Is George Osborne having a good war? It is a critical issue for the country and its economy – and the future of the Conservative Party.
The Chancellor is in an extraordinary position. He has been dealt the worst hand of any chancellor since at least Geoffrey Howe after the winter of discontent in 1979, and possibly since Philip Snowdon in 1929 (he ended up at war with his own Labour party over its "Bolshevism gone mad" response to the great depression, and ended up leaving the party to serve in the national government). George faces the national debt crisis, out of control public spending, a UK recession, the collapse of the euro, probably double dip recession caused by Europe, the coalition government restricting his room for manoeuvre, and – oh yes, entrenched unions calling national strikes defending the indefensible today. To have any one of those would be a problem; to have all at the same time is a perfect economic storm.
There are two theories about how this can play out: cometh the hour, cometh the man; or we are all victims of circumstances.
In bridge (which I used to play competitively) it can sometimes be difficult to distinguish between bad playing and a bad hand – if you get a good hand you can seem like a master sweeping all before you even if you are playing clumsily; if you get a bad hand, you can fail to win anything, however crafty and skilful you are being. And as it is in bridge, so it is often in politics. It isn't so much a question of Macmillan’s much dreaded "events, dear boy, events", but "circumstances, dear boy, circumstances." Very often, the reputation of characters is merely a reflection of the circumstances they find themselves in.
The only reason that Gordon Brown succeeded in persuading the country for about a decade that he was the best chancellor in history was that he had the good fortune to inherit an astonishingly healthy national economy in a time of stable, low inflationary global economic growth. His reputation was a reflection of the previous Conservative reforms, and the entry of China into the global market. He took the laurels, and basked in the glory, of the achievements of others. In the end, of course, he was found out, and we now know that actually he was probably about the worst chancellor in history. You have to be a really bad chancellor to ruin the golden legacy he was given, and turn a country like the UK to the brink of bankruptcy (to give credit where it is due, his greatest achievement was undermining Tony Blair's attempts to take us into the euro).
Contrast that with Norman Lamont, who had the misfortune to inherit the UK's membership of the exchange rate mechanism, a policy he opposed. We inevitably crashed out not long after he became chancellor, and because the music stopped on his watch, he ended up being badly (but unfairly) tarnished as a result. The Conservative Party's reputation for economic competence was given a severe battering, and he was blamed for it. In fact, although he had some unfortunate PR incidents (visa bills, black eyes and prostitute tenants), he actually performed much better as Chancellor than he is normally given credit for. Out of the ashes of black/white (take your pick) Wednesday, he crafted the new monetary policy regime that helped deliver stable economic growth in the decade ahead. He gave the Bank of England its inflation targets, and gave confidence by introducing transparency through getting it to publish its quarterly reports and forecasts (Gordon Brown's independence of the Bank of England was just the culmination of this process). Lamont's successor Ken Clarke didn't do much to change the monetary framework, and enjoyed the economic upswing – he was an example of a good chancellor in comparatively good circumstances, handing over that golden legacy to Gordon.
It is easy for a bad Chancellor to look good in good circumstances; and it is difficult for a good chancellor to look good in bad circumstances. But there is obviously more to it than that – is the Chancellor seen to be having a good war? Some politicians – like President Clinton who was annoyed 9/11 didn’t happen while he was in the White House – wish for a crisis on their watch so they are given the opportunity to prove what they are really worth. Alastair Darling, to be fair, came out of the financial crisis of 2008/9 with his reputation enhanced.
The growth review has so far been an object lesson in masterful communication, with the daily drum beat of positively-reported announcements and initiatives over the last few weeks building up to yesterday’s Commons performance where the message was: the pain is unavoidable, but it is for the better in the long term, and I understand it, and will do everything I can to reduce it. You have to remember, that George was not given a free rein on the policies he could adopt, because of the coalition.
There has been criticism, from both left and right, that he has been copying Gordon Brown’s fidgety micro-management of the economy, with countless small initiatives-for-headlines, creating uncertainty and chaos. But that is to misunderstand the position that the Chancellor is in. In times of crisis, the country wants the government to show active and energetic leadership – business and workers want and need to know that the government is doing all that it can. Free marketeers say that George should just sit down with his hands in his lap, but that is to totally misunderstand the politics; if voters smelled government complacency, they would panic far more. Gordon Brown had a thousand initiatives in good economic times, which is counterproductive and economically damaging; George Osborne has lots of initiatives in the middle of the worst economic crisis the country has faced for a century, which is exactly what is needed.
So, to answer my question – is George Osborne having a good war? I think the answer has to be yes.