George Osborne’s 2015 Budget: From The 1930s to the ’60s, And Beyond

George Osborne Budget 2015 Conservative Party


“Out of the red and into the black, Britain paying its way in the world again!” boasted George Osborne, pounding the despatch box with satisfaction as he finished delivering the coalition government’s final, 2015 Budget.

This was wishful thinking at best. But by any reasonable measure it constitutes wilful deceit.

From the BBC’s summary of Budget Day 2015:

Setting out his plans in the Commons, Mr Osborne said: “We took difficult decisions in the teeth of opposition and it worked. Britain is walking tall again.

“Five years ago, our economy had suffered a collapse greater than almost any country.

“Today, I can confirm: in the last year we have grown faster than any other major advanced economy in the world.”

He said he would use a boost in the public finances caused by lower inflation and welfare payments to pay off some of the national debt and end the squeeze on public spending a year earlier than planned.

In 2019/20 spending will grow in line with the growth of the economy – bringing state spending as a share of national income to the same level as in 2000, the chancellor told MPs.

The BBC’s Robert Peston said this was a move aimed at neutralising Labour’s claim that the Conservatives would cut spending to 1930s levels.

But nothing did as much to condemn the Conservative Party’s half-hearted attempt to restore fiscal discipline to Britain over the past five years as Telegraph columnist Dan Hodges’ verdict on Budget 2015, the budget that “killed Labour”:

As I wrote yesterday, George Osborne wasn’t interested in using this Budget to pull any rabbits from any hats. Instead, he used it to shoot Labour foxes.

The attack line that Tory cuts would take public spending back to levels not seen since the 1930s was neutralised. Public spending will now be cut to levels not seen since Gordon Brown was sticking pins into dolls of Tony Blair.

That a Conservative Chancellor of the Exchequer is happy for the main takeaway from his Budget to be that government spending will be no less than it was when the previous Labour government was in power speaks volumes about the weak state of British conservatism, and the lack of conviction shown by this government in particular.

In America, the Republican Party can reliably expect to win cheers and votes by promising to shrink the size of government, pointing out (quite correctly) that lower government spending does not mean “taking money out of the economy”, as Gordon Brown loved to claim, but rather leaving more money in the hands of people who created and earned it, thus helping the economy to grow.

Contrast the confident conservatism of the United States with its sickly cousin this side of the Atlantic. In Britain, David Cameron’s Conservative Party has to grovel and apologise for every insignificant little spending cut, so terrified are they to boldly make the case that lower government spending can be a force for good. In this country, Big Government simply isn’t seen by many as a bad thing.

Of course the British Conservative Party has an uphill task to convince voters that Small is Beautiful – modern Britain remains in the shadow of the post-war consensus; its people are more coddled and collectivist, worship at the altar of “our NHS” and tend to doggedly believe in a strong correlation between government spending and quality of life. No one expected it to be easy for David Cameron and George Osborne. But the Tory Party simply hasn’t even tried.

All of which makes the Conservative Party unnecessarily vulnerable to effective (and truthful) attacks from the right, such as this new effort by UKIP:

David Cameron Doubled National Debt Conservative Party UKIP


It cannot be denied: the national debt has increased more under five years of Conservative-LibDem coalition government than it did in thirteen years of New Labour. And while even some fiscal conservatives might agree that deficit spending is necessary during a deep recession, that argument becomes increasingly hard to wash a growth returns yet any urgency about eliminating the deficit seems to disappear.

This is not to say that the Conservatives have failed completely – Britain’s economy is growing at a decent clip once again, and things are looking up across a range of measures, as Dan Hodges concedes:

In the end, it’s George Osborne’s economic – not political – stewardship that has saved him and his party. Record low inflation. Record employment. Record low interest rates. Faster growth than any other advanced economy. These aren’t the products of Treasury spin, but economic facts.

Osborne’s critics may counter that these are also the products of good fortune, rather than good judgment. But they certainly wouldn’t have been saying that had inflation been soaring, unemployment rising, interest rates were being ratcheted up and growth stagnating.

But while there are reasons for satisfaction after five years of Conservative-led government, the fact remains that George Osborne chose to “spend” the unexpected £6 billion pound boost to the economy from higher-than-expected tax revenues on gimmicks and giveaways rather than deficit reduction. By trumpeting the fact that government spending as a proportion of GDP will not fall as much as Labour claim, the Tories are fighting according to Labour’s terms, and tacitly accepting the fact that less government spending is bad.

It was clearly George Osborne’s hope that the media would pick up on the “1960s, not the 1930s” narrative, and they duly obliged. Much of the press has been reporting that government spending will not fall to 1930s levels as a proportion of GDP after all as though this is some great relief; that through George Osborne’s munificence (or cunning) we have been spared a harsh monochrome future of working in the coal pits and eating bread and dripping for tea. This is nonsense.

People too easily conflate the idea of “1930s levels of public spending as a share of GDP” with a return to 1930s living standards,  when the two are completely different things. And the media, including much of the Tory press, has done far too little to push back against this erroneous view of government spending.

The truth is that aiming for a smaller surplus by the end of the next parliament (remember when the deficit was supposed to have been eliminated by this point?) is a bad thing, and a great disappointment coming from this Chancellor. All it means is that we will now be paying down our national debt in pitifully small increments when we eventually return to surplus, while continuing to incur large interest charges to service this remaining debt.

When Britain already spends more than the Defence budget on debt interest payments alone (£52.5 billion compared to £45.6 billion in FY2015), why are we celebrating the fact that a supposedly Conservative chancellor and government have all but abandoned any pretence that they are interested in restoring us to fiscal sanity?

Celebrating George Osborne’s lack of conservative conviction and David Cameron’s inability to make a compelling public case for fiscal conservatism to the British people is wrong, and reveals modern Britain at its worst – addicted to high government spending and an active paternalist state, while displaying a childish petulance toward anything that threatens future state largesse. But more than this, it reveals that eighteen years after Tony Blair and New Labour first swept to power, British conservatism remains cowed, timid and unable to make a case for itself.

In his final Budget of this coalition government, George Osborne has treated the British people the same way a frazzled parent might treat a toddler throwing a meltdown in a busy supermarket – promising that we can all have treats and win prizes now in order to keep us mollified without giving any thought to the future, or how a lack of fiscal discipline today will breed more fiscal incontinence tomorrow.

Budget 2015 appeals to the British peoples’ fears and childish expectations of instant gratification rather than our adult reason, and gives us little reason to hope for much better from a future Tory government.

The politics of it all might be smart and the economic indicators may be ticking upward, but with opinion polls tight and Ed Miliband’s Labour Party still with a real chance of forming the next government, George Osborne’s final Budget could well see the Conservatives go out not with a bang, but a whimper.

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