Steve Richards: You can't be Santa or Scrooge, I'm afraid, George

The good news, in the form of capital spending, can't be over-spun without giving the wrong impression

Share

Senior ministers convey two contradictory messages in the build up to today's Autumn Statement. They give the impression of hyperactivity. Extensive leaks suggest there will be announcements galore, from wage subsidies for the young to new infrastructure projects. At the same time, they insist they do not plan to spend any more overall cash than previously announced, that Plan A will be observed rigidly. George Osborne will play Santa Claus tied up in chains.

We await the precise details to see how Osborne manages to reconcile the two messages, how he plans to "invest in Britain" while continuing with his programme of spending cuts unveiled with a premature flourish in the autumn of last year. "Where's the money coming from?" is the unavoidable question when fiscal neutrality forms part of the multi-layered proclamation. The answers can lead to difficulties in the future. In his final budget as Chancellor in 2007, Gordon Brown attempted a similar contortion, announcing at the beginning that his measures were fiscally neutral. Having tied himself up, he gave the impression for the rest of his speech that he was a liberated Santa Claus.

Only later did it emerge that Brown's much-hyped cut in the basic tax rate, his biggest gift, was to be paid for by those on low incomes, an arrangement that returned to torment him as Prime Minister. Osborne needs to be careful that, in seeking to avoid unequivocal misery, he does not also sow the seeds of future misfortunes by taking discreetly with one hand as he gives more loudly with the other.

This is what tends to happen to chancellors, a policy announced to wide acclaim can become a much darker measure over time. To some extent, the rule applies even in relation to the Office of Budget Responsibility, the other big player in today's drama. Arguably the institution is the bigger player today and might command more headlines than the Chancellor, one of the reasons why ministers have sought to get their good news in first by leaking most measures in advance.

The OBR's message will be grim as it downgrades its growth forecast. Although everyone is expecting such an assessment, the formal announcement will generate a degree of frenzy as if God had given an economic verdict that is beyond question. In this case, God takes the form of Robert Chote who acquired a deified reputation when he ran the Institute of Fiscal Studies and now is in charge of the OBR. In a way, Chote's role has not changed greatly. When he was at the IFS, his verdict was both independent and regarded with awe. Now he has an official role performing in a similar capacity.

While Chote's deification is well deserved, his elevation must be slightly unnerving for the Chancellor, even though it was the Chancellor who came up with the idea and who appointed Chote in the first place. Perhaps more than he intended when he proposed the OBR in the comfort of opposition, Osborne loses control of the narrative at key moments and Chote takes command of the stage with his bleak warnings and forecasts.

Nigel Lawson used to joke when he was Chancellor that all forecasts are wrong. At his most upbeat when the economy appeared to be booming, Gordon Brown quipped that the Treasury forecasts, while underestimating the mesmerising pace of growth, were proving more accurate than other independent bodies. Those were the days. Now Osborne prepares for the reverse, with his independent body suggesting that the situation is worse than its previous forecasts. The revision itself shows that forecasts are almost impossible in the current fluid circumstances, but it is not part of Chote's remit for him to descend from above and declare rather like the more earthly Governor of the Bank of England did the other day: "I haven't a clue what will happen to the British economy tomorrow let alone further ahead." Instead, Osborne will have to accept the darkness as described by Chote and cling to any shafts of light.

This makes his balancing act even more tantalising. He must be seen to be doing something. He will not want to make consumers even more pessimistic than they already are. It was bad enough when he compared Britain to Greece in the summer of last year when the economy was growing more steadily than it is now. Unequivocal pessimism when the British economy is much more fragile could make matters worse. And yet the good news, in the form of capital spending and the rest, cannot be over-spun without giving the impression that the Chancellor is loosening the purse strings, which he is not.

Indeed, the £5 billion Osborne plans to switch from current to capital spending is relatively small and the rest of the money supposedly from the private sector is not necessarily guaranteed. This is not exactly a bazooka. Osborne's focus on infrastructure projects is the right one, but its success will depend on scale and speed. However he chooses to present his contortion, in reality Osborne risks being too Scrooge rather than another Santa Claus breaking free of his chains.

s.richards@independent.co.uk / twitter.com/steverichards14

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Online Media Sales Trainee

£15000 - £30000 per annum: Recruitment Genius: Now our rapidly expanding and A...

Recruitment Genius: Public House Manager / Management Couples

£15000 - £20000 per annum: Recruitment Genius: Are you passionate about great ...

Recruitment Genius: Production Planner

£20000 - £30000 per annum: Recruitment Genius: This fast growing reinforcing s...

Recruitment Genius: General Factory Operatives

£18000 - £35000 per annum: Recruitment Genius: This fast growing reinforcing s...

Day In a Page

Read Next
 

If I were Prime Minister: Every privatised corner of the NHS would be taken back into public ownership

Philip Pullman
 

Errors & Omissions: Magna Carta, sexing bishops and ministerial aides

John Rentoul
As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links