Chancellor: We have completely won the argument on austerity
It would be perhaps unsurprising if George Osborne had lost some of his swagger. It has been a brutal month for the chancellor of the exchequer as various aspects of his budget unravelled.
For the first time in that month, overnight in Washington DC, I had the chance to ask him some questions about the decision to expand loan funding to the IMF, the economy and the month of shambles. He is confident that the £10bn extra funding for the IMF will be accepted in Britain even as it is not subject to a further vote.
“I think the parliamentary support is there. More importantly, I think the public understands that Britain has got to engage with the world and sort out the world’s problems because if we don’t, then we are going to face real problems here in Britain,” he said, adding “
You can either pull over the bedcovers and pretend these problems don’t exist or we can engage with those problems, require more of the Europeans which is what we’ve done and make sure the international institutions are strong enough to deal with whatever is strong enough.”
Here in DC, the chancellor seems particularly relieved that key backbenchers and the chairman of the treasury select committee have backed this move. It does rather appear that the size of the loan has been determined at the maximum point which avoids the need for a vote. Still the widespread international backing provides some support, even as the US avoided contributing. You might think that the chancellor would have avoided further controversy after this torrid month of pasty, granny, charity and caravan tax revolts.
I ask him if it looked like a shambles from where he was sitting?
“I’d be the first to accept that the headlines haven’t been great. But I don’t think the economics have been bad. I think actually the policies have not only held up, but people now say hold on, here’s a country, Britain, that is cutting its business taxes, sorting out its income taxes to make it competitive, giving a tax cut to working people across the country” he said, adding “You can either pull over the bedcovers and pretend these problems don’t exist ,or we can engage with those problems, require more of the Europeans – which is what we’ve done – and make sure the international institutions are strong enough to deal with whatever is thrown at them.”
In the chancellor’s view “good politics follows good economics”.
“I am not in, as the chancellor of the exchequer, a daily opinion poll contest and a daily popularity contest. I will tell you what I am engaged in. A daily contest with the rest of the world to make Britain competitive to bring jobs to Britain. Ultimately my responsibility to the British people is to do what is necessary to get the economy moving, not to write tomorrow’s newspaper headlines or write Channel 4 News’s headlines,” Osborne said.
Interestingly, the chancellor seems to think that many of the disparate battles of the past few weeks have been proxy battles against the scrapping of the 50 per cent tax, suggesting he is fearful that the public no longer buys “we’re all in this together.”
Osborne said that he knew going into this budget that cutting the top rate of income tax was not a particularly easy thing to do politically, but it was the right thing to do economically.
“I’m always prepared to do the difficult thing, even if they don’t deliver the ideal newspaper headline the next day,” he told me.
Near the end of the interview in the UK delegation of the IMF, I did start to think that the chancellor was slightly contrite and had been rather bruised by the past few weeks and the collapse in the poll numbers. Perhaps the London mayoral elections are keeping spirits high. But at the end his swagger returned.
I asked him if he shared the view expressed by many at this IMF conference that austerity was going too far in the Eurozone.
“When it comes to Britain, I think that argument is now completely won, in other words the argument that we had to deal with our debts. Those who say Britain should ease off on dealing with its debt I think are now on the margins of the debate,” he said.
Completely won? Even as some polls has his party 13 per cent behind just a month after being ahead?
Alas I had run out of time. But the Chancellor is counting that the self-inflicted blows of the past month has not done permanent damage to his cause. He could very much do without a plausible return to recession when Gross Domestic Product figures come out on Wednesday (even though it might be written off as a statistical anomaly. Again!)
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