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

Programme Test Manager

£400 Per Day: Clearwater People Solutions Ltd: Our client are currently seekin...

Secondary supply teachers needed in Peterborough

£21000 - £35000 per annum: Randstad Education Cambridge: Secondary supply teac...

Modern Foreign Languages Teacher

£100 - £110 per day: Randstad Education Group: Full time German Supply Teacher...

Project Manager with some Agile experience

£45000 Per Annum: Clearwater People Solutions Ltd: Our client based in Chelmsf...

Day In a Page

Read Next
Francois Hollande at the Paris summit on Iraq with ministers from Saudi Arabia and Bahrain on 15 September  

What's going to happen in Syria and Iraq? A guide to the new anti-Isis coalition's global strategy

Jonathan Russell
The colours of autumn leaves are among the many pleasures of the coming season  

In Sickness and in Health: As autumn arrives, more of us should wear high-vis clothes

Rebecca Armstrong
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week