Spending Review: What Osborne said – and what he meant

It was a speech as political as it was fiscal and economic. John Rentoul separates the substance from the spin


1. A nod to the Iron Lady

Opening with the Margaret Thatcher gambit. Never mind that Nobel prize-winning economists point out repeatedly that national finances are not like household finances, because maintaining aggregate demand keeps people in jobs, this is a simile that the Conservatives continue to flog, even if it does remind some of us of the worst bits of the 1980s.

"We are going to ensure, like every solvent household in the country, that what we buy, we can afford; that the bills we incur, we have the income to meet; and that we do not saddle our children with the interest on the interest on the interest of the debts we were not ourselves prepared to pay."

2. A dig in the ribs

A curiously political and surprisingly honest criticism of the Labour plan to halve the deficit in four years rather than to eliminate the structural deficit altogether – that it would mean going into the next election with more pain and austerity ahead.

"We have inherited from the previous government plans... that envisaged our national debt ratio still rising in the year 2014. Not a single penny of savings had been identified. Indeed, they were plans that envisaged the Chancellor... standing here in 2014 presenting a spending review that still had years of cutting public spending ahead of it."

3. Political point scoring

Identifying a Labour sore point and hitting it again: Gordon Brown and Ed Balls wanted to rule out a VAT rise in the election campaign, in order to create a dividing line; Alistair Darling – to whose approach Alan Johnson is sticking – refused, knowing that a re-elected Labour government might need to do it.

"In the Budget I set out the tax increases we were prepared to make, including on capital gains at the higher rate, pension relief on the largest contributions and... a permanent levy on banks. We also had to increase VAT, where fortunately we were able to benefit from the preparatory work of the previous government."

4. Unnecessary verbiage

Yes, even the Chancellor of the Exchequer has fallen victim to that blight on the English language, the phrase "going forward". Never mind the debt, that's the worst legacy of New Labour's public-sector-speak. Her Majesty must have been horrified to hear this.

"Her Majesty graciously agreed to a one-year cash freeze in the Civil List for next year. Going forward, she has also agreed that total Royal Household spending will fall by 14 per cent in 2012-13, while grants to the Household will be frozen in cash terms."

5. Shifting the burden

A nice way of selling what is actually a political sleight of hand: moving some of the costs of social care from squeezed local-council budgets to the NHS budget, protected by the Conservative election promise, which had to be made to counter the voters' perception that Tories don't really like socialised medicine.

"Grant funding for social care will be increased by an additional £1bn by the fourth year of the Spending Review. And a further £1bn for social care will be provided through the NHS to support joint working with councils – so that elderly people do not continue to fall through the crack between two systems."

6. A sense of deja vu

The Gordon Brown memorial pledge, which could just as well have come from the last Prime Minister's lips – the "We are the first Government in history to do X" being a formula of which he was fond – and the first bit of real red kidney-bean stew tossed to Liberal Democrat activists.

"This Coalition Government will be the first British government in history, and the first major country in the world, to honour the United Nations' commitment on international aid... Overseas development will reach 0.7 per cent of national income in 2013."

7. The banking dilemma

The impossible balancing act: anger at the banks vs wanting to keep the goose that lays golden tax revenues in London. As Jean Baptiste Colbert put it: "The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing."

"We neither want to let banks off making their fair contribution, nor... drive them abroad. Many hundreds of thousands of jobs across the whole United Kingdom depend on Britain being a competitive place... Our aim will be to extract the maximum sustainable tax revenues from financial services."

8. A welfare waterfall

The biggest single specific savings were announced in a gabbled list that few MPs could assimilate. Most Labour MPs were dimly aware that this might mean real hardship for some of their poorest constituents; the cleverer ones were conscious of Osborne's introductory point – that these were the sort of changes a Labour government should have made, but funked.

"We will... limit contributory Employment and Support Allowance for those in the Work Related Activity Group to one year... increase the age threshold for the shared-room rate in housing benefit... give local authorities greater flexibility to manage council tax... align the rules for the mobility and care elements of Disability Living Allowance."

9. Cold comfort

A clever political strike, trying to turn to the Coalition's advantage the Tories' embarrassment at having been forced to protect these benefits for pensioners because of David Cameron's cowardice during the televised debates during the election campaign in April.

"Winter Fuel Payments will remain exactly as budgeted for by the previous Government – as promised. I am also turning the temporary increase in the Cold Weather Payments... into a permanent increase. In my view, higher Cold Weather Payments should be for life, not just for elections."

10. Cherry picking

Translated: "In the next few weeks, various secretaries of state of spending departments will set out the really unpopular detailed consequences of the figures I announced in my Budget in June; meanwhile, let me just set out and take credit for selected nuggets of good news."

"The cap on regulated rail fares will rise to RPI+3 per cent for the three years from 2012... The Secretary of State will set out how more of the transport money will be allocated next week. But I want to tell the House today about some of the projects that will go ahead."

11. Laying a trap

The "I have received many submissions" device has long been a favourite of Chancellors. Here, Osborne gives it an extra twist: he has decided to go further than Labour's suggestion and cut unprotected departments' spending by 19 per cent – thus ensuring Alan Johnson had to start by responding to what seemed to be a spending review Labour could have announced.

"Mr Speaker, during the process of this Spending Review, I have received many submissions... including one from the party opposite that the average cut for unprotected departments should be set at 20 per cent over the coming four years... rather than the 25 per cent that I anticipated in my June Budget."

Suggested Topics
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SQL Report Analyst (SSRS, CA, SQL 2012)

£30000 - £38500 Per Annum + 25 days holiday, pension, subsidised restaurant: C...

Application Support Analyst (SQL, Incident Management, SLAs)

£34000 - £37000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Embedded Software / Firmware Engineer

£40000 - £45000 per annum + Pension, Holiday, Flexi-time: Progressive Recruitm...

Developer - WinForms, C#

£280 - £320 per day: Progressive Recruitment: C#, WinForms, Desktop Developmen...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform