George Osborne urges no change of tack on austerity as senior Tories call for rethink
George Osborne has urged Theresa May not to scrap his austerity agenda as senior Tories called for a rethink on public spending in the wake of the election.
The Evening Standard’s editorial declared that diverting from the Conservative approach to fiscal policy could lead to a loss of economic credibility and risk Britain’s recovery post the 2008 financial crisis.
The intervention came after Cabinet minister Michael Gove this morning hinted that the Tories would review their economic policies after the public expressed “legitimate concerns” about the funding of services.
Former minister Gavin Barwell, who lost his seat last Thursday, reflected before being appointed Mrs May’s new chief of staff that anger over Brexit and austerity cost the Tories votes at the election.
He was joined by Dominic Grieve, another former minister, who called on the Government to consider whether “the limits of reasonableness” have been reached by the electorate in accepting fiscal prudence.
'LOSS OF ECONOMIC CREDIBILITY'
But the Evening Standard, which Mr Osborne edits, today warned against backtracking on a key plank of the Tories’ economic platform.
“At a time like this it is more important than ever that the Government provides the anchor of a long-term economic approach,” the editorial read.
“This would help reassure investors and job creators otherwise deterred by the uncertainty of whether our country will retain its unfettered access to our largest export markets.
“There are worrying signs that Mrs May is considering abandoning that long-term approach. Talk of ‘an end to austerity’ is code for ‘we’re going to allow the deficit to rise, and we don’t care’.
“That would risk repeating the mistakes of the past that led Britain to the point where there was, in the words of that Treasury letter, ‘no money left’.”
It concluded: “Spending plans don’t have to be set in stone but the Government would be advised to maintain the fiscal responsibility that has underpinned Britain’s economic success these last seven years.
“The Government already has enough on its plate. A loss of economic credibility would make those problems a whole lot worse.”
Speaking to the BBC’s Daily Politics Tory MP Mr Grieve said that while austerity was a “necessity” resulting from the financial crash in 2008, perhaps now it is time for the Government to rethink its approach.
“The difficulty we now have is that the events of last year create instability and anxiety about the future, and if that becomes a state of permanence people then start asking ‘I’m quite prepared to make sacrifices if I think it’s leading to an outcome which is going to be good for me and my family’,” he explained.
“But if it becomes a state of semi-permanence, and you can’t show the direction of travel in which you’re going, then it’s going to become much harder to persuade people of that.”
He warned against “chucking billions of pounds at public services” and expressed concern about Labour leader Jeremy Corbyn’s proposals, but added:
“What the Prime Minister and the Chancellor need to do, and I think they recognise this, is that one has to understand the extent to which the austerity that has been and is seen as a necessity – whether it’s gone on too long is another matter – the question is has the limits of reasonableness been reached with the electorate.”
He added: “If respectable government cannot offer a credible vision, the fantasists will soon creep into the picture.”
Former Tory leader Michael Howard added: “It’s entirely understandable, as Dominic has said and as Gavin Barwell has said that people should be increasingly frustrated by austerity. We all completely understand that...
“On the other hand, as a country, we have to try to get to a situation in which we are living within our means. We are not living within our means at the moment, we haven’t been living within our means for quite a long time and at some point we have to try and get back to our situation.”