For every measure that Osborne has introduced to help job-creators, there have been at least as many that hurt them. Most futile of all is the imposition of expensive climate change policies that increase the energy costs of British manufacturers.
This Government has had its share of crucial moments – but the date that could come to define it will be Tuesday, November 29. On that day, George Osborne will deliver his Autumn Statement. If he doesn’t announce growth measures that are as extraordinary as the crisis facing this country, there’s a risk that he will not just miss his deficit targets, but condemn Britain to such economic misery that David Cameron’s chances of winning a parliamentary majority will be dangerously and perhaps fatally imperilled.
Ed Balls and the Tory Right don’t agree on much, but they do agree on one thing: the Chancellor’s economic strategy is dangerously lopsided. Osborne has a deficit reduction strategy, but he doesn’t have an emergency strategy to get the economy growing. I emphasise “emergency”, because these days any economy is only ever 24 hours away from losing the confidence of the markets. For the time being, Britain’s deficit reduction plan looks like a Rolls-Royce: bigger, better and more impressive than anything else on the market. But just as a classy car is useless without petrol, a deficit reduction strategy is useless without growth.
The Coalition does have a long-term growth plan – and if fully implemented, it will be as revolutionary as anything pursued by Margaret Thatcher. Michael Gove’s schools reforms have the potential to ensure that tomorrow’s labour force possesses world-beating skills. Iain Duncan Smith’s welfare policies will turn today’s benefit claimants into productive workers who pay rather than consume taxes. Philip Hammond’s high-speed rail link will integrate the Northern cities with the South-East. But these are all long-term measures, aimed at delivering growth in 2015, 2020 or 2025.
In the face of our economic woes, Britain needs to turbo-charge the private sector right now. Yet for every measure that Osborne has introduced to help job-creators, there have been at least as many that hurt them. The Government cuts corporation tax, but takes away much more in VAT. There’s a promise to curb health and safety laws, but submission to EU oversight of the City of London. Most futile of all is the imposition of expensive climate change policies that increase the energy costs of British manufacturers, but – in the absence of global agreements – do nothing to lower emissions worldwide.
Encouragingly, there are suggestions that Osborne now realises the urgency of the situation. Treasury officials have warned him that his deficit plans are in jeopardy, and that he needs to find ways of convincing global investors that he can get back on course. Just three months ago, the Chancellor was the man at the table who found fault with others’ growth ideas. He’s now the one banging the table and demanding more boldness.
That new plan won’t, of course, be the “Plan B” that Ed Balls is promoting: the Government isn’t reckless enough to increase Britain’s debts in the middle of a global debt crisis. Last month, this commitment came under its strongest pressure yet, when Boris Johnson and police chiefs such as Sir Hugh Orde joined Labour in demanding that the Government abandon cuts to police budgets. Fortunately, ministers didn’t even wince, let alone buckle. More significantly, the public didn’t panic: over the summer, the Labour lead narrowed. Most voters seem to understand that tough spending choices are unavoidable. [….]
But what if the economy isn’t fixed? Osborne has followed a very unusual economic policy for a Tory Chancellor. On the big questions of the day – the balance between taxes and cuts, climate change policy, the future of euro – he’s ignored most advice from the mainstream of his party. He needs to change course, or for his existing policies to succeed – and quickly. Either way, his most interesting period as Chancellor is about to begin.