The Chancellor’s economic bondage fetish continues! During the election he bound himself in pledges not to increase income tax, national insurance and VAT by law. Last night at the Mansion House he pledged a new fiscal framework to achieve permanent budget surpluses.
This is a major development in the finances of the nation. In only seven of the last fifty years have governments run a budget surplus. George Osborne is convening the first meeting in 150 years of the commissioners for the reduction of the national debt.
Business is likely to welcome this determination to tackle the national debt but its political implications are profound. Labour has always believed in the need to run deficits during difficult times to boost the economy and support public services. How will they respond to this? If they support it, the prospect of a Labour Party coming to power with ambitious visions for the NHS, housing and social care will be almost impossible. If Labour oppose Osborne, he will say it is evidence Labour are committed to running deficits and never tackling the National Debt currently running at 80% of GDP.
This move shows the Tories are determined to press home their advantage at a time when Labour is engaged in a tepid leadership election to which I will return in later blogs.
EURO HONEYMOON OVER.
It is a good job the Chancellor is able to divert attention from Tory divisions on Europe. I thought the “better off out” brigade now disguised as Conservatives for Britain might have come to have a little more respect for David Cameron after his election victory. Not a bit of it. We are back to the nineties with these Tory backbenchers making impossible demands on banning freedom of movement in the EU so that they can campaign to get Britain out.
MANDELSON ON NORTHERN DEVOLUTION.
Peter Mandelson is hoping to be elected Chancellor of Manchester University shortly and wants that institution to play its part in the Northern Powerhouse.
During the campaign he has made some painful observations about how Labour was completely outflanked on devolution during the last few years.
Labour council leaders across the North were left with no alternative but to go along with the Northern Powerhouse because of a complete absence of an alternative by Labour. They were reluctant to promise to abolish the Local Enterprise Partnerships but their vision of how the North South divide would be narrowed remained opaque. They should have returned to John Prescott’s vision of regional assemblies holding recreated Regional Development Agencies to account. Only this time they should have given them real powers, like Osborne is giving Greater Manchester.
Mandelson says he was hugely frustrated by seeing the Tories seizing the devolution agenda whilst Labour stood back. The former cabinet minister says Labour had the language but not the policies to rebalance the UK economy.
Labour got this wrong but the Tory plan to allow groups of councils to come together, each with a different model isn’t the answer either to the really big question of how England responds to the call for a federal UK.