The heat threatening to fry George Osborne’s chancellorship will ease following the thumbs up from Standard and Poor’s. Nevertheless he must use the respite to set his political house in order.
The budget was the biggest PR disaster since Geoffrey Howe’s extra dose of Thatcherism in the early eighties. Howe was attacked for dogma, but Osborne’s problem has been credibility. This is said to be because he has two jobs. Whether this is true or not, lack of attention to detail and its consequences led to the mess up of Budget 2012. Moreover it is easy for opponents to say his plan is not working. It is now important to separate man and plan.
Osborne himself must get a grip of detail at the Treasury and give up being a kind of third prime minister. We already have two, which is plenty. If he does that, in spite of rude barbs from his tormentors, he can yet succeed. He must do that by joining up his various measures to create a narrative which informs a strategy. Without this the country as a whole will not buy into the plan.
The plan is relatively sound. Whatever Ed Balls says, you cannot borrow your way out of debt any more than you can towel yourself dry while still under the shower. You cannot continuously outspend your tax revenue on the daily running costs of a bloated state. You may have to borrow in the short term to cover the costs of re-balancing the economy and you may have to endure flat lining growth while these changes are happening. You may have to use more quantitative easing to fire up infrastructure renewal, business financing and new home construction. So long as you make sure that the government’s payroll is shrinking and its commitments to future growth of government spending reigned in, progress will be made and growth, when it comes, will be on a sounder footing.
That essentially is what is happening in a muddled incoherent way. Standard and Poor’s can work this out. This is why they are willing to let the UK keep its AAA rating. Osborne needs to present his programme in a joined up way we can all understand, with a clear view of where we are headed, expressed in values to motivate ordinary people. The likes of S&P will then take care of the markets.