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George Osborne talks tough but he also needs to talk clearly

By Peter Hoskin
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George Osborne’s appearance on the Andrew Marr show was very much like David Cameron’s article for the Mail on Sunday this morning. Like the Prime Minister, he emphasised many of the “big, radical decisions” that this Government has already taken, from schools reform to deficit reduction. And, also like the Prime Minister, he said that more must be done to overcome certain obstacles (e.g. NIMBYism) and secure economic recovery. On Mr Osborne’s list of priorities were further planning deregulation, including the loosening of restrictions abound the green belt, and more airport capacity in the South East. This was a blunt, tenacious performance from the Chancellor. It contained much to suggest that the Government is going up the pace in its pursuit of growth.

If anything was different between George Osborne’s and David Cameron’s words it was that the Chancellor sounded even more combative. He rounded on his Tory critics — who, in the form of David Davis and Brian Binley, are out in force this morning — and urged them to “get behind the Government”. He also described many of their economic recommendations as “mutually contradictory”. I suspect this is a battle that is only going to escalate, whatever the contents of the Autumn Statement.

But, more than the calls for a new Chancellor or the calls for new policies, George Osborne should be especially concerned about one line in his critics’ attacks this morning. And that one line is this, from Brian Binley’s article:

“It is now clear that the Chancellor will not fulfil his Election promise of eliminating the deficit by 2015.”

Why is this so concerning? Because, in several respects, it’s wrong. There was no election promise to eliminate the deficit by 2015. In fact, the promise in the party manifesto was to “eliminate the bulk of the structural deficit over a Parliament”. Even before we consider the fact that this “structural deficit” (aka, the cyclically-adjusted current budget) is not the same as “the deficit” (aka, public sector net borrowing), it’s clear that “the bulk” is not the same as the whole. In this case, Mr Binley is attacking his own party's leadership on a false premise.

But what about since the election? Even then, Mr Osborne hasn’t strictly promised to eliminate the deficit, structural or otherwise, by 2015. I explained the government’s fiscal rules in a post for the Spectator’s Coffeee House a few months ago, but the basic point is this: the Chancellor aims to eliminate the structural deficit by the end of a rolling five-year period. This rolling period begins afresh each year, such that in 2010 the aim was to eliminate the structural deficit by 2015-16, but this year it’s by 2016-17. The length of this Parliament doesn’t actually come into it.

Of course, as I pointed out in my Coffee House post, you could say that it’s a weird sort of fiscal rule that allows the Treasury’s structural deficit forecasts to slip as they have. But Mr Binley didn’t make that charge against George Osborne, and instead deployed an attack that isn’t quite accurate. This typifies a problem that people from yours truly (in a column about Paul Ryan) to the CPS’s Ryan Bourne have highlighted recently. If even Tory MPs aren’t sure about what the Chancellor is up to, then what about the public? George Osborne should make it a priority to explain himself more clearly.


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