James Forsyth

Why won’t the Tories say they favour the creation of a bad bank?

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In his speech earlier today, George Osborne said:

‘we must deal with the toxic debts of the banks we now own.

They will be zombies until we do. Neither dead nor fully alive.’

The clear implication of this statement, and several others that Conservative spokesmen have made in the last few months, is that a bad bank is needed. But the Tories always stop short of saying that they actually favour the creation of one. I can’t see any reason—political or economic—why the Tories shouldn’t say openly that a bad bank is a necessary step for ending this crisis. It seems to be another instance where the Tories would benefit from being less cautious.

The rest of Osborne’s speech was typically politically astute. He inveighed against the 50p rate, declaring it to mark the death of New Labour. But he chose to make clear that stopping the increase in National Insurance Contributions is the party’s top priority. The leadership’s 50p straddle—disagree with it, mock it but don’t pledge its instant repeal—is keeping the party united for the moment and has neutralised the political danger the move posed to them. These are not small achievements. But in government, they will have to decide whether or not to scrap it in their first Budget. After all, to govern is to choose.

The biggest applause Osborne got was for the line, ‘it wouldn’t be a bad thing if Britain started making things again.’ Although, Osborne’s attempt to cast his family as part of the small business manufacturing base of the country risks bringing up Labour’s favourite subject, Cameron and Osborne’s privileged backgrounds.

On the Tory argument of the day—how much the Tories should say about what they would do—Osborne cast himself as one of those who believe in the importance of a mandate.

“the public looks to us, now, for answers to the problems our country faces.

And we must provide them.

Because we want and we will need a democratic mandate for the changes we need to bring about.”

Watching a Tory audience listen to an Osborne speech is always interesting. The party doesn’t automatically love him in the way it does Cameron. But he is able to hit the party’s buttons so that by the end of the speech he has won them over enough to receive a far warmer standing ovation than one would have predicted he’d get at the beginning.

Written byJames Forsyth

James Forsyth is Political Editor of the Spectator. He is also a columnist in The Sun.

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