In the last two months, the government has been presented with four major problems:
1. The Economy – It’s not growing, despite good signs in manufacturing and a recent drop in unemployment, we’re back in recession and could even face another almighty shock if the Euro crisis deepens.
2. Ministers mucking things up – May, Hunt and Osborne have provided the government with a fatal combination of not getting the basics right (Abu Qatada and airport queues), the smell of sleaze (Murdoch) and the fallout from cutting taxes for the wealthy whilst raising them for pasty eaters, grannies and Churches.
3. Labour sky high in polls – Labour exceeded expectations in the local elections but worse is the national polling showing them with leads from 8% points (ICM), 10 points (Mori) and 14 points (YouGov). However, most important of all, they are starting to lead the government on economic competence.
4. Hollande – The last time a first-term French President failed to get re-elected was in 1981. What appeared to undo the charismatic right-wing incumbent was the economy, with a media-awkward left-wing challenger claiming victory on an anti-austerity ticket. Sound familiar?
The government must get a grip over day-to-day issues. Perhaps Teresa May should be moved out of the Home Office. The Leveson inquiry could provide some closure over the Murdoch affair if the government accepts the recommendations. Hunt may be forced to go. However, the elephant in the room is the economy.
We should have a government reshuffle in the next few days, and if Osborne isn’t privately working on a new economic policy, or at least a substantial, credible growth plan to bolt onto it, then I would argue the only way to rescue the government is for Cameron to remove him from the Treasury.
We would need someone who isn’t as politicly scheming as he is, a centrist, an economist who has had successful business experience outside the Westminster village and, preferably, someone who cannot be characterised as ‘posh’. I would argue Vince Cable, Ken Clarke or David Laws fit this role.
Cable’s stewardship at BIS has seen some sectors of manufacturing enjoy a quiet resurgence and for the first time since 1976 we’re a net exporter of cars. His personal intervention in securing the Vauxhall factory at Ellesmere port, saving 2,100 jobs and creating 700 more also secures his future in the cabinet. It’s not difficult to imagine Cable forcing the banks to lend more and more quickly. Clarke has the experience of turning round a failing economy as he did in the 90s and his experience of combating Whitehall resistance is invaluable. Laws oozes raw economic talent and commands huge respect from both sides of the coalition.
Any of these three have the credibility, experience and political position to turn the fortunes of the government around. The question is, does Osborne have a plan, and, if not, will Cameron have the balls to change the occupant of number 11? If he doesn’t, the next occupant will be Balls himself – a truly frightening thought.
* Lev Eakins is a former Manchester Councillor and parliamentary candidate who now lives in Sussex.
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24 Comments
No doubt at all that the Coalition needs a new Chancellor and no doubt either that it should be Vince Cable. Matthew Oakeshott should be brought in and made Minister for Banking .
Osborne’s record on sorting out the Banks is poor, We have stae funded Banks like lloyds/Halifax raising SVR mortgages by 1% this month when base rates have not moved.
The Banks are continiung to charge appallingly high interest rates on loans and credit cards (Loans 10-20% and credit cards 22-29%). Why is this being tolerated ,when in Europe, loans are at 3-6% even when the ECB rate is higher than the Boe Base rate. My only surprise is that the public must be semi anaeasthetised ato stand for this greed and that the party has not made decisive moves on this front. Come on guys get your fingers out!!!!
Items 2 and 4 do not really seem to be the Chancellor’s fault. Neither Cable or Laws seem to have much chance. Would they fix item 3, or make it worse? We’re the smaller of the two parties in the coalition, and I suspect it would be pretty amazing if Conservative backbenchers or party was to accept a LbDem in such a key role. Any change of Chancellor would be a strong signal about a change of course, and would itself risk creating uncertainty. Maybe I’m wrong, but I see the task ahead is to persuade those who are already there, rather than thinking wishfully about replacing them. Unfortuanely I also agree with you that the task is well nigh impossible.
Move Cable in and Clegg out. After all, that’s what should have happened in the first place.
