It isn’t so much the prospect of a two-tier A&E service that catches my eye today, but George Osborne’s two-tier message about the economy. For this, just as much as the NHS, if not more so, will influence the outcome of the next election.
So what are those two tiers? Basically, as the Chancellor expressed them yesterday, they’re this:
- Tier 1: Huzzah! We’re back on the path the prosperity that’s suggested by today’s employment figures and the Bank of England’s ungraded growth forecasts. Vote Conservative.
- Tier 2: But let’s not get carried away. The path is still a long and arduous one, and we can’t trust a Labour government to keep us on it. Vote Conservative.
I’ve ranged across this ground before, so I won’t repeat myself. Suffice to say, I think the state of the public finances helps bolster Osborne’s message. Whatever the growth rate of the economy, there’s always the prospect of more austerity, to reduce the deficit to naught, in the next Parliament. The Tories’ work is unfinished and so, they will argue, they ought to be given more time.
But, keeping things binary, two further points struck me after Osborne’s remarks yesterday. Here they are:
- He’s warning about other countries again. Osborne used to talk about the problems of other countries – especially those caught up in the eurozone crisis – and their effect on the British economy almost incessantly, but that more or less stopped as soon as our economy started growing. Yet now he’s at it again. His address yesterday included observations such as “the eurozone is still weak,” and “we still see political issues around debt and deficit in US”. Of course, all this supports the second tier of his argument: that our journey to prosperity may not be smooth. But it also has a basis in fact. For instance, as I pointed out recently, even though American legislators averted the debtpocalypse, it’s thought that their deliberations could still have reduced US growth by “at least a quarter of a percentage point”. The potential for politics to upset the US economy, and with it the world economy, remains.
- Keeping the two tiers intact will become more difficult as the election approaches. But what if America does alright? What if the eurozone packs on a bit of muscle? What if our own economy keeps growing smoothly? In that case, the second tier of Osborne’s message could collapse under the weight of the first – there would be too much good news to go around, and not enough bad. And it might not stop there. So far, by his own testimony, Osborne is resisting the temptation to appeal to voters with spending hand-outs and tax sweeteners. But I suspect he won’t be able to as the election approaches. In rushing to make everyone feel warm and fuzzy about the Tories, he could also undermine the idea that the public finances are still in a precarious state.
Don’t get me wrong: it’s far better for the Tories that the economy is growing strongly, and that voters feel better off, come the next election. But, as I’ve said before, an improving economy doesn’t make everything easy for Osborne and his party. Which is probably the point he was trying to convey to Tory backbenchers yesterday.