Lest you were in any doubt about its purpose before, the Conservative party has left little room for confusion in 2015. The cover of its election manifesto promised “a brighter, more secure future”. In July George Osborne announced “a budget that puts security first”. Its conference slogan in Manchester was: “Security. Stability. Opportunity.”
In a speech two weeks ago at Imperial College in London, the chancellor road-tested the argument that will be at the heart of his spending review and autumn statement this week: “There is no economic security, there is no national security, there is no opportunity, when you lose control of the public finances.” It is somewhere between neuro-linguistic programming and Chinese water torture. You have to wonder: why don’t the Tories just change their name to the Security party?
Tomorrow the prime minister has a breakfast meeting with President Hollande in Paris to discuss the coordination of their “full-spectrum” response to the growing threat of Islamic State. In the afternoon he unveils the strategic defence and security review in the Commons, advancing the claim – much contested in recent days – that the nation is equipped to defeat its enemies anywhere, or, in the words of one familiar with its content, “from extremism in Bradford to the expanding force of Isis abroad”.
All of which is the principal context in which Osborne’s third spending review must be understood. Quite how heated the arguments between the spending departments and Treasury became is a matter of perspective – the chancellor tending to shrug off such moments of confrontation as workaday special pleading – but nobody is denying that, in Whitehall lingo, there was some pretty robust “pushback” from the Home Office, from some engaged in the negotiations over health, and from elsewhere.
We already know Osborne intends to increase spending on counter-terrorism by 30%. I have a hunch that, whatever pain the police have to withstand as part of his plan to eliminate the deficit by 2019-20, there will be strong commitments intended to quench public anxiety about the jihadist threat.
The true dilemma lies elsewhere. At its conference in Manchester, the Conservative party presented itself as a one-nation party, a movement for working people, and Cameron declared himself a social reformer at heart. On Wednesday Osborne has to persist with the austerity strategy that has been at the heart of Tory economic policy for seven years. This is a direct train to Surplus-ville, no stops on the way. And with good reason: this chancellor inherited a mess from a government content to blame it all on the banks and not remotely bashful about its failure to deal with the deficit even in the boom years.
But how to make the train look less menacing? The furore over cuts to tax credits is no more than a hint of the disaffection to come if the British feel they are being treated without decency, without fairness. The exchequer is spending far too much on these tax breaks that have ballooned far beyond the original scale intended, but the cuts will have a material impact on those who are working hard and trying to escape welfare dependency. For them the prospect of losing relatively substantial sums from their wage packets must seem arbitrary at best and punitive at worst. This is about more than poverty. It tests the core Tory principle that those who play by the rules are rewarded.
Whether by taper or other transitional arrangement, Osborne needs to mollify the potential victims of tax credit cuts sufficiently to soften this dilemma from a poll tax in waiting to just another speed bump. This is the right thing to do – but also politically necessary for the Tory party, and the chancellor himself. To be the dauphin for any length of time – as Eden, Ken Clarke and Gordon Brown learned the hard way – is a draining and vulnerable experience.
It is no accident that Theresa May’s tussles with the Treasury were semi-public, or that Boris Johnson appealed over the chancellor’s head to the prime minister about police numbers. Both the home secretary and London mayor are among Osborne’s principal rivals for the Tory crown.
In 2010 Osborne faced Alan Johnson; in 2013 it was Ed Balls on the other side of the dispatch box. At the very least it will be intriguing to see how John McDonnell returns fire this week. One mistake the shadow chancellor should not make is to portray Osborne as anti-state, or opposed in principle to government. In his conference speech, the chancellor addressed this head on: “I’ve changed in the five years I’ve done this job too. I’ve always been able to see the problems with government. Now I understand too the power of government to drive incredible, positive change.”
Talk is cheap, of course. But then again – as one architect of the review puts it – “4 trillion quid is a lot of money”. Team Osborne is keen that this week’s statement is not seen exclusively as yet more evidence of his commitment to austerity until the job is done – important as that is. There will, in other words, be goodies amid the carve-up: the spoils of discipline. Osbornophobia is such an intellectually lazy position. It assumes greed, shallowness and incompetence, without stopping to ask how we got here and the merits of the repair work thus far.
Flick through what the chancellor and Greg Hands, the Treasury chief secretary, say about this exercise, and you realise the scale of their ambition. They truly believe they are enacting a revolution: digitalisation of government functions; charging where appropriate (tuition fees, for instance) or otherwise offloading financial burdens from the state (employers must pay the national living wage); integration of services (as piloted by the troubled families programme); and the relentless pursuit and emulation of best practice (an example being the NHS quality, innovation, productivity, and prevention programme).
There is an alphabet soup of reviews and consultations, overseen not by mandarins but officials with clipboards, iPads and complex metrics. Perhaps the celebrated economist Vito Tanzi was right to argue in his prophetic Governments Versus Markets, that “the expanding government role may refer to the regulatory role”.
These are not the Tories of the Thatcher era, as formative an influence as she was upon them. Yes, they have ingrained assumptions about the proper limits of taxation, enterprise, the role of Europe. But they were also receptive admirers of Tony Blair and his public service reforms.
Osborne’s task is not just to cut. It is – much harder – to establish and defend priorities. The next chapter will be revealed on Wednesday. However much you dislike this lot, I would still tune in if I were you. They are going to be around for a while.
