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July 6, 2017

Theresa May now defends austerity: What took her so long?


July 6, 2017

Theresa May set about exorcising the Government of George Osborne’s influence as soon as she entered Downing Street. The Prime Minister began by giving the man himself a dressing down, before sacking him and bundling him out of the back door.

She then moved onto his allies, dispensing with the services of Nicky Morgan. Conservatives have been worried by her apparent interest in taking her purge one step further by junking Osbornomics.

Supporters of Mr Osborne called it his “long-term economic plan”, while critics prefer to think of it as an “austerity” agenda. Her Chancellor announced within weeks of replacing Mr Osborne that his target to get the UK’s finances into surplus by 2020 as “when times change, we must change with them”. Philip Hammond was not afraid to pay tribute to his predecessor, telling party members:  

“We got our deficit down by nearly two thirds. We’ve cut the welfare bill. We’ve kept mortgage rates low, protecting millions of homeowners through difficult times. We’ve cut income tax for 30 million people taking four million low-paid workers out of income tax altogether. Not bad for an economy that looked out-for-the-count when we took it over in 2010.”

Mrs May reeled off similar facts in her own speech, but could not bring herself to credit  Osborne for them. Instead she thanked David Cameron as “the man who made that possible”. The man who made sure it could all be paid for was only mentioned once, in relation to the Northern Powerhouse. Perhaps she had to mention him then as no other minister did more to promote it than him.

Her antipathy towards Mr Osborne has been fostered over years of working together in Government. She fought with him when the then Chancellor demanded further cuts to the police force, and he later quashed her plan to send home international students after they graduated. As the woman tasked with fulfilling the Government’s net migration pledge, Mrs May was bound to clash with the Chancellor, who had to keep university and business chiefs happy. 

Giving Osborne the boot was a sign from Mrs May that she wanted to take Tory economic management in a new direction. The Tories used to have that as a central plank in their election messaging, with David Cameron urging voters in the 2015 election campaign to “let us finish the job” of getting the national finances in order.

Yet this year, the Tories’ work to get the deficit down was scarcely mentioned. Was that because Mrs May hated the idea of suggesting that Osborne had done some good things in Government?

Her campaign’s reluctance to sell the Tory’s record on sound finances gave Jeremy Corbyn a golden opportunity to set out his anti-austerity stall, as he could do so without being challenged much. He thought today’s session of Prime Minister’s Questions would be another open goal for him. Thankfully, Mrs May was able to put her feelings about Osborne aside in her response. 

The Prime Minister defended the last few years of austerity in terms often used by the former Chancellor himself. She warned MPs of the need to “live within our means”, and pointed to the predicament facing Greece (a rhetorical tactic much used during the early days of the coalition) to warn of what happens when countries fail to deal with deficits. What took her so long? 

During the election campaign, the Conservatives’ coyness about the economy was bizarre. Ed Miliband was once mocked for not mentioning the deficit in a speech, but Mrs May seemed to only mention the “D word” in the final week of campaigning. She has never mentioned it on her Twitter account. Other terms like “borrowing”, “balance the books” and “debt” have not been mentioned either.

Voters may have been weary of austerity, but they would have been scarcely relieved by the response they had from the May campaign. If the Conservative leader wasn’t happy to defend the decisions her party took to get the books in order, how could she persuade voters to trust her for the future? 

The Tories are still aware of the importance of prudency, even if the recent outbreak of doubts among senior figures about the public sector pay gap and tuition fees may suggest otherwise. “Sound money and responsible public finances are the essential foundations of national economic success,” Mrs May’s election manifesto stated. Her campaign should have been proud to tell voters about what the Tories had done in Government to ensure that. Trying to change the topic onto other matters merely left voters to wonder if they had a lack of confidence in their record. 

David Cameron and George Osborne have been despairing about how ready ministers are to take apart the “long-term economic plan” they had spent seven years driving through, as Chris Grayling admits that a “debate” is ongoing about scrapping the public sector pay cap (a move that would cost as much as £5.2 billion).  “We have a free-for-all,” the Osborne-edited Evening Standard recently complained. It has fallen to Philip Hammond, Mrs May’s Chancellor, to remind colleagues that the Government can’t loosen its purse-strings without having to find the money elsewhere.

Chancellor Osborne became the human face of the Government’s efforts to sort out the nation’s finances. The reputation he garnered as a pantomime Machiavelli meant few tears were shed when Mrs May went on to sack him. Her personal animus towards him might well have constrained her enthusiasm for justifying what the Tories had done to bring the economy back from the brink, but it allowed her critics to set the terms of debate.

Conservatives will be relieved to see Mrs May taking pride in what the Government she served in did. She still appreciates that fiscal responsibility has to drive her agenda, even if she is working to get the deficit down at a slower rate than Mr Osborne planned.

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