Hardly a Budget or Autumn Statement has gone by during the
past two and a half years without George Osborne having to swallow hard and
tell the nation about another downward adjustment of the prospects for
Britain’s economy and its public finances, but when he stands up in the House
of Commons on Wednesday, he may face his toughest challenge yet.
It has been a torrid time for the government – and the
Treasury in particular – since the Chancellor’s last such address in December.
The surprise announcement that the UK slumped back into
negative growth in the last three months of 2012 (rendering the
Olympics-boosted third quarter as an outlier rather than a turning point)
prompted more fierce criticism about the coalition’s fiscal strategy, despite
continuing improvements in the labour market that have left even the most
experienced economists puzzled.
Worse than that, last month Britain’s economic outlook was
downgraded by one of the three main credit ratings agencies for the first time
in 35 years. Although such agencies are seen as less influential than during
the financial crisis, and even if the move was no real surprise given the
disappointing growth figures, the decision appeared to undermine part of the
fundamental rationale for austerity.
More recently, Westminster has witnessed a series of
squabbles about more and less trivial issues, including whether press
regulation should be instituted by new legislation or royal charter (as if
anyone really knows or cares what the difference is), but mainly about planned
changes to housing benefit that are designed to make a system that currently
resembles a blank chequebook into one that is more efficient and
cost-effective.
Most contentious is the so-called ‘bedroom tax’ – better
thought of as the removal of a spare-room subsidy – which will mean council and
social housing tenants will no longer be paid by the state to live in homes
that are larger than they need while others exist in privately-rented squalor.
(Apparently it’s the new policy that’s unfair, not the reality…)
The worrying aspect of it all is that, amidst the weekly
micro-scandals, the country is losing sight of the bigger picture – what the
coalition set out to achieve, how it intended to achieve it, and whether it is
likely to be achieved by the time the electorate delivers its verdict.
The bad news is, it’s not looking good, and just how ‘not
good’ will come into sharp focus when the red box is wielded; that’s why this
week is likely to be particularly uncomfortable for the government, especially
as it is likely to set the tone for Labour for many months to come.
The challenge for Ed Miliband and co, though, is not merely
to exploit the government’s weaknesses – they have ample opportunity to do that
– but to convince the electorate that they could do better. The election is
only two years away, but it seems they still cannot shake off the reputation
for economic mismanagement that deterred so many voters last time round.
The Conservatives’ persistent tendency to blame the troubles
of the present on the failings of the past may be drawing ever more derision,
but the polls suggest the mud still sticks. But just as Labour was held
accountable for creating the mess, so the coalition will ultimately have to
take the heat for its utter failure to sort it out – the temperature is rising
fast, and it’s going to leave one man in particular sweating it out this week.
***
Whatever the particular economic circumstances, though, some
things about Budget week never change – expect a series of conveniently-timed
‘leaks’; expect the government to get its excuses in early and the opposition
to rehearse its response; expect the Chancellor to rush through a mind-boggling
array of unhelpful figures in a matter of minutes, leaving pundits scrambling
for hours to interpret them; expect headline-friendly gives and takes,
helpfully illustrated by news-channel case studies; and above all, expect the
devil to be in the detail.
