George Osborne’s budget next week should be another triumphant staging post en route to the premiership, the job for which he has been preparing for more than a decade. Yet he will come to the dispatch box against the backdrop of a ferocious battle for the future of his party and Britain’s place in the world.
Before the cabinet meeting in early February at which ministers discussed how they would manage the debate among their colleagues in the run-up to June’s referendum, the chancellor – ever eager to learn from past masters of the political art – had civil servants look up cabinet minutes from 1975. That was when British voters were last consulted about their membership of the European club, and fissures opened up in Harold Wilson’s Labour party that ultimately led to the formation of the breakaway SDP six years later.
After poring over the minutes, Osborne decided that keeping Priti Patel or Iain Duncan Smith in the Conservative fold would be a relatively straightforward affair compared with trying to reconcile, say, Roy Jenkins and Tony Benn back then. He and the prime minister believed they could keep the Conservatives’ disagreements over Europe a much more low key, civilised affair – and use their considerable powers of patronage to limit the scale of rebellion.
Once the voters had delivered their verdict, David Cameron could then gracefully step down – as he has promised to do before the next general election in 2020 – leaving Osborne, whose political tentacles reach deep into every corner of government, to try to capture the leadership of the party and the country.
Groomed, drilled and polished by a team of advisers, including former TV producer Thea Rogers, the chancellor has replaced the squeaky-voiced gawkiness of his early days in the job with a carefully constructed image. He conducted so many staged photo opportunities in the campaign for last May’s election that his Christmas card was a cartoon of himself in a hi-viz jacket and hard hat.
Osborne is a more complex political figure than his critics portray. While the Treasury’s welfare cuts have been deep, with more to come, he can also point to concrete policies, from free childcare provision to his “national living wage”, that show he is interested in more than just shrinking the state. And policies such as the legalisation of gay marriage are a natural fit with his metropolitan, liberal version of conservatism.
Vince Cable, who worked with the chancellor on budgets as part of the “quad” of senior ministers in the 2010-15 coalition, says Osborne was sometimes more willing to countenance progressive policies that would hit higher earners – a mansion tax, for example – than Cameron. “There is a side of him which is very traditionally reactionary; there’s another strand which is trying to be middle of the road: reaching out to the left,” Cable says.
As he eyes the top job, Osborne, who has always been consulted on Cameron’s reshuffles, expects to be able to count on longtime allies who have been placed in powerful roles, including his former advisor Matt Hancock, now a minister in the Cabinet Office, and Andrew Feldman, an old friend who raised funds for Cameron’s leadership campaign and is now party chairman.
But as he mapped out his path to No 10, Osborne the tactician reckoned without the strength of feeling among many backbench Tory MPs – and their Eurosceptic constituents – about what they regard as a once-in-a-lifetime opportunity to throw off the shackles of Brussels. And he reckoned without Boris Johnson, with his buccaneering appeal to plucky Britain’s independence and man-of-the-people appeal.
The ferocity of the battle, once the results of the prime minister’s negotiations with his EU partners had been announced, has taken Downing Street aback. “Blue on blue” attacks, in which one senior Conservative minister rubbishes another, are now a daily event.
So when Osborne delivers his budget on Wednesday, the pinnacle of every chancellor’s year, he will have to serve at least two audiences: voters wondering whether quitting the EU is worth the risk and Conservative backbenchers sizing up the prospect that he could lead them to a future election victory.
Ryan Shorthouse of Conservative thinktank Bright Blue said: “He has been like a two-headed Janus on the economy. On the one hand, he has been very optimistic and the autumn statement certainly reflected that – that’s his one face, to show the public the plan is working. But his other face is needed to show that the plan is necessary. I suspect that more pessimistic face will be on show, particularly as with the referendum coming up, he wants to show that it’s risky if we take a bold move like leaving the EU.”
As Wednesday approaches, the Treasury has been less sure-footed than usual in controlling the news agenda. Radical proposals for pensions tax reform, for which some close to the discussions had said the chancellor was “gung ho” as recently as late February, were abruptly ruled out by his allies last week, amid fears that press speculation was running out of control.
Any route to the top job, though, has to take Osborne past Johnson, who was already a firm favourite with the Conservative grassroots members who will have the final say on who will be the Tories’ next leader. His popularity has rocketed since declaring his hand as an outer.
Before Christmas, Osborne held the lead in ConservativeHome’s regular poll of members. The latest one, held earlier this month, had Johnson well ahead on 33%, benefiting from what editor Paul Goodman called the “who dares wins factor”. The chancellor languished at just 11%, behind Johnson’s fellow Eurosceptic – and Osborne’s close friend – Michael Gove.
Osborne’s popularity with his own backbenchers, always somewhat shaky, has been shattered by his role in what Eurosceptics regard as the brutal scare tactics of “Project Fear”. Backbenchers have been publicly mobilising against mooted budget policies, including a fuel duty rise, and rebels joined with the Scottish National party to vote down plans to liberalise Sunday trading that were first announced by the chancellor. One minister remarked darkly last week: “If Conservative backbenchers had a dartboard, it would have George’s face on it.”
That’s a problem for a future party leadership contender, because before any candidate’s name can be put to individual members, they must become one of the final two contenders, chosen in a series of ballots among the party’s MPs.
That may be why Osborne appears to have adopted a surprisingly low-profile approach to the EU referendum: while Cameron is touring the country day after day, making a shirtsleeved pitch to the public about why Britain should remain a member, the chancellor has barely been seen – barring an appearance alongside the German finance minister and political ally, Wolfgang Schäuble, who warned about the risks of Brexit.
MPs believe that is because the chancellor hopes that even if the referendum is lost, Cameron will take the taint of project fear with him, leaving his chancellor to guide the country through the fraught negotiations that would lie ahead.
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