Your five (and a bit) point guide to Osborne’s big speech

By Peter Hoskin
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I wonder who does the location scouting for these big, ministerial speeches. George Osborne’s today was delivered in a building development that ceased, er, developing in 2008, but where construction started again last year. So, y’know, the economy has turned a corner, etc, etc. But it mostly reminded me of the Chancellor’s speech in a Morrisons depot in Kent in April. His appearances are ever more considered and camera-friendly.

As for the content of today’s speech, I previewed some of it yesterday, but here are five (and a bit) points that stood out to my eyes from the actual text:

1. Living standards really matter, you guys… It’s as I said yesterday: in many ways, this speech was designed to pre-empt the new political landscape. Now that Labour cannot complain about the absence of growth, we know that they will complain about the absence of cash in people’s pockets. Osborne today tried to nullify that attack by linking everything he said back to living standards. The phrase itself was used a dozen times. And he promised “more [policy action] to come this autumn”. There was no firm answer to what I regard as one of the most important questions in British politics, at the moment: whether, if the Treasury’s growth forecasts improve, Osborne will use the extra anticipated money to reduce the deficit or to cut taxes and hand out some cash. But there was nothing to undo my suspicion that it will be the latter above the former. 

2. …but not how Labour say they matter. But Osborne didn’t just pre-empt Labour’s coming attack on living standards, he also tried to sabotage it. Despite that promise of more action to come, he was actually quite dismissive of policies formulated specifically to tackle living standards. “Of course,” he said, “there are important improvements we can make to the scale of energy and water bills, the cost of housing, the fees paid for everyday financial services, the expense of rail and road travel.” But then there was a but: “But fundamentally, Britain is poorer than it was not because government didn’t intervene enough, or rail regulation wasn’t tough enough, or rental policies weren’t fair enough.” His point was that the major cause of declining living standards is a declining economy – and, for that, Labour doesn’t have the answers. This is rather cunning, I think. As growth returns, Miliband & Co. would love to talk about micro measures rather than macro ones. Osborne is trying to deny them that opportunity.  

3. Boo! Hiss! It’s those beastly fiscalists! The passage that Osborne seemed to relish the most was the one targeted directly at Ed Balls. Those who advocated a Plan B – what the Chancellor called, rather clumsily, the “fiscalist” plan – have “lost the argument”. His point was not just that these folk would find it difficult to explain why the economy is growing at a time when the cuts have maintained, or even increased, their severity, but also that they would, naturally, harm living standards. It all goes back to that second point, above: that, by borrowing more, Labour would have made the economy less secure, and the pain would have lasted longer. As Osborne argued it, “the most powerful tools that we have to protect living standards as our economy recovers are low mortgage rates and low taxes, and we’re delivering both.” It’s worth mentioning, however, that he did defend a looser fiscal policy in one specific instance.

4. The long and winding road. We knew before the speech that Osborne would take care not to sound triumphalist or premature – and, apart from one line about the Eurozone crisis having “finally abated”, that’s exactly what he did. “This is a hard, difficult road we have been following,” he said, reminding the audience that the Land of Plenty is several leagues off yet. And he also went out of his way to describe just how awful things were. The potted analysis that Osborne gave here – of overstretched banks and budgets, of long-stagnant incomes and declining productivity – is actually one of the best he has given about the pre-Crash years. I’d suggest you read it, but it was summed up thus: “What happened in Britain was the product of a pattern of economic development that had been fundamentally unbalanced and unsustainable for many years.”                                  

5. History ain’t repeating itself. But isn’t the new economic growth still unbalanced and unsustainable? Aren’t we now too reliant on house prices, easy debt and quantitative easing? I shall write about this in more detail soon, so suffice to say, here, that Osborne’s answer today was – NO! He claimed that growth has been spread across “all sectors of the economy”, and that “consumer spending accounted for less than half the rise in GDP over the first half of this year”. He pooh-poohed talk of a housing bubble, for the reason that “house prices are down a quarter from their peak in real terms”. And he defended Help to Buy as a “sensible” way to shunt people on to the property ladder (although crucially, thankfully, stressed that it would be “time-limited”). One thing that struck me was the Chancellor’s confidence that the new system of financial regulation would be able to spot any imbalances in the system and swiftly correct them. Quite a hope, that.    

And a bonus point…

6. You, the people. Just an observation about rhetoric, but one that’s worth making, I think. Osborne was careful – particularly at the beginning of his speech – not to claim too much credit for the improving state of the economy, but to attribute it to the British public. The bit about the economy turning a corner was preceded by the words “thanks to the efforts and sacrifices of the British people”. He then added, “We mustn’t lose what the British people have achieved”. This belief in you, the people – as Charlie Chaplin once put it – was something that Thatcher felt from the heart. It’s also something that peppers American speeches.