By Peter Hoskin
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The dead space of summer is the time for casting forward to the future. What will happen at the forthcoming party conferences? What are the chances of another Con-Lib coalition? Can Ed Miliband hold on to his party’s leadership? But there’s one scrap of politics-yet-to-come that isn’t getting as much attention as these but that is just as significant: this year’s Autumn Statement.
Normally, I’d be wary of over-emphasising the importance of one of George Osborne’s (or any Chancellor’s) statements – they rarely alter the parameters of British politics. But this one is likely to be different. Judging by the current mutterings from the soothsayers, including the CBI yesterday, this one could contain something that has been unfamiliar to Osborne: improved growth forecasts from the Office for Budget Responsibility.
I’ve written about this possibility, in some detail, before. Not only would it give Osborne a grand political opportunity (“I’m delighted to announce that…”), but it also raises the possibility of further fiscal choices to be made. For so much else is predicated on those growth forecasts, from anticipated tax receipts to the level of national borrowing. If they improve, then Osborne could have more space to operate within in future.
By way of distilling all this down, I figured I’d present it as three questions. So, in the event of improved growth forecasts from the OBR…
1. What will Osborne do? If growth forecasts are raised, and those for tax revenues too, what will the Chancellor do with the extra, anticipated money? Will he use it to eradicate the structural deficit more quickly, perhaps before 2017-18? Or will he stick to the current path of deficit reduction, and earmark the money for tax cuts and spending giveaways instead?
2. When will he do it? If Osborne does choose to splurge, will we see signs of that in the forthcoming Autumn Statement? Or will he hold back until closer to 2015, either in case the public finances worsen again, or simply for maximum electoral gain?
3. What would it mean for future coalition negotiations? Deficit reduction would probably be one of the Tories’ red-lines – the policies over which they will not budge – in any future coalition negotiations. But this Autumn Statement could give us clues as to where, and how firmly, that red-line will be drawn. Will Cameron and Osborne be relaxed about sticking to current plans, by which the structural budget is brought into balance in 2017-18? Or will they demand more from any future coalition partners?
As for the answers, stay yourself: there are only three-and-a-bit months to go.