10/10 Tests for the Autumn Statement: Will Osborne recognise the nation's mood?

By Tim Montgomerie
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In his article for The Sunday Telegraph Lord Ashcroft had some advice for George Osborne on how he should present his Autumn statement. Basically stop the Labour-bashing and don't pretend things are better than they are:

"Swing voters chastised Labour for failing to see the crisis coming and make provision, as well as for spending more than Britain could afford. But even those who felt this said they were fed up with hearing it from the government. If the Chancellor's message this week seems unpalatable, it will at least have the merit of being, for voters, believable. Over-claiming on the economy would not just be unconvincing, it would reinforce persistent perceptions that he and his party are out of touch with life as it is lived by most people."

In terms of presentation I'd also hope for something bigger. This year's Budget was disappointing because it didn't level with voters. Important help for motorists and council taxpayers was put central stage when the core message needed to be economic renewal. Every voter knows times are tough. They want to know if better times lie ahead, when they are likely to arrive and how we will all get there. Up until now the Chancellor hasn't brought policies or a message to the despatch box that match the seriousness of the time. Tomorrow he must deliver both the strategy and the words to convince people that he has a plan for prosperity as well as for deficit reduction. We don't want Tory MPs waving order papers like they did last year when big cuts were announced. We don't want silly catchphrases like the March of the Makers. Like a sick patient, Britain doesn't want platitudes or false hope. The British people want to know they are in the hands of a healing statesman who knows what he's doing and that, however painful in the short-run, things will get better. Osborne is the most political of men but voters don't want politics tomorrow. They want a Chancellor.

9/10 Tests for the Autumn Statement: Will Osborne advance an industrial policy?

By Tim Montgomerie
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Ealier I wondered - a little unfairly - if our Chancellor was becoming a bit like Gordon Brown with his nook and cranny interventionism. I also wonder if Mr Osborne is tempted to become a little bit like Peter Mandelson, too. Last week the former Deputy PM made the case for a strategic industrial policy in an article for The Times (£). He began by saying that he wasn't recommending a return to the failed industrial policies of the past:

"For the past 30 years there has been an unwritten rule in Whitehall that ministers and markets don’t mix. It’s easy to see why: misconceived central planning, ill-judged attempts at creating national champions and the inefficiencies of public ownership in the 1970s and 1980s were powerful evidence for the prosecution. The capture of policy by vested interests often meant that rather than government picking winners, losers were picking government."

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8/10 Tests for the Autumn Statement: Will Osborne address family policy?

By Tim Montgomerie
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There are, crudely, two forms of compassionate conservatism. One form is about helping the strivers - the working poor. Cutting petrol duty, freezing council tax, tackling energy prices and raising the starting threshold for income tax are part of this agenda. The second form of compassionate conservatism is a broader idea of what it means to fight poverty. A bigger welfare state is Labour's answer. Our answer must be (1) a strong family PLUS (2) a good school PLUS (3) a paid job. The Coalition has made good progress on two of these three routes to prosperity and security. IDS' welfare reforms have a long road ahead of them but he's started on the journey - thanks to a lot of help from Nick Clegg. Also progressing are Michael Gove's school reforms. Those reforms look set to take an important step forward with the launch of a new network of maths and science colleges. Mr Osborne has apparently found £600 million to fund these centres for gifted pupils. The part of the anti-poverty treble where progress has been very limited has been on family policy. This has mainly been because of Lib Dem opposition. Earlier this month Iain Duncan Smith attempted to reframe the debate on the family by arguing that we do no not need to talk of privileging marriage or/and the two parent family - only of eliminating the unfairnesses towards them. Osborne is more socially liberal than IDS or the PM but he's very aware that the costs of family breakdown are a huge burden on the taxpayer. The weakness of Britain's families is actually one of the growing sources of our country's uncompetitiveness and why I believe that economic liberalism needs social conservatism. The Coalition Agreement contains provision for the Chancellor to introduce pro-family tax relief and the Lib Dems have undertaken not to oppose it. It would be good to get an update on this issue in the Autumn Statement.

> Test nine at 5.30pm: What will Osborne say about industrial policy?

7/10 Tests for the Autumn Statement: Will Osborne address the €uro issue?