But David Laws? Seriously? The public’s sleazometer would go to full scale deflection.
I think item 2 was partly Osborne’s fault (Omnishamble budget), but these four problems are scene setting rather than a list of problems the Chancellor has generated himself.
As I say in first paragraph after list, the elephant in the room is the economy, and without a new, radical economic policy that has a strong growth focus, it is easy to see us going the way of France in three years time.
We’re all doomed !
Osborne won’t be moved – he’s too important to Cameron and he’s powerful within the Tory Party, even now.
The idea that the Tories would sanction a Lib Dem Chancellor even one as Tory – lite as Laws, is highly unlikely.
Tories want some red meat right now, after their drubbing at the polls. We’ll be lucky to keep Vince where he is after our hammering by the electorate, and as he’s stopping the Tories doing some terrible things to employment law, thank goodness he’s there.
I would like to see Matthew Oakeshott put into the Treasury as Chief Secretary – now that really would shake things up.
Helen – the way I see things is that the choice of government is stark. Osborne is getting in the way of a 2015 victory, and if Cameron cares more about him than the economic recovery, then the gov is rightly doomed.
I think the PM needs to look objectively and decide – does he want to win back the trust of the electorate and have a second term, or does he care more about his mate’s ego in number 11?
If it’s the latter, then there’s a real chance Ed Balls will be Chancellor in 2015 – something nobody in the coalition would want.
Cameron has a choice: swap Osborne with a Coalition MP, or let the electorate swap him with Ed Balls.
The problem is assuming that the economy isn’t growing because of government policy, which isn’t the case.
1) Terribly weak consumer economy, with low wage rises, high inflation on basics like food and fuel and accumulated debt from pre-2008;
2) Collapsing oil output in the North Sea and high oil prices, resulting in a huge energy gap in our balance of payments and taking billions out of the economy;
3) Eurozone crisis looming over everything, hitting export growth and business investment and feeding into a generally worse than anticipated global economic environment.
Compared with these factors, a few billion of extra government spending here or there really wouldn’t be making much difference. Cable is great, but in the end, any chancellor in charge at present is going to find his/her name is dirt as everyone believes that what they do is the sole explanation for growth or the lack of it.
Any government needs luck and at the moment we’re out of it, big time.
@Lev: ‘I think the PM needs to look objectively and decide – does he want to win back the trust of the electorate and have a second term, or does he care more about his mate’s ego in number 11?’
Lev – I think we already know the answer to that question. Cameron puts his friends first and reality second. Hopefully after 2015, the Lib Dems will no longer be in coalition with the Tories.
My ideal scenario would be a hung parliament with Labour as the largest party – a new Leader – a strictly negotiated deal with Labour, in which we don’t stray from the coalition agreement – restoration of trust in public services which have been savaged and denigrated by the Tories (sanctioned by NC) – an end to Thatcherism and Blairism once and for all – an infectionwhich has spread throughout the body politik in England.
RC – I think the Treasury can do a lot more if it wants to.
The oil output you reference is interesting, as Fraser Nelson thinks it was the Treasury who caused the drop. In the Spectator at the weekend he wrote (http://www.spectator.co.uk/coffeehouse/7855548/no-time-to-tinker.thtml – point 6) “The North Sea oil tax in the 2011 Budget was followed by a 20 per cent fall in production and 50 per cent collapse in exploration. These high taxes are having a far worse effect that Osborne realised.”
I also learned that under Hammond the MoD has “saved” a contingency pot of £8bn. If we used even half of that for a major social housing building programme across the country then that would create tens of thousands of jobs and much needed housing in acutely short areas. It would massively stimulate local economies suffering high economic deprivation and drive down sky high rents.
Roland Watson and Sam Coates in The Times today report that: “A group of Tory MPs will call for a new industrial strategy based on 25 plans, dubbed The Growth Factory… Separately a group of business leaders will call today for a radical overhaul of the tax system to cut rates and public spending dramatically as a way of stimulating growth.” (http://www.thetimes.co.uk/tto/news/politics/article3420805.ece) – So the Treasury isn’t short of unsolicited ideas from the government benches and business of what to do to grow.
The question I pose above is – where are the fresh, bold, radical new ideas from the Treasury? It seems that Osborne is stubbornly keeping to plan A whilst only tinkering around the edges. We need a radical growth strategy and at present I don’t believe Osborne has what it takes to deliver it.
Helen: “Lev – I think we already know the answer to that question.” – Agreed – at least Blair was ruthless enough to ditch his mates (Mandelson, Milburn, Blunkett) when they acted as a drag on government. Cameron doesn’t seem to have the same ruthless streak.
Are there figures available somewhere to support Frank Nelson’s point 6 about North Sea oil revenues? There would have been a change in the tax take from North Sea hydrocarbons, a change in the UK’s energy costs and sourcing, an effect on employment in Aberdeen and Hull perhaps and elsewhere, and an effect on the Balance of Payments, for starters.
Frank Nelson’s Point 8 is “David Cameron remains Britain’s single greatest hope”. Not much of a future then!
RD – I’m afraid Nelson hasn’t sourced his arguments. Maybe it was an off-the-record briefing from an official or lobbyist?
Even ‘Teflon Dave’, adept as he is at leaving others to ‘take the flak’ when policies he’s espoused go wrong, will find it difficult to ‘ditch’ Osborne. Cameron has made umpteen speeches supporting the ‘no alternative’ approach to the worsening economy and, even though Osborne’s handling of the last budget was inept beyond belief, Dave still supported him (sadly, so did Clegg and Alexander)
As far as the, “problems being outside government’s control” goes, that didn’t work for Labour and it’s wearing thin now. Osborne’s first budget was described by him, and Cameron, as “The budget for growth”; when growth failed to appear it was blamed on the weather, the royal wedding and Europe. We are now in ‘double-dip’ (the situation that both LibDems, precoalition, and Labour said would happen). Osborne has repeatedly stated that, “There is no Plan B”; so he, Cameron and the economy, are joined at the hip.
I completely agree with Lev on this:
” the way I see things is that the choice of government is stark. Osborne is getting in the way of a 2015 victory, and if Cameron cares more about him than the economic recovery, then the gov is rightly doomed.
I think the PM needs to look objectively and decide – does he want to win back the trust of the electorate and have a second term, or does he care more about his mate’s ego in number 11?
If it’s the latter, then there’s a real chance Ed Balls will be Chancellor in 2015 – something nobody in the coalition would want.
Cameron has a choice: swap Osborne with a Coalition MP, or let the electorate swap him with Ed Balls.”
The single best thing Cameron could do (irrespective of whether it is likely) would be to replace Osborne with a Lib Dem as Chancellor. Any Lib Dem would be an improvement. But especially an economically literate Lib Dem like Cable or Laws. The choice of an economically literate Chancellor above ties of personal friendship and across party lines at a time of national and international economic crisis would be a statesmanly move on his part, in keeping with some of his other decisions. The Chancellorship of Osborne is an Achilles heel in his leadership.
The departure of Hunt due to the Murdoch affair and the re-shuffling of May would be better still. Any of the re-shuffle options discussed previously in recent posts could be adopted. Norman Baker is well suited ot the Transport portfolio but the thought of him v Murdoch is a pleasing one …………………..
My 5 year old – coincidentally called George – is more financially competent than Mr Osborne. If I had a pet, they would also be more competent. Installing Osborne at Chancellor was for me the biggest drawback of the whole coalition.
Jason: “As far as the, “problems being outside government’s control” goes, that didn’t work for Labour and it’s wearing thin now. ” I agree – the government has run out of excuses and Cameron arguing “but he’s George, I can’t move him!” is placing friendship above the national interest.
It’s time Cameron looked beyond his navel and took the interests of country seriously. We need the best person in the most critical of government positions right now, and as far as I can see, Osborne isn’t it.
