in 1992 to such disastrous effect. He argues that this will create jobs. The obvious Tory riposte is to say that the budget deficit — regrettable, but inevitable — should instead be used to bring direct relief to families through tax cuts (or, at least, tax freezes). So while Labour argues that the key impetus must come from the state, Tories should put their faith in families and aim to stimulate the economy by easing the tax burden upon households.

But to do this, Mr Osborne needs to bury his old assumptions and adopt new ones for the recession era. The Tories are still in therapy over the issue of tax cuts, haunted by flashbacks to old internal battles. Like hallucinating war veterans imagining explosions, many Tories even now go into palpitations over the very mention of tax cuts. It is this lack of intellectual self-confidence that Mr Brown relies on. Yet the Prime Minister’s message — that letting people keep more of their money is somehow a right-wing fixation — is being spectacularly disproven by events across the Atlantic.

The United States is facing budget deficits and bank bail-outs as large as Britain’s, yet Barack Obama’s main campaign pledge is to offer tax cuts larger than those of John McCain. Visitors to the senator’s website are asked ‘What’s your Obama tax cut?’ and invited to calculate the size of their rebate. Of course, any tax cuts would have to be debt-financed and — ergo — what Mr Osborne calls an ‘unfunded tax cut’. Yet this is coming not from the unreconstructed Right but from one of the most left-wing Democrats ever to run for the White House.

Mr Osborne has the brainpower to devise a well-crafted Tory tax cut message with at least the power of Mr Obama’s. He has the audacity to break free of that old Tory curse: fear of what Mr Brown might say. A Tory tax policy could convey the message which has resonated so strongly for Mr Obama — that the Tories wants fundamental change, and have a palpably better plan to speed Britain out of recession. If Mr Osborne has been truly chastened by the events of last week, he will grasp the urgent need for such a message. There is no time to waste.

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