Analysis: Weary Osborne's discomfort deepens

Few chancellors have faced a more challenging policy environment than this one. That doesn't mean Osborne hasn't managed to make a tough job even harder
Few chancellors have faced a more challenging policy environment than this one. That doesn't mean Osborne hasn't managed to make a tough job even harder
Alex Stevenson By

"I don't pretend this is easy or what I came into politics to do," George Osborne said dolefully this morning.

This is partly a political point. The chancellor is inches away from mentioning the mantra that the coalition had to clear up the mess made by New Labour.

It also cuts much deeper. Osborne did not become a member of the governing elite to preside over the slowest recovery or harshest period of austerity since the Second World War. That he should lament his own fortunes at being in charge right now seems entirely justifiable.

Right now is a good time for Osborne to moan, too. The full extent of the misery in No 11 is being laid bare by the tensions around Whitehall as next month's spending review approaches.

The tussles over which departments should pay the heaviest price as total savings of £11.5 billion are sought is widening existing cracks in the government.

On the face of it, the bravado of Iain Duncan Smith is staggering. He has a track record of behind-the-scenes conflict with the Treasury, but has never before gone so far as to seek conditional cuts on the basis that other departments' expenditures will be protected. Osborne is left with little choice but to reject the proposal out of hand, simply for the sake of preserving his own position as the man who ultimately decides which departments get what.

The Liberal Democrats' opposition to welfare cuts is also underlined by today's IDS story. Aides close to the work and pensions secretary have distanced themselves from the suggestion he sought an accommodation to ensure police and armed forces personnel are protected from more cuts, on the basis that the Lib Dems would block more benefit cuts. Even if the story has nothing to it, it reminds voters the Liberals are the big roadblock to even harsher settlements against benefit scroungers.

These weaknesses are borne of the coalition – but it's the Conservative party's leaders that are paying the price. Tory right-wingers, desperate to shave more money off the total welfare bill, will be angered by the fact the Lib Dems are standing in the way of the moves. They already despise their coalition partners, but some of their frustration will also find its way against their party leaders. It means Conservative backbenchers face another grim confrontation with reality: they cannot get their own way, and suspect that even without the Lib Dems, their moderate party leaders would not let them cut welfare more, anyway.

The awkward context is that none of this was ever what Osborne wanted. The original plan was for austerity to be over in this parliament. Such has been the failure of the coalition's growth policy that it is now going to continue until 2017. Lower growth means shrinking tax revenues and more spending on 'annual managed expenditure' – the bit of government spending which doesn't come from government departments. Getting the deficit under control means it's the departments which have to pay the price. June 26th sees the coalition outline its unified spending plans for 2015/16, when we'll find out exactly how heavy those cuts are. Hence the current debate, creating more difficult choices for the chancellor and a very deep sense of political discomfort.

Osborne "did not come into politics" for this, he moaned this morning. But at least some of the reasons causing his present headaches are of his own making. As austerity drags on, the difficulties it presents are exacerbated by coalition politics. And he has taken the choice of imposing more cuts because growth is slower, when the two are not necessarily linked together. Few chancellors have faced a more challenging policy environment than this one. That doesn't mean Osborne hasn't managed to make a tough job even harder. The political rumblings seen this week show the price he's paying for sticking to the plan.

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