Five things we learnt: Spending Review and Autumn Statement 2015

Five things we learnt: Spending Review and Autumn Statement 2015

Nathan Jones

Today’s announcements focused on security in every sense. The Chancellor promised economic security with support from a warm autumn statement, national security by delivering on this week’s defence and security review, security for the UK’s regions and nations outside London, and security of health and care. Finally and most importantly though, Osborne sought to deliver security for his party, and for his future within it. On the back of an Autumn Statement and Spending Review which had pulses racing in the Pagefield bunker, here are the five things we learnt.

Lines Labour’s Lost

We have become accustomed to a number of ‘rabbit’ policies pulled from the Treasury’s hat from the Chancellor as he delivers his set pieces over the years, and today certainly did not disappoint. The two issues which have dominated political discussion in recent months have been the Conservatives’ planned cuts to tax credits, and in the wake of recent terrorist atrocities, cuts to policing budgets. Both issues resonate with the public and have been picked up by Labour. Andy Burnham, Shadow Home Secretary reportedly appealed to Osborne to curb police cuts at no more than 10%. Osborne’s decision to U-turn on both areas was therefore hugely significant, as it neutered two core Labour lines (and in doing so setting up Burnham as a supporter of police cuts in a political coup de grâce). The decision will be spun as a victory by Labour, Lib Dems and the SNP, but Osborne will have defused some of the toxicity around the issue for his party.

Devil in the detail

For what was billed as the beginning of a second round of austerity, casual listeners to the Chancellor’s remarks could be forgiven for thinking everything sounded rather sunny. Osborne focussed his speech on popular announcements and areas where spending is going up (or cuts are not so deep), and in doing so unsurprisingly left out much of the detail. Commentators and economists will be combing through the documents behind the speech as we speak, but many are already asking how Osborne is planning on funding some of the commitments made, as they surely can’t all be funded by the £27bn found down the back of the sofa. One area to watch out for is the mysterious ‘administration’ efficiencies which Osborne claims to have found in departments which were ostensibly cut down to the bone in the last parliament.

(Os)borne to lead

On several occasions over the last five years, and particularly in some of the country’s darker economic moments, the longevity of Osborne has come into question. Today was a personal lesson from the Chancellor for his doubters. One might think that a Chancellor presiding over historic levels of cuts in public services would be reviled, but Osborne has continued to successfully turn the tables since his famous ‘omnishambles’ budget of 2012. Aided by relative economic recovery, he has also leveraged his emerging role as a super-Chancellor and de facto Deputy PM to ensure that it is he who makes the announcements which count. Few politicians would have the self-confidence with which to perform the kind of u-turn that he has done on tax credits.

The devolution will be televised

Ever since he announced the creation of the ‘Northern Powerhouse’ last year, Osborne has made regional devolution one of the key planks of the Government’s agenda. Critics have claimed he is simply giving local authorities responsibility for unpopular cuts, but with the announcement of a raft of additional new powers for local Government, Osborne has started to add some meat to the bones of regional devolution. We have heard much of the rhetoric before, but it is now arguably being matched by the reality. Further to Budget announcements on business rates, tax powers, housing and health and social care, Osborne announced possible city deals for Cardiff, Glasgow, Aberdeen and Inverness to add to those in Leeds, Liverpool, the West Midlands and others. However, many of these benefits come with conditions attached; while he gives with one hand, Osborne seemingly takes with the other. Devolution is becoming a reality, but the reality may not be pretty. To quote a cliché, ‘with more power comes more responsibility’. It remains to be seen whether local authorities are ready for this, and what safeguards and accountability can be built in to ensure the system works.

Doing more with less

Despite Osborne’s seeming determination to steal Labour’s clothes (evidenced by a swathe of pilfered Labour policies like the National Infrastructure Commission, National Living Wage etc.), the left-leaning commentariat has long feared that his supposedly necessary austerity measures are in fact an underhand restructuring and shrinking of the British state to a new and fundamentally conservative norm. Today’s announcements will likely both terrify and reassure them. Osborne’s plans, if completed, will shrink public spending to 36.5% of national income. However, some clever-looking policymaking is Osborne’s riposte, and policies like stamp duty increases for second home buyers and digital reform of taxation could show the way for how to genuinely do more with less.