By Tim Montgomerie
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Over at the Daily Mail Tim Shipman looks forward to a Boris V George leadership race and notes that the Chancellor is never likely to be as popular as London's Mayor with the public. Osborne's followers hope, however, that people will come to respect his economic stewardship even if they'll never love him. One of Osborne's vulnerabilities with Tory activists is the position he's staked out on the European crisis. He recently raised spirits with a speech attacking the idea of a Tobin tax but, unlike Boris, he's looked eager to (a) save the €uro and (b) has supported fiscal union. Boris has rightly questioned both ambitions. Neither are in Britain's interests. Rumours are now flying - and I have good reason for believing that they are true - that Osborne is backtracking from both positions. He can't publicly say so tomorrow but a strong message on how Britain is preparing for the possibility of the €uro's demise would communicate that his thinking has moved on. We need to believe we have a Chancellor who is on the right side of the great economic and political question of our time.

> Test eight at 4.30pm: Will Osborne say anything about the family?

6/10 Tests for the Autumn Statement: Will Osborne address the 40p issue?

By Tim Montgomerie
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Last week I looked at the politics of abolishing the 50p tax band and don't want to revisit my conclusion that it needs to go as part of a very broad tax reform package. I'd be very surprised if George Osborne announces such a package tomorrow but that doesn't mean he shouldn't set down a few markers.

His tax priorities should be the low-paid and business. He also needs to address the 40p question. Many of us have all neglected the 40p issue while talking a lot about 50p. My apologies. But the 40p threshold matters for two big reasons. 750,000 more people are now paying it because of the new much lower threshold of £35,000. There's then the problem of withdrawing child benefit from people when they start earning about £40,000. "Around 175,000 people on £40,000 a year will see a doubling of their marginal rate of tax – the amount they lose through tax and benefit changes on every extra pound of income," reported the Daily Mail, continuing: "Complex changes to the tax and benefit system – largely the scaling-back of tax credits for the middle classes – will mean marginal tax rates for this group increasing from 30 per cent to 70 per cent from April 6 [2011]."

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5/10 Tests for the Autumn Statement: Will Osborne bring economic sense to environmental policies?

By Tim Montgomerie
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At the Manchester Party Conference George Osborne appeared to become a multilateralist on climate change. This is what he told the Tory Conference:

"We know that a decade of environmental laws and regulations are piling costs on the energy bills of households and companies. Yes, climate change is a man made disaster. Yes, we need international agreement to stop it. Yes, we must have investment in greener energy. And that’s why I gave the go ahead to the world’s first Green Investment Bank. But Britain makes up less than 2% of the world’s carbon emissions to China and America’s 40%.  We’re not going to save the planet by putting our country out of business. So let’s at the very least resolve that we’re going to cut our carbon emissions no slower but also no faster than our fellow countries in Europe. That’s what I’ve insisted on in the recent carbon budget."

Tomorrow he has a chance to show that the shift is more than rhetorical. There is talk of special help for energy intensive businesses. The DECC minister Greg Barker MP has been to Germany to study how that country protects its important manufacturing industries and, not for the first time, Mr Osborne may embrace another aspect of the German model.

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4/10 Tests for the Autumn Statement: Will "Osbrowne" simplify or complicate the economy?

By Tim Montgomerie
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It's not often Janet Daley and John Rentoul agree but they did yesterday. Their common complaint was George Osborne's Brownian tinkering with the economy.

John Rentoul in The Independent on Sunday:

"A few more schemes, complications and subsidies and pretty soon I shall have to go away and rethink my life. I had thought that Gordon Brown was a bad Chancellor because he fiddled with the tax system, finding another few hundred million down the back of a refurbished Treasury armoire for footling schemes designed to secure a day's headlines; complicated things so no one could work out why what he had just said was rubbish even though it obviously was; and invented subsidies, tax reliefs and distortions that turned out to be counter-productive. At this rate, though, we may have to conclude that the fault lay not with Brown's personality but with the Treasury or, worse, with contemporary politics. Because George Osborne is up to the same silly, self-defeating tricks."

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3/10 Tests for the Autumn Statement: Will Osborne act on growth now?

