17 Aug 2010

Osborne’s missionary zeal for cuts

For ten minutes the wheels of deficit reduction paused. The Channel 4 News camera crew had set up in the chancellor’s office, I was on my way at 4.30, and the chancellor turned up early to find his office occupied by cables (no, not Vince).

From this office in the coming weeks George Osborne will take decisions that will determine for the next half decade the fate of hundreds of thousands of jobs, the UK economy and even our place in the world. Forget the 100 days since the coalition launched. It’s the ten weeks till the Spending Review that really matter.

It was Channel 4 News’s first interview with the chancellor, and it must be said that he is rather comfortable in his newish position. The chancellor has missionary zeal for his deficit reduction programme and is utterly convinced that supersizing Labour’s cuts plans is the right thing. Today though, perhaps with due deference to the stand-in prime minister, George Osborne was emphasising the fairness, progressivity, and the contribution deficit reduction will make to growth.

“It’s an absolute fundamental belief of mine that there is nothing progressive about losing control of the public finances,” said George Osborne, having earlier today invoked the former Labour Treasury minister Lord Myners’ similar musings.

First in the way is a protracted battle over the Ministry of Defence budget. Nick Clegg mentioned yesterday that he could understand why someone facing a housing benefit cut might have difficulties with the funding going to Trident.

“People should get used to grown up adult government, unlike the soap opera under Tony Blair and Gordon Brown. When there are differences in opinion they are honestly articulated,” the chancellor told me, though he didn’t seem to endorse Trident warmly.

I asked him about the suggestion that the whole capital cost of Trident was to come off the MoD budget, effectively a further cut.

“I’m very clear that the replacement of the nuclear deterrent – the Trident renewal programme – has to come from the Ministry of Defence’s budget. And they [the MoD] know that.”

It, particularly the last four words, seemed something of a stinging rebuke to the defence secretary’s suggestion, made on Friday that: “How [the Trident] budget is funded is a conversation that is constantly ongoing with the Treasury”.

The really important thing here is that the battle over defence funding is simply the most public of a series of private conversations being had right now.

Cathy Newman detailed the DWP-Treasury spat over the winter fuel allowance today.

Take transport, which faces cuts double that of the MoD. Today’s RPI inflation figure of 4.8% could lead to price rises on some commuter lines of 10%, I am reliably informed by the train industry.

Then think universities, culture, justice etc etc.

More on Osborne’s economic assessment and fairness agenda tomorrow. Let me know what you think of the interview.