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| Comprehensive spending review: Balls appeals to the few, Osborne the many | Comprehensive spending review: Balls appeals to the few, Osborne the many |
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| For many months the political class – and you the reader are arguably part of it – have had 26 June ringed in the diary. For those of us who think in this way, George Osborne's spending review announcement for 2015-16 yesterday is axiomatically of vital significance. For us it is the event that frames the general election year and perhaps the politics of the next parliament. I know intelligent and sensible people who have specially come back from holiday so as not to miss the excitement. | For many months the political class – and you the reader are arguably part of it – have had 26 June ringed in the diary. For those of us who think in this way, George Osborne's spending review announcement for 2015-16 yesterday is axiomatically of vital significance. For us it is the event that frames the general election year and perhaps the politics of the next parliament. I know intelligent and sensible people who have specially come back from holiday so as not to miss the excitement. |
| For people like us, therefore, Wednesday delivered plenty to argue about. It could hardly be otherwise. Since 2010 Osborne has cut £120bn of public spending, based on the average rate of spending over the past 30 years. On Wednesday he made another £11.5bn of real-terms cuts for the financial year starting in April 2015. Though many will have limited impact on frontline services – an insufficiently acknowledged feature of the cuts – these are massive numbers, pregnant with major policy implications. | For people like us, therefore, Wednesday delivered plenty to argue about. It could hardly be otherwise. Since 2010 Osborne has cut £120bn of public spending, based on the average rate of spending over the past 30 years. On Wednesday he made another £11.5bn of real-terms cuts for the financial year starting in April 2015. Though many will have limited impact on frontline services – an insufficiently acknowledged feature of the cuts – these are massive numbers, pregnant with major policy implications. |
| Nor did Osborne disappoint when it came to headline-grabbing announcements. Another 1% pay ceiling in the public sector. The loss of automatic progression pay – already ended in the police and now signalled more widely. A welfare spending cap, and a longer signing-on delay timed to come into force on the eve of the general election. Bit hits to the justice, welfare and local government budgets. Softened blows for defence, education and health. And a big attempt to rebalance the announcements in favour of capital investment, on which Danny Alexander will say more on Thursday. | Nor did Osborne disappoint when it came to headline-grabbing announcements. Another 1% pay ceiling in the public sector. The loss of automatic progression pay – already ended in the police and now signalled more widely. A welfare spending cap, and a longer signing-on delay timed to come into force on the eve of the general election. Bit hits to the justice, welfare and local government budgets. Softened blows for defence, education and health. And a big attempt to rebalance the announcements in favour of capital investment, on which Danny Alexander will say more on Thursday. |
| These things matter. But remember that announcements of this kind are often works of art. As Nick Clegg put it this week in a comment worth remembering, "the gap between intention, announcement and delivery is quite significant". The government's emphasis in capital investment is a good case in point. In fact, the £50.4bn spending on infrastructure in 2015-16 that Osborne trumpeted as a big change of focus simply repeats the £50.4bn already earmarked for capital spending in 2014-15. So, although these are healthy amounts, there is no actual increase there at all. And every one of the announcements that Alexander will make today for beyond 2016 is likely to mean further cuts for Osborne or his successor. | These things matter. But remember that announcements of this kind are often works of art. As Nick Clegg put it this week in a comment worth remembering, "the gap between intention, announcement and delivery is quite significant". The government's emphasis in capital investment is a good case in point. In fact, the £50.4bn spending on infrastructure in 2015-16 that Osborne trumpeted as a big change of focus simply repeats the £50.4bn already earmarked for capital spending in 2014-15. So, although these are healthy amounts, there is no actual increase there at all. And every one of the announcements that Alexander will make today for beyond 2016 is likely to mean further cuts for Osborne or his successor. |
| There is also a case, which should not be overstated but appears true nevertheless, for saying that this spending review is part of a quiet long-termist switch in coalition economic strategy. The efforts of Vince Cable, among others, to push the government into a more growth- and investment-oriented package, with less emphasis on cuts and laissez faire, have borne some fruit on such things as regional growth funds – though whatever happened to Lord Heseltine's £49bn? – science and the green investment bank. It's not a U-turn, certainly, but it feels like a body swerve. | There is also a case, which should not be overstated but appears true nevertheless, for saying that this spending review is part of a quiet long-termist switch in coalition economic strategy. The efforts of Vince Cable, among others, to push the government into a more growth- and investment-oriented package, with less emphasis on cuts and laissez faire, have borne some fruit on such things as regional growth funds – though whatever happened to Lord Heseltine's £49bn? – science and the green investment bank. It's not a U-turn, certainly, but it feels like a body swerve. |
