Progress | Centre-left Labour politics

Two weeks today: Osborne’s trickiest budget

For those of us who grew up with a Labour government making a difference to our lives at nearly every step along the way, election defeats and the simple paralysis of opposition feel particularly cruel.

The cruelty was not just the realisation that this was a Labour party settling into the natural order of things: losing. It was that this thought process has probably gone through every moderate Labour party member’s head, in every generation, at every election defeat in our history.

It will be a long summer, and most of the leadership candidates have yet to reach out beyond the party’s comfort zone. But that moment will come sooner than they are showing signs of being ready for: another indisputable truth of politics will be hammered into the minds of voters this summer – that while Labour are often left changing our party, it is the Conservatives who are changing our country.

Two weeks today, George Osborne will deliver his emergency budget to – presumably – deal with the mess left by the last government. He will do so standing a little taller and mocking a little louder than at any other budget he has delivered: his partnership with David Cameron is probably now of the most politically fruitful Tory leaderships in history; perhaps even surpassing Margaret Thatcher’s luck in facing Michael Foot. But to think this is irreversible is a mistake – this will also be one of the chancellor’s trickiest budgets to navigate.

Thanks in part to hastily drawn-up pledges during the election campaign, the looming danger for the Tories will come in overreaching. Voters are not fickle, but they are quicker than everyone else in politics to realise when a government is threatening to push too far into their lives, to take too much while understanding too little. The warning signs, for the coalition of voters who put Osborne back at the government dispatch box, are there already.

In the budget the chancellor will reaffirm his plan to eliminate the deficit by 2018, which will see most cuts fall in the first half of this parliament. There will likely be incentives for first-time buyers and a freeze on rail fares, but Osborne is the master of giving with one hand while taking with another.

Welfare cuts totalling £12bn never seemed like a number grounded in reality, which is why the plan to cut tax credits is bad policy and very bad politics. As Sally Keeble wrote yesterday, tax credits do not just help families, they help the economy too. Families could lose up to £1,700 a year.

Then there are suggestions circulating that the top rate of tax will be cut further, to 40p, benefitting someone earning £200,000 to the tune of an extra £2,500 a year.

Incentives like help for first-time buyers are to be welcomed but they seldom do more than kick the can down the road – we are all surely now well versed in the arguments for boosting the housing supply. Osborne may have the political nous to make his way through a budget interwoven with unfunded retail offers made in the heat of an election campaign, but papering over deep-rooted economic problems such as weak productivity will haunt him if he is to become prime minister.

We can expect further money for devolution of powers, too, to cities and towns. But doing so while leaving local government with an unfair funding settlement – and the real threat that some councils could fail to carry out their statutory duties – suggests the chancellor is more interested in localising blame for cuts to services, rather than championing real localism.

This emergency budget may be delivered by a chancellor who has revitalised both his image and the electoral fortunes of his party, but as we know in the Labour party more than anyone else, nothing is forever in politics.

This time Labour should not be focused on waiting for the economy to falter again. Centre-ground voters are not lost permanently to Labour, and we should not conduct the leadership contest as though they are. They will turn against the government they elected in May but only if there is a better offer elsewhere. Will Labour be ready?


Alex White is a member of Progress. He tweets @AlexWhiteUK

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