The state we’re gonna be in….

June 20, 2010

Though I never got round to finishing his book The State We’re In, I’ve always admired Will Hutton. A former stockbroker, banker and economics editor before he took over at the Work Foundation his writing has always seemed equally independent-minded and well informed.

Yet I found his latest pre-budget piece in the Observer (20th June) both disappointing and unsatisfactory.

On Chancellor Osborne’s promised measures to implement an unprecedented cutback in public spending, Hutton has this to say:-

“If we are going to embark on such a course, there has to be a national consensus that it is right. What is proposed, if we are to believe the pre-budget speeches and leaks, is the closest to an economic scorched earth policy we will ever have lived through. If it is to work, we have to be prepared to accept not just enormous economic sacrifice, but to regard it as legitimate. There has to be complete honesty about why the measures are being taken. The reasons have to be unanswerable. The economics must be unimpeachable. The measures themselves have to be extremely skilfully implemented and seen to be fair.
This is not the case just now.”

I can agree to his last sentence, but the rest is plain dreaming. As an outline of how we might like politics to work, it’s a first-class wish list; as an analysis of how politics works at present it’s just unreal.

My guess is that George Osborne believes he’s got all his ducks in a row. The only disputes that have any traction just now are over the timing of the start of fiscal retrenchment and the timespan of its implementation.

Those disputes may prove critically important but opposition, in parliament at least, is hamstrung by Labour having sold a pre-election pass on reducing the deficit. Arguments about the ratio of spending cuts to tax rises have failed to catch light and there’s been an almost concerted softening-up of public expectations from ConDem cheerleaders in the media, think tanks and the Bank of England. Osborne’s latest stroke in recruiting former New Labour minister and arch-privatiser John Hutton to lead a review of public sector pensions is simply icing.

The direction of travel is set and will be stuck to; times of departure and overall journey time are secondary. As Osborne has no idea what obstacles he might meet, that’s inevitable. The advantage of exaggerated targets and timescales is to draw out the opposition he anticipates as early as possible and to allow himself room for tactical retreat where unavoidable.

Pressure on him to trim is as likely to come from his coalition partners as from public opposition. Where the material of his financial strategy rubs, expect more inquiries and commissions. Where a risk of deflection from his plotted course arises expect the confidence of financial markets to compel timely correction.

Neither national consensus, nor legitimacy, fairness, honesty, nor unimpeachable economics are necessary to impose enormous economic sacrifice; just power, resolve and tactical nous.

How far Osborne and Co. have these, we’ll see.


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