By Tim Montgomerie
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If Osborne has got macroeconomic policy largely right (here) he's been very slow with microeconomic policy. Yes, the welfare, education and planning reforms will enhance long-term competitiveness but British business needs help now. Despite the urging of ConHome - and many more important than us - there was no big growth strategy at the beginning of this government. Eighteen months later we may finally be getting closer to some urgent help for business although it remains to be seen if initiatives like credit easing and the infrastructure plan will live up to their press released promise. People like Allister Heath are certainly justified in their concern that more might be being announced than that which is being delivered. This is what he wrote today in City AM:

"Osborne should be commended for the government’s decision to exempt firms with under 50 staff from the Nest pension auto-enrolment scheme (though he should have postponed it for everybody). Chris Grayling’s bid to reduce health and safety red tape is equally welcome, assuming that it is more than mere rhetoric or trivial (as ever, I will believe it when I see it). The same is true of the reforms to employment law launched by Vince Cable – though, once again, change is taking a long time and various measures have been reannounced several times already, which is worrying."

We don't need talk of consultations tomorrow. We need action.

> Test four at 1pm: Will Osborne simplify or complicate the economy?

2/10 Tests for the Autumn Statement: Will Osborne fight for the fairness agenda?

By Tim Montgomerie
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This question has two parts.

Part one is whether the Chancellor will deliver help for the little guy. There are encouraging signs. It looks like his tax cut priority will be petrol duty - a tax which falls very heavily on the working poor. He also intends to cap increases in rail fares. He might also act on council tax if he's read Lord Ashcroft's polling and its finding that cost pressures are voters' top economic worry. My own hope is that he'll go further. Will he announce the kind of measures on executive remuneration floated yesterday (£) by Tory MPs Dom Raab and Matt Hancock? Will we see a wealth tax that is used to cut taxes on the working poor? Will we see a review of the Barnett formula so that more money goes to the very poorest parts of the UK, in Wales, the North-East and parts of London - and not Scotland?

Part two is the importance of George Osborne claiming these acts as part of his and the Conservative vision for Britain. The Liberal Democrats are busy claiming that they are the ones responsible for every socially just thing this Coalition does. Nick Clegg used an Observer interview yesterday to stake ownership of other things the Government is doing to help poorer Britons:

"Whether it's on youth unemployment, whether it's on youngsters, whether it's on getting behind advanced manufacturing and not putting all our eggs into the City of London basket, I don't think that would have happened without the coalition."

The greatest political cost of this Coalition may be that the Conservatives get no credit for the compassionate things we would have done if we had governed alone. Osborne needs to find words as well as deeds tomorrow to address this danger.

> Test 3 at noon: Will Osborne deliver action now for growth?

1/10 Tests for the Autumn Statement: Will Osborne stand firm on deficit reduction?

By Tim Montgomerie
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Over the course of today I'll suggest ten benchmarks with which to judge the Chancellor's Autumn Statement. Much of that Statement has already been pre-briefed. Some say this has happened in order to ensure maximum exposure for complicated initiatives like credit easing. Others, more cynically, believe that Osborne is getting out the good news now so that it's not buried by the bleak forecasts for growth that the Chancellor is expected to have to announce.

The most important thing that Osborne must announce tomorrow is that there will be no retreat from his deficit reduction strategy. That there'll be no Plan B. In his ConHome column Bruce Anderson spells out the consequences if he did retreat:

"He must persuade... the markets, that there is no question of plan 'B'. Nor should there be. That would be fatal, politically and economically. The markets would lose faith, with appalling consequences for credit ratings and interest rates. The voters' faith would rapidly follow. Governments can survive tactical retreats, which create a noise at the time but are quickly forgotten. They cannot survive strategic retreats. To withdraw from plan 'A' now would be the most disastrous retreat since Elphinstone quit Kabul in 1842."

No investor or voter would ever believe Osborne on Cameron on anything ever again. Deficit reduction is the centrepiece mission of this Coalition but, as Nick Watt blogged overnight, it actually has a lot of flexibility within it. Mr Osborne is only committed "to ensure that the structural current deficit is in balance by 2015-16, which is, crucially, after the next general election" and his second key target "that debt is falling as share of GDP by 2015-16... simply means that debt in 2015-16 must be lower than the previous year, however high the figure in 2014-15."

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