19 December 2015

George Osborne is behaving like a man heading for a fall


Philip Hammond, Britain’s Foreign Secretary, has been very loyal to David Cameron and George Osborne. In opposition pre-2010 he was happy to deployed on their behalf when someone was needed to tour the studios defending them because the Tory leadership was in a tight spot. Hammond may or may not be your cup of tea, but he’s been a diligent Foreign Secretary, a post to which he is much more suited than he ever was to the Ministry of Defence.

Now Hammond wakes up to find various well-sourced stories in the weekend papers saying that he is expendable. Sources close to George Osborne David Cameron say that the FCO could be offered to Boris Johnson in a reshuffle next year. This idea was first floated by George Osborne Lord Finkelstein in a fascinating and beautifully written piece for The Times last week.

Camos – as one increasingly thinks of Cameron/Osborne as running a joint government – are mustard keen to get Boris on board on the In side in the referendum and want to lure him with the Foreign Office, it seems. There’s a double bluff involved too – I’m told – as Team Osborne thinks putting Boris in as Foreign Secretary would help Osborne in the leadership race because voters would see Boris in one of the great offices of State and think that this is beyond a joke, recoiling at the idea of him ever becoming PM. Everything, everything, that goes on in the upper reaches of the UK government right now should be seen through the prism of Osborne’s determination to stop Boris, secure the Tory leadership and become Prime Minister.

So what? The Chancellor is ambitious and the Foreign Secretary is to be fired or demoted by his former friends. Let’s not be sentimental. It’s a tough old world. Hammond knew the risks; he’s a grown man. Anyone wanting a friend in politics should forget it or get themselves a dog instead, as the old saying goes.

But I do wonder if George Osborne is over-reaching himself. He is certainly behaving like a man heading for a fall. His appearance at the Star Wars premiere was most odd, although he had no knowledge that he was going to appear in the end credits (which was down to his film-friendly tax work). Mercifully, Downing Street also declined to allow the Star Wars PR team to station stormtroopers outside Number 10 or 11 because the Chancellor feared it would look fascistic. It speaks volumes that this is even being discussed. Chancellors should be in the Treasury looking at the books, not worrying about movie premieres.

This year there have been – effectively – three budgets. The Wizard of Os has been hailed by supporters as a genius for scrapping tax credits and hailed as a genius for u-turning and not scrapping tax credits. Then he found £27bn magic pounds down the back of the Number 11 sofa and promptly spent it. He has toured the country incessantly in a hi-viz jacket and planted his allies in every corner of the government. The machine is ready to roll.

It is – purely in machine politics terms – a highly impressive operation. But Osborne, who loves “the game”, seemingly cannot help it. He is now involved in every aspect of government, from making announcements about GCHQ to being the route through which anyone who wants a decision out of the government must go. Once again Britain has a Georgian regency, with power residing in the heir to the throne.

The recent precedent – of a Chancellor too focussed on becoming Prime Minister – is not encouraging. After the Iraq War, Gordon Brown’s obsession went into overdrive and dangerous warning signs on personal debt and the massive, unsustainable growth of the UK banking system were overlooked because he spent his time looking next door and playing politics.

For now, the UK economy seems to be fine. Unemployment is down and growth is healthy. But it has been achieved with years of abnormally low interest rates (creating bubbles) and QE. The London property bubble has already started to burst at the top end and it will be remarkable if 2016 or 2017 passes without a serious correction to prices rippling down through the system. Voters love that…

George Osborne, and the rest of us may sail on, of course, thanks to the fall in the oil price and a bit of wage inflation. It is not preordained though, and we are already seven years from the last crisis. History suggests it will be fairly miraculous if Osborne – and the UK – gets from here to 2019 without some kind of economic reverse or serious trouble.

That being the case, the Chancellor should leave questions such as who becomes Foreign Secretary to the Prime Minister. Perhaps – if he wants to succeed, or even to avoid being fired himself if he loses the Tory leadership election – Osborne would be better sticking to the day job and worrying about the economy.

Iain Martin is Editor of CapX