George Osborne: Midwife of Reform

In one regard at least, one must admire George Osborne: it takes some nerve to take to X and crack jokes about the halcyon days of his “long-term economic plan”. Or perhaps that’s merely wishful thinking on my part. Such a posture certainly ought to take nerve; but does it?

For the former Chancellor is the latest personification of the hagiographic historical filter which tends to be applied, sooner or later, to all but the most effective Conservative governments (Margaret Thatcher will never receive it); the process by which some previous iteration of the party becomes the good-old-Tories, in stark contrast to whatever the party is doing in the present day.

All the vitriol once directed at “Gideon” when he was grand vizier in the only government in recent times which actually cut public spending is forgotten; today, his chummy podcast with Ed Balls commands a hefty following, and broadcasters invite him to share his sage wisdom on the future of the Conservative Party.

The whole circus is an extraordinary injustice. The unhappy state of the nation has many authors, but Osborne’s name deserves a spot near the head of the list. It was he, after all, who was the guiding intellect behind the Coalition Government’s austerity programme.

At this point left-wing readers might be tempted to start crowing, so we should clarify the charges. The problem is not that Osborne cut spending — it is that he cut spending in a deeply stupid and unstrategic way, and in so doing squandered our best chance at shifting the course of the country before things got very bad indeed. This charge has two parts.

Osborne has never recanted his record; he appears a tactician almost flagrantly uninterested in the substance of policy

First, there was his Treasury-brained insistence on cutting capital investment. This is a general British vice (who can forget, having seen it, Nick Clegg crowing about killing nuclear investment which wouldn’t have come online until the 2020s?), but the then-Chancellor must take the lion’s share of the blame — especially given the historic period of near-zero interest rates after the Crash which would have made borrowing the capital cheap.

Second, there was his refusal to make any strategic decisions on how to cut revenue expenditure (that is, day-to-day spending). Instead of making deep cuts in some areas to protect spending in others, the Coalition adopted a policy of salami-slicing all of them. (A fun parlour game for a certain sort of nerd: how many things did the state actually stop doing during austerity?)

The result is what John Oxley has dubbed “Shit-State Toryism”: the footprint of government is as wide as ever, and public expectations of it as high as ever, but nothing has enough money to work. The Conservatives did pay the ultimate political price for the courts backlog and the lack of prison capacity, amongst many other things — but only long after Osborne had left office.

At the same time, he continued to ramp up the tax squeeze on private landlords; a fine populist measure in isolation, but in the absence of dramatically expanded housebuilding a sure-fire way to exacerbate the housing crisis, as private-rented is the highest-density form of residential housing. The Tories paid a price for that, too.

Rather than facing up to the biggest challenges facing the British economy — stagnant growth, an ageing population, and the attendant runaway revenue expenditure — he poured fuel on the fire, introducing the Pension Triple Lock and slashing central government support for councils without doing anything about their statutory obligations to provide things like social care.

It isn’t really difficult to see how this came about. David Cameron won the Conservative leadership in 2005 on a platform which was more or less that the party had won the victory over itself, and now loved New Labour. When the economic conditions which made New Labour possible disappeared a couple of years later, all he and Osborne could do was blow the dust off the old Tory hymnals.

That they did, and to some effect. But they didn’t really believe the words, certainly not enough to have formulated a vision of a smaller, more sustainable state in pursuit of which they were prepared to make unpopular decisions.

And they would have been deeply unpopular. The boilerplate criticism of austerity is that the government should not have cut spending at all, and simply kept ramping it up irrespective of underlying economic conditions. This is often presented as “Keynesianism”, but in truth Britain has very few Keynesians; Keynes advocated retrenching spending when times are good, and what politician does that? Finding Keynes in a recession is like finding God in a foxhole: comforting, but probably not sincere.

Yet Osborne has never recanted his record; he appears a tactician almost flagrantly uninterested in the substance of policy. Instead, he continues to peddle the absurd Elysia that his new audience wants to be peddled: that the Conservatives didn’t need to do anything about immigration or Europe, and if only they had just ignored Nigel Farage everything would have been fine.

As I have written elsewhere, neither he nor anyone else pushing this line seem able to explain how this would have worked in practice; UKIP managed to come second in a hundred seats in 2015 even with Cameron promising an In/Out referendum, and it isn’t at all obvious how either not having one or Remain triumphing in one would have hurt the Faragists.

But if this is a fantasy, it is not a harmless one. Part of the job of either major party in a system such as ours is to shift ground sufficiently to keep most public opinion inside the big tents. Contra nonsense about a “lurch to the right”, it has been the Conservatives failure to do this which has allowed Reform UK to start creating serious cracks in the mould of British politics.

Should this country end up with a government of the radical Right, Osborne will surely deprecate it from his podcasting studio, and his audience will lap it up. But he will have played a larger individual role than most others, including the bulk of the Brexiteers, in creating the conditions that allowed it to happen.