George Osborne’s budget was more New Labour than Thatcherite

http://www.theguardian.com/commentisfree/2015/jul/09/george-osborne-budget-new-labour-thatcherite

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No event in the political calendar is more thoroughly scrutinised yet more routinely overhyped than the budget. Only a tiny handful of budgets actually change the country or remain lodged in the memory as agenda-shaping moments. So let the dust settle before being too categorical about the long-term importance of George Osborne’s latest budget – especially as it is his second in four months.

Related: Summer budget 2015 represents new centre of UK politics, says Osborne

All the same, the Osborne July budget is clearly an attempt to reset the British party political dials for the new parliament and perhaps even beyond – though an attempt is not the same as an achievement. “I can call forth spirits from the vasty deep,” boasts Glendower in Henry IV part I. “Why, so can I, or so can any man,” Hotspur retorts, “But will they come when you do call for them?” In other words, Osborne may propose but the world itself will dispose. We have a smart chancellor but he can’t ignore stubborn realities.

This budget also defies many of the tidy categorisations that politicians and commentators love to impose on such events. This was another austerity budget – but it increased taxes. It was a tight spending-cuts package – which nevertheless loosened the timetable for cuts. It was a budget that reduces the size of the state while using the state’s power to intervene in labour markets and raise pay. It undid much the last Labour government sought to do, while nicking plenty of Labour priorities.

It is therefore just as risky to frame this budget too confidently as merely an austerity or a small-state budget, as it is to pretend it is a definitive moment. After all, with the eurozone crisis still unresolved – never mind uncertainties surrounding the impact of the Chinese stock market slide, the unexpected NYSE shutdown or faltering global growth reported by the IMF today, Osborne’s measures may look like a spit into the wind in a very short time.

Osborne’s desire to appeal to centre-ground support and to force Labour towards the margins could not be plainer

What can be said, though, was that the 2015 summer budget was a strategic attempt to advantage the Conservative party over Labour. Osborne’s desire to appeal to centre-ground support and to force Labour towards the margins could not be plainer. Nothing would delight the chancellor more than for Labour to fall into his trap and become on cue the party of welfare, the poor and the public-sector unions. Disraeli’s desire to “dish the Whigs” has rightly been identified by some commentators as the real inspiration for this budget.

Yet although this was overall a regressive package, as the Institute for Fiscal Studies underlined today, which took more from poorer households than from richer ones, it won’t do to say this was therefore a reversion to traditional Conservative budget-making, especially of the Nigel Lawson era, in the 80s. It wasn’t. The speech’s focus on wages alone makes that comparison a nonsense. Pay has been an almost unmentionable subject in budgets by all parties ever since 1979. Yet now it is back. This is not “the same old Tories” – and it is important to understand why.

Many on the left, and some on the right, believe all modern UK politics exists in the shadow of Thatcherism. In this view, as Britain was de-industrialised after 1979, there was an epochal battle between neoliberal, small-state and socially authoritarian ideas against social democratic, mixed-economy ideas. The neoliberals beat social democrats out of the park. Many who see politics in this historical frame believe the left’s project must therefore be to reverse the neoliberal victory, while those on the right think it should be carried through even more completely.

But this taxonomy of modern politics is just too simplistic. It is a mistake to see so much in the light of 1979, since it essentially means emphasising the continuities between the Thatcher, Blair and Cameron governments (perhaps in some readings with the Brown years as a brief moment of social democratic decency).

Related: Budget 2015: tax credit claimants will be up to £1,000 a year worse off, says IFS

Some of those continuities do indeed exist. Yet in many respects, an equally important organising point in British politics was 1997, when Labour was elected to try to redress the neoliberal imbalance and the inequalities that Thatcherism had unleashed.

Instead of seeing New Labour as essentially a Tory project that perpetuated Thatcherism though with a human face, we might better think of 1997 as a second watershed. In that perspective, New Labour was a sustained first attempt to rebuild a post-industrial, more market-orientated form of social solidarity, which rejected the injustices and anarchies of the post-1979 neoliberal order as well as the economic unsustainability of the regime it replaced.

Yet in some ways both the 2010 Conservative-Liberal Democrat coalition and perhaps even the 2015 Tory government have shared some of that too. They have each embraced the liberal social values against which Thatcherism always battled. They have also been concerned about fairness and social justice, which Thatcherism always disdained. So it might be more useful to think of the Cameron governments – as to some extent some of their members have thought of themselves – more as alternative successors to new Labour rather than to Thatcher.

If that analysis is right, or even merely heading in the right direction, the budget this week looks a bit different from the bash-the-poor cliche. It also looks like an attempt, not necessarily the right one or a successful one, to tackle some unfairnesses – low wages, tax evasion and avoidance, aspects of the housing market, the banking crisis legacy, the north-south divide – while rejecting and dismantling some (but not all) parts of New Labour’s mottled and more state-centred approach to reforming the welfare system.

Of course there are huge differences of values, interest and approach. But the Osborne and New Labour approaches are on the same page and they recognise, from their different positions, that there is no going back to the lost past. What’s more, the voters recognise it too, as they proved on 7 May. British voters remain highly receptive to a modernising Labour approach that shows it is in touch with the way the country and the world have changed and are changing. Whether Labour offers them that is what the party must now decide in its leadership contest. In the absence of such an offer from Labour, however, Osborne’s budget will seem to many voters like a logical and not wholly unreasonable alternative.