Judging by this budget he hopes to win the next election like vintage Arsenal, playing ugly and nicking late winners
Ask George Osborne an economic question, those close to him never tire of saying, and what you will get is a political answer. By that yardstick, the 2013 budget was vintage Osborne. There was negligible economic innovation or strategy to confront the slow deterioration and flatlining of the national economy. But there were tricky political moves to win headlines and soothe Conservative nerves in the aftermath of the Eastleigh byelection disaster last month. And the underlying big political idea is not dead yet, either.
Overall, this was indisputably a grim budget for grim times. The growth forecast for 2013 has been halved after only three months, and it was not all that impressive in the first place. The high level of borrowing, a direct consequence of an inadequate tax take to finance the state even in its reduced current condition, will change barely at all either this year or next. The claim that the coalition would balance the books by 2015 went out the window long ago. Meanwhile real living standards continue to erode, with little sign of an upturn.
Ordinarily, this would be a disastrous record, the kind of score card that would guarantee government electoral meltdown in 2015 unless things unexpectedly pick up in a big way – of which there is very little reliable sign. True, millions in work remain relatively able to pay their bills, but the fear of worse is pervasive. All this is reflected in calamitous opinion polls which show two-thirds of voters believing Osborne is doing a bad job, with overwhelming numbers expecting that their household circumstances will get worse before, if ever, they get better.
In this context the more creative bits of the budget can be easily depicted like spits into the wind. Yes, the housing finance changes will be popular and, more importantly, are an arresting way of addressing a real need if new houses are finally built. And yes, the cut in employers' national insurance will help small businesses, though nothing like as much as a resumption in bank lending would do. Meanwhile the abolition of automatic tax rises on beer is a move fully worthy of Disraeli, who swept to power in 1874 as the brewers' friend.
Yet in the long run, which in this context means two years from now as the election looms even larger, not much of this is likely to count unless the newbuild housing for the "help to buy" scheme is shamelessly gerrymandered into Tory marginal constituencies – something worth monitoring. Nor will the new tax-free childcare scheme kick in before the next election. Nor will the boost to capital spending, which will likewise not be visible before 2016, at the earliest.
Ordinarily, therefore, it was a doleful budget. Yet these are not ordinary times, and unless one understands how much has changed from the still recent past, it is difficult to get an accurate grip on what is happening in British politics.
Osborne seems to me to be making two key calculations. The first, which is difficult to dispute, is that there is a new normal in economic prospects which the public has grasped. This stagnation is not a recession of the kind which today's middled-aged and retired voters can remember from the 20th century. It is part of a global crisis and an epochal shift in economic power away from the west. It may be long lasting and it almost inevitably means a new kind of state, which has to be more selective about what it can provide as the population grows larger and older and traditional sources of growth die away. The IFS pointed out this week that the modern British state is not significantly smaller than in the past, and will not be even in 2017-18, but it is increasingly dominated by welfare, pensions and health spending at the expense of education, housing, and almost everything else. This is a change that will shape politics for years, maybe decades, to come.
The second calculation, more politically questionable in my view, is that there will be a discernible short-term improvement in the economy in the next two years that will be felt to validate the preceding fiscal contraction. The polls show about half of the public is hopeful about, and certainly open to this possibility. And as Nigel Lawson pointed out recently, even modest progress would seem pretty spectacular after the flatlining and cuts of recent years. Expectations have been reduced, and the government may benefit from this rather than be punished for it.
The figures in the budget are certainly consistent with this possibility. Growth figures like the 1.8% now forecast for 2014 and the 2.3% anticipated in election year seem difficult to credit in current circumstances. Yet if Osborne finally does deliver them, and if employment continues to be reasonably strong, he will be able to argue that the medicine has begun to work. In those circumstances, the Conservatives will campaign on a "Don't let Labour ruin it again" platform that seems absurdly improbable now, amid today's economic gloom, but that would look a bit more plausible if, for once, the government forecasts turn out to be robust.
At first sight, there seems something superficially fitting in the fact that Osborne's football team of choice is Chelsea. There's the true blue strip, of course, the in-your-face privileged lifestyles of the owner and his stars, and the whole sense that the rest of the country can go hang itself as long as the champagne keeps flowing in London. Then there's the clincher. Chelsea may not be popular, but they don't go away and they still seem quite good at winning.
The more you think about it, however, the more it seems that the club that more truly reflects Osborne's approach to the British economy is one of its London rivals in their pre-Arsène Wenger days. Under George Graham in the 1980s and 1990s, Arsenal were notorious for the unlovely effectiveness of an on-field austerity style that was often capped by the priceless ability to nick a late goal and take home the points. It drove supporters of other teams mad – but Graham laughed all the way to the trophy cabinet, time after time.
Judging by the 2013 budget, Osborne's approach to the current parliament is straight out of the George Graham playbook. The chancellor is under no illusion that he is popular. He long ago ceased to care a great deal what the public thinks about him. But he is in a results game, and he has now evolved a consistent strategy for grinding out the only result that really matters to him – winning the 2015 election. Will he score a late goal? It remains a long shot, but it cannot be ruled out.