| Alongside that, though, it is important to recognise that very little that Osborne said yesterday, or that Alexander will say today, will have tangible shape for two years at the earliest, and in many cases much longer. This spending round was in many ways a virtual exercise – involving a target of cuts in which the figure of £11.5bn seems to have been plucked out of the air, in a financial year that is still two years distant, and containing many figures covering the rest of this decade that are largely meaningless. If we are going to have annual spending rounds as well as strategic spending assessments covering the full parliament (which is not a bad idea), we should have them in the autumn before the financial year in question – as we used to. | Alongside that, though, it is important to recognise that very little that Osborne said yesterday, or that Alexander will say today, will have tangible shape for two years at the earliest, and in many cases much longer. This spending round was in many ways a virtual exercise – involving a target of cuts in which the figure of £11.5bn seems to have been plucked out of the air, in a financial year that is still two years distant, and containing many figures covering the rest of this decade that are largely meaningless. If we are going to have annual spending rounds as well as strategic spending assessments covering the full parliament (which is not a bad idea), we should have them in the autumn before the financial year in question – as we used to. |
| For Labour and its supporters, yesterday was every bit as significant as for the government parties and theirs. Osborne's barely concealed intention yesterday was to frame Labour as the spending and borrowing party in the run-in to 2015. Ed Balls managed to keep most of his options open when he replied. His speech was not so much a critique of Osborne's spending plans as an attack on Osborne's economic stewardship generally. Balls is in the framing business too. While Osborne tries to frame Balls as a serial borrower, Balls seeks to frame Osborne as a failed chancellor. They each have a point. | For Labour and its supporters, yesterday was every bit as significant as for the government parties and theirs. Osborne's barely concealed intention yesterday was to frame Labour as the spending and borrowing party in the run-in to 2015. Ed Balls managed to keep most of his options open when he replied. His speech was not so much a critique of Osborne's spending plans as an attack on Osborne's economic stewardship generally. Balls is in the framing business too. While Osborne tries to frame Balls as a serial borrower, Balls seeks to frame Osborne as a failed chancellor. They each have a point. |
| But this brings us to the wider politics of what happened yesterday. These have relatively little to do with what the partisans on all sides might want to believe. Tories may be confident that Osborne has nailed Balls. Labour supporters may insist that Balls skewered Osborne. And Lib Dems may persuade themselves that Alexander will show a sensible middle way between the two extremes. But the truth may lie somewhere else entirely. | But this brings us to the wider politics of what happened yesterday. These have relatively little to do with what the partisans on all sides might want to believe. Tories may be confident that Osborne has nailed Balls. Labour supporters may insist that Balls skewered Osborne. And Lib Dems may persuade themselves that Alexander will show a sensible middle way between the two extremes. But the truth may lie somewhere else entirely. |
| One of the most useful political articles of recent times was written last year by the YouGov pollster Peter Kellner. Kellner argued that there is a massive gulf between the way that political junkies see politics and the way a lot of other people view the subject. Junkies – people like me and you – think political moments are important. We often have strong – often predictable – partisan views about them. But most people aren't like this. They judge politics more on character and trust. | One of the most useful political articles of recent times was written last year by the YouGov pollster Peter Kellner. Kellner argued that there is a massive gulf between the way that political junkies see politics and the way a lot of other people view the subject. Junkies – people like me and you – think political moments are important. We often have strong – often predictable – partisan views about them. But most people aren't like this. They judge politics more on character and trust. |
| Kellner calls these two groups positional voters and valence voters. He illustrated the difference between the two by asking whether you feel strongly about the role of the private sector in the NHS. If you are strongly for or strongly against, that is a positional view. If you don't have a strong view one way or the other and all you want is an NHS that gives good care when you need it, that is a valence view. Very few people are junkies, especially among swing voters. So the task for all parties is to win the valence war. | Kellner calls these two groups positional voters and valence voters. He illustrated the difference between the two by asking whether you feel strongly about the role of the private sector in the NHS. If you are strongly for or strongly against, that is a positional view. If you don't have a strong view one way or the other and all you want is an NHS that gives good care when you need it, that is a valence view. Very few people are junkies, especially among swing voters. So the task for all parties is to win the valence war. |
| Looking at the spending round, it seems to me that all three main parties have some valence credibility but also carry some valence problems. The Tories do well on readiness to take difficult decisions, but badly on fairness and understanding. Labour is good on fairness but bad on efficiency and credibility. The Lib Dems score high for being undogmatic but decent, but low for promise-keeping. | Looking at the spending round, it seems to me that all three main parties have some valence credibility but also carry some valence problems. The Tories do well on readiness to take difficult decisions, but badly on fairness and understanding. Labour is good on fairness but bad on efficiency and credibility. The Lib Dems score high for being undogmatic but decent, but low for promise-keeping. |
| And here is where the politics of this spending round may play out in surprising and, to many, frustrating ways. Balls made a better positional attack on Osborne yesterday than Osborne made on him. But Osborne made the smarter valence attack on Balls. Since there are many more valence voters than positional ones, we should not be astonished if Osborne's undoubted record of economic failure may coexist with a platform for political success. | And here is where the politics of this spending round may play out in surprising and, to many, frustrating ways. Balls made a better positional attack on Osborne yesterday than Osborne made on him. But Osborne made the smarter valence attack on Balls. Since there are many more valence voters than positional ones, we should not be astonished if Osborne's undoubted record of economic failure may coexist with a platform for political success. |
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