In my humble opinion, Cable, Clarke and Laws, despite any Tory backbench objection, have the right qualities to deliver.
Asking for someone’s head on a block isn’t usually a good way to get their friends’ support. And, in the context of collective cabinet responsibility, isn’t it a rather outdated idea that a single heroic individual can save the world? And Vince is there, remember, and can presumably argue directly and through Danny Alexander. Would it not be better to focus at the level of policies, and let the consequences for appointments sort themselves out?
Ain’t gonna happen. If Cameron replaced Osborne with Cable he wouldn’t remain Tory leader for very long. Even if he replaced him with Laws, who is probably more popular with Tory backbenchers than Ken Clarke, his leadership would be in serious jeopardy. If Osborne is ever replaced by Cameron it will be with an equally unimpressive Tory.
Lev: ‘Agreed – at least Blair was ruthless enough to ditch his mates (Mandelson, Milburn, Blunkett) when they acted as a drag on government. Cameron doesn’t seem to have the same ruthless streak.’
I think Blair’s hand was forced in all three cases (Mandelson and Blunkett – scandals; Milburn – left of his own accord, I think because Brown stopped him from reforming Health?), so IMO the only ruthless streak he had was to ignore everyone and go to war in Iraq!
I agree with you that Osborne is an incompetent Chancellor and that Vince or Laws would be much better at formulating an economic Plan B, (my preference is for Vince). I would love Matthew Oakeshott in at the Treasury aswell.
However, I think that Cameron and Osborne are joined at the hip re Tory strategy and both know where each others’ bodies are buried. Therefore, if Osborne doesn’t want to move, it’ll be hard to dislodge him without losing face.
If Cameron proves me wrong, so be it, but I won’t hold my breath!
This is a typically radical, well thought out argument from a good friend of mine.
Will it happen? My money is on no.
I repeat, although no-one seems to be listening, that the Chancellor could be economics’ answer to Einstein and he would still be facing no or very little growth in the economy.
Please, everyone, just listen. The government’s fiscal stance is only part of a very much bigger and (sadly very much darker and stormier) picture faced by the UK economy and there are many very strong forces sucking demand out of it at present, notably the state of underlying consumer finances bequeathed after a decade of debt-driven excess.
Although I am no great fan of Osborne, all this foaming at the mouth about how bad he is is just so wide of the mark.
@ Lev
NEVER take anything that Fraser Nelson says as true. He is just another right wing ideologue dancing in this case to the oil lobbyists’ tune. If he can’t provide any evidence, it isn’t true.
As for the notion that the MoD has £8bn just “sitting around” on its books waiting to be spent elsewhere, you have to be joking. The Treasury would be snapping the money back instantly.
Finally, any so-called “new ideas” from the right are invariably the same old neo-liberal corpses propped up in new garb – benefit cuts, third Heathrow runway, tax cuts for the rich, ripping up planning controls and labour legislation. Thank you but no thank you.
Face it, any extra money spent on infrastructure has (1) to be borrowed; or (2) cut from elsewhere; or (3) raised in taxes.
RD: In the piece above I have argued we need ” a new economic policy, or at least a substantial, credible growth plan to bolt onto it” and that if Osborne isn’t able to deliver this, “then I would argue the only way to rescue the government is for Cameron to remove him from the Treasury”. I’ve argued for a change in policy, and if Osborne isn’t able to deliver that, then only then would we need to remove him. My instinct is that he isn’t willing to radically alter his “plan A”, but I could be wrong.
AndrewR: I share your pessimism, but Cameron is facing serious problems as it is. A bold reshuffle with a radical new economic policy is a gamble, but Cameron is running out of options. If he doesn’t fix the economy (and I doubt Osborne can), Labour will win the next election. By gambling on a new chancellor with a radical growth strategy, at least Cameron has a chance for another term.
Helen & Louise: I share your pessimism over the chances of this happening, but if we don’t adopt a serious growth strategy and turn round the economy, it’s game over in 2015.
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