Ask the Chancellors: substance over style

Posted on 30 Mar 2010 by The Manufacturer

Mark Young on who won the TV battle of the three prospective Chancellor's last night...

Last night saw the three prospective Chancellors duke it out on Channel 4, in front of a live studio audience, to see just who is the best man to pull the purse strings in this incumbent age of austerity.

And by almost all accounts Vince Cable was the winner.
The Liberal Democrat MP for Twickenham had the audience onside from the outset, and cemented that support early by reeling off a list of specific ways in which the Liberal Democrats recommend cutting public spending, including scrapping both Trident and the ID scheme, while his adversaries remained vague.

Osborne came out worst of the three and must surely now be viewed as the weakest contender for the job – despite the fact that he’s probably still favourite to get it, albeit marginally. In the latest pandering to the public vote from both the Conservatives and Labour in recent weeks, Osborne was shown up when announcing that the Tories would keep National Insurance at its current rate, rather than implementing the planned 1% increase to employer contributions, but then remaining totally at a loss when questioned as to how they planned to pay for it.

Both Cable and Darling pointed out that this plan comes at a cost of £30bn which cannot be balanced, especially considering the abstract plans for cutting public spending that Osborne had thus far produced. The argument was won when Cable pointed out that the only way Osborne has said he will make in-roads to the deficit is through the £11bn worth of savings that Labour had proposed which Osborne himself had derided as fictional.

Osborne can legitimately complain of a two-pronged attack from Cable and Darling more often than any similar team-ups against either of his aggressors, but he didn’t exactly accept his criticism with great composure. He regularly tried to butt in and challenge his rebukes but his feeble stutterings were easily overpowered and his attempts to wrestle control of the platform were resisted more often than not.

He attempted to curry favour with the audience through inclusive address regarding prudent spending of the “the taxes of everyone in this room”, but if this tactic bought him empathy, it did so quietly. The cheers were mostly reserved for Cable – who even himself looked slightly perplexed by one early encouraged eruption – and occasionally for Darling; specifically once when he somewhat patronisingly responded to Osborne’s assertion that it was he that first formulated the plan for stamp duty which Labour has now adopted with the line: “There’s nothing like cross party cooperation George, we’re all in favour of that.”

In Osborne’s defence, he did make an allusion to manufacturing when he talked of the UK borrowing money from China to buy the things they make instead of producing them here. Also, his hounding of Darling over the proposal to introduce a 10% ‘death tax’ on the estates of the deceased ended with Darling appearing to diminish the possibility of its fruition.

That was one element of uncertainty from Darling. He also dithered on exactly how public pensions would be cut and was non-committal when answering a question from the audience relating to real growth for the NHS. On this latter point, Cable employed the straight-talking honesty that seems to serve him so well and which his peers would do well to adopt. He said: “It would be totally irresponsible for any of us to give cast iron guarantees, knowing how desperate the position is in terms of public finance” and he challenged George Osborne to name which of the other front line services – the army, police, local government, housing – that the Tories would cut by providing what Osborne called “David Cameron’s personal commitment to the NHS”.

All three prospective Chancellors were in agreement that lending must be increased to small businesses. Darling referenced his move in last week’s budget to ensure £95bn is lent to SMEs through the state owned banks Lloyds and Royal Bank of Scotland.

“That’s absolutely right,” said Cable, “but one of things you have to explain, Alistair, is that having set legally binding lending requirements a year ago as you did the banks hopelessly failed to meet them, very large numbers of small and medium sized companies are going down the pan because they can’t get credit and you failed to implement the agreement you introduced.”

Darling maintained that the banks did lend the money but that it was offset by “at the same time other companies were paying bank their overdrafts” (for this you should probably read those same banks were calling in the overdrafts).

He said Government will set up a regulatory body which small business can complain to if they are refused lending. Cable labelled this “very weak”.

Osborne had linked the situation to bankers’ bonuses, saying the money should be lent to companies instead and received approving nods from the audience as the cameras panned round. He later referenced the £66m salary of a top boss at Barclays bank – an interesting point to have made which could be indicative of a shift in Conservative thinking from its traditional values, given that Barclays was not one of the banks that was bailed out.

Commentators this morning suggested that a line from Cable in his closing statement relating to Tory privilege and a desire to “reward their rich backers” was a touch underhand and marred what was otherwise a sterling display from the Yorkshire-born Liberal Democrat. As one of my learned colleagues pointed out this morning though, quips about his background or even a lack of clearly communicated policies aren’t the main threat to Osborne’s fiscal aspirations. “He can’t be Chancellor; he hasn’t got any eyebrows,” I was told. “A chancellor has to have a strong set of eyebrows. Always has done.” Alistair Darling is certainly adequately qualified on this front.

The shame is, as far as any hope for Britain getting what one daily newspaper today called “the people’s fantasy Chancellor”, as George Osborne nonchalantly pointed out, there is not going to be a Liberal Democrat government after the election. A hung parliament is a lot likelier, and while that is by no means a good thing in terms of what the uncertainty it would bring would do to the value of sterling among other things, one positive that would come out of the situation is that Cable would have a much greater hand in how we go about balancing our books.

Osborne said in his closing statement: “This is your choice…use that choice well, you decide if you want to change your country.” But, as Cable had just pointed out, we have to ensure its change for the better, not for worse.

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