By Ben Marshall and Tomasz Mludzinski
Budgets and autumn statements are about politics as well as economics. Back in March George Osborne, previously considered one of the most capable strategists of his generation, was widely thought to have got the politics wrong (remember ‘omnishambles'?), and Ipsos Mori polling recorded his budget as the worst rated by the public since the mid-1990s.
This week's statement, in essence a mini-Budget, gave the chancellor an opportunity to return to the Commons despatch box and rebuild his political stock after his personal satisfaction ratings fell to the lowest for any chancellor since Ken Clarke. In the aftermath of the Budget Ed Balls even overtook Mr Osborne as being seen as the most capable chancellor. However, our polling also gives the Conservatives – if not George Osborne personally – some comfort with the Conservatives increasing their lead over Labour as the best party on the economy.
It was always unlikely that we would see the same furore we had following the Budget, but the chancellor will also have known that even yesterday's unpopular measures are unlikely to result in lasting damage as long as people's optimism about the real economy continues to increase and our polls show this to be the case (relatively speaking at least).
Those same Ipsos Mori polls also provide additional comfort for Osborne, but some warnings too.
"Yes, the deficit is still far too high for comfort. We cannot relax our efforts to make the economy safe... Britain is heading in the right direction. The road is hard but we are making progress."
The public is divided, split down the middle, on the merits of deficit reduction if it means cuts to spending on public services. If asked to choose, more (but not a majority) favour 'growth' over 'deficit reduction'. That the public are not themselves sure of the best course of action gives the chancellor leeway to lead, though it does show he has not yet been successful in persuading them. Of course, the chancellor alluding to the difficulties being faced by "many families" was necessary; he did so on numerous occasions but, at the same time, was clear in his conviction that his strategy is working, and that it will be worth it in the end.
"But we must show that we're all in this together…"
Fairness was a big theme in Wednesday's statement. Ipsos Mori's research over many years has found fairness hard-wired in public attitudes towards public services (think 'postcode lotteries') and welfare. In the lead-up to the spring Budget our polling showed that a majority of the public doubted the government on its claims that "we're all in this together": 50% expected the rich to benefit most from the Budget and just 17% expected those on low incomes to benefit most. The autumn statement sought to address this, coupling measures to reward work, raiding the pensions of the super-rich and tackling tax evasion (timely given the controversy over Jimmy Carr, Starbucks, Google etc. seen since the last Budget).
"…out of work benefits have gone up by around 20%. That's not fair to working people who pay the taxes that fund them."
Our polls have also shown public sentiment trending (albeit very slowly) against welfarism and towards support for self-reliance. The statement included proposals to squeeze welfare benefits. This is likely to play well but while the public think governments have tried to do too much in the past, they also worry that not enough will be done to protect the vulnerable in the future. Housing benefit is a case in point: 44% of the public support reducing the bill if helps reduce the budget, but this falls to 18% if homelessness increases.
"So today, we are reducing departmental resource budgets by 1pc next year and 2pc in the year after. We will continue to seek efficiency savings in the NHS and in our schools, but that money will be recycled to protect spending in these priority areas."
Late last month we found 79%, little changed on the 77% recorded in June 2009, backing the protection of spending on some services even if that means bigger rises in taxation and/or deeper cuts elsewhere. By some distance, the NHS is identified as a priority for protection followed by schools. Interestingly, care for the elderly is on a par with schools and the chancellor pledged to protect the state pension, for now at least.
More generally, austerity has managed down expectations. The public expect public services to get worse. And so far, most report that the cuts have not affected them personally but worry that they will do so in 2013.
"Taken together this is a revolution in the sources of finance for upgrading Britain's infrastructure and equipping Britain to win the global race."
The public see construction, along with manufacturing, as likely sources of growth. Investment in housing, transport and broadband, among other things, are important economically but perhaps also symbolically, re-building that voters can see with their own eyes. Expect to see many more photo ops of ministers in yellow hard hats and fluorescent jackets in the months to come.
"In everything we do, we're helping those who want to work hard and get on."
As well as help for business and trade, the chancellor talked to aspiration. The statement was trailed in some circles as being one for 'strivers' and, as well as the benefits squeeze, headlines this morning have focused on help for drivers as the 3p fuel duty rise due next month was scrapped. And politicians, especially a canny chancellor, are mindful of the importance of constituencies other than the public, with cuts in corporation tax and extra business rate relief for small businesses announced yesterday.
Economically, the statement heralded more of the same policy, for longer, with extra stimulus. Politically, Osborne and the Conservatives have recently been making good some of the deficit created by the Budget. In some ways though, yesterday was the easy part – the extra hurt was announced but has not yet been felt, only third currently say they have been affected by the cuts.
With five more years of austerity to go, let's watch the polls for green shoots in public confidence in the economy, as well as movements in ratings of the competence Osborne and the government. Right now, sentiment is as fragile as growth is elusive.
Ben Marshall and Tomasz Mludzinski are researchers at Ipsos Mori
Follow them on twitter at @BenM_IM and @tom_mlud