Osborne's Cuts

It is unclear whether David Cameron and George Osborne are a "good cop, bad cop" act or whether there is real disagreement between them. At the end of January David Cameron said on the BBC Politics Show:

"We're not talking about swingeing cuts. We're talking about making a start in reducing our deficit."

At the time it was odd to have such an announcement from the leader and not from the economics spokesman, and clearly it was meant to try and shore up the polls so as to not scare voters. However, the announcement was not popular with the Conservative Party's right wing which went apoplectic over the suggestion that cuts would be neither immediate nor savage.

Now, however, it appears that David Cameron is listening to his right wing. On Monday (22 Feb 2010) Cameron was interviewed by Jeff Randall on Sky News. Randall pressed Cameron hard on the issue of cuts and although the leader of the Conservative party refused to give the merest hint of how the Conservatives would implement the cuts he did say:

"Now I think two things, one is that we should start earlier. 2010, this coming year, we should make some reductions in public spending programmes, we should get on with it because it’s all very well having a plan to halve the deficit, we can all have plans for the future."

Cameron's message is getting tougher, but it still is not in the realm of swingeing cuts that the Conservative right wing require from him. Cameron is clearly maintaining his good cop image.

Enter George Osborne into the fray, in his role as the Conservative bad cop. Tonight Osborne gave the Mais Lecture at the Cass Business School. In it Osborne said:

"A credible plan is not really credible unless you're prepared to make a start on it this year."

"Those who say we should simply ignore the markets are siren voices, ­luring us on to the rocks. For an economic policy maker to rail against the unpredictable nature of financial markets is like a farmer complaining about the weather. A loss of market confidence could force dramatic tax rises and spending cuts that were indeed savage and swingeing. That would represent a loss of economic sovereignty.

"And those cuts would be far larger than the actions that are needed now in order to retain our economic freedom in the first place. Far better to be prepared and protect ourselves against the storm."

Yet again Osborne is talking down the economy. As I mentioned on an earlier blog post, the Governor of the Bank of England discounts that the country's credit rating is in danger:

'I don't believe the rating agencies are concerned, in the sense that they are not re-rating the UK and I would be very surprised if they were to do so,' he said.

He said that ratings agencies would remain somewhat 'uncertain' about the fiscal outlook for the UK economy, but the UK's AAA-rating wouldn't be down-graded.

Osborne clearly does not listen to the experts and is talking down the economy for political purposes. But clearly he is at odds with his leader. Osborne listens to the right wing and is chomping at the bit to make savage cuts.

Where will the cuts fall? The clue is in Randall's interview with Cameron. Randall, with his feet firmly placed in the mire of right wing politics, asked:

"Labour has added something like 900,000 jobs to the public sector payroll, how many of those are superfluous, how many should you get rid of?"

Cameron, as usual, ducked the question, replying with "I don’t have that figure", but it is clear that if you are a public service employee, regardless of whether you are on the front line, or in one of the important support roles, your job is at risk.