George Osborne and Ken Clarke are wandering around the Rolls-Royce factory in
Derby, wearing safety goggles and peering into aircraft engines. While
Father Ken talks about widgets with the middle-aged managers, Boy George
happily discusses football with the apprentices.
Mr Osborne, the Shadow Chancellor, has been an apprentice to Douglas Hogg,
John Major and William Hague. Now, at 38, he could be about to graduate to
managing the country’s finances. With a deficit of £178 billion to confront,
it must be a daunting prospect. But he thinks that he could have done a
better job than Alistair Darling with this week’s Pre-Budget Report. “The
overriding objective was to produce a credible plan to deal with the debt,
to set out exactly how we were going to live within our means,” he says.
“That is the key to restoring confidence in the economy and the tragedy is,
Alistair Darling failed to do it.”
Labour has promised to halve the deficit in four years. Mr Osborne thinks that
that is nowhere near fast enough. “I share the view of the Governor of the
Bank of England that we need to eliminate a large part of the national
deficit in the next Parliament,” he says. “It’s a serious dereliction of
duty by Gordon Brown to insist on more spending and more taxation, not to
deal with the deficit but to position himself ahead of election.”
The credit rating agencies are, he notes, already looking at Britain’s
triple-A status. “Unless Labour come up with a more credible plan . . . they
are going to continue to run risks with the credit rating. The consequences
of a downgrade are that your interest rates go up, mortgage rates go up,
unemployment goes up and families are squeezed.”
Yesterday’s claims about rows over the Pre-Budget Report are, he thinks, proof
that he is right. “You now have the publicly stated views of the Governor,
the privately expressed views of Treasury and the Conservative Party, all
saying the same thing that we need to move faster and you have the Prime
Minister and his sidekick Ed Balls standing in the way of what is required
to get the country back on track. If Gordon Brown overruled the advice of
his Treasury and put his own dividing lines ahead of the country, then
people will see that as a complete failure to live up to obligations as
national leader.”
A Conservative government would, he says, put spending cuts before tax rises.
“I am quite clear that the bulk of this has to come from curbing public
spending. The Government overspent and overborrowed, it’s not that we were
undertaxed.”
Tory frontbenchers have been told to find substantial savings across the
board. If Mr Osborne becomes Chancellor he intends to set up a “star
chamber”, including Cabinet ministers without spending departments, to
decide where the axe should fall. Ministers would have to pitch to their
colleagues for cash. “The Prime Minister and the Chancellor just hand out
spending decisions. There is no collective bargaining. That’s demeaning for
government,” he says. “What you need at a time of economic challenge is
collective political will to deal with it.”
Would he like to save money by scrapping Trident? “We need to look across the
board at getting value for money and that includes defence projects,” he
says. The BBC should get into the real world. “The salaries need to reflect
the economic conditions. As and when they find savings, I would want that
money to go back to licence-fee payers.”
Crossrail is less of a target. “I have a French view that these grands
projets, when it comes to transport spending, are worth it. The
[north-south] high-speed rail link is also enormously expensive, but I’d
like to see it built. These big infrastructure projects will power the
future.” What about the third runway at Heathrow? “It’s not going to happen.”
Mr Osborne has, however, made some spending commitments of his own. His pledge
to abolish inheritance tax for all but millionaires saw off a general
election two years ago, but now Labour is using it to claim that the Tories
are on the side of the rich. Can he really afford to keep the promise?
“People liked it because it was aspirational. It’s now clear that if you
want to get on in life, save for your retirement and leave something for
your children then the Labour Party is not for you. But it won’t be in the
first couple of years.”
More urgent, he says, is avoiding the introduction of the national insurance
rise announced by the Chancellor this week and due to be implemented in two
years. “The national insurance rise is a tax on jobs over £14,000, a tax on
incomes over £20,000. That is middle England, the aspirational classes who
want to get on in life, who are out working for their families. The No 1
priority is to try to avoid bringing it in. That is something you can judge
us on between now and 2011.” Although he won’t give a pledge, he says: “I
will do everything I can to avoid that tax rise.”
Mr Osborne is not, however, going to fall into the trap of promising to
abolish the 50p top rate of tax. “I don’t think higher marginal rates are
economically effective and I think it will, in the long term, have a
damaging effect in the signals it sends, but I’m not promising to get rid of
it. You couldn’t contemplate abolishing the 50p rate while at the same time
putting up taxes on lower-income people or, indeed, asking people in the
public sector to accept a pay freeze.”
He takes a similarly pragmatic view of taxing bank bonuses. “We looked at a
windfall tax. The money the taxpayers put into banking institutions was to
enable them to rebuild their balance sheets and start lending — it was not
to support bonuses.”
What about the tax break for marriage? He is instinctively more liberal than
David Cameron and is said to have qualms about the pledge. “I wouldn’t pass
judgment on anyone as a parent. There’s nothing wrong with cohabiting. I’m
not trying to preach.”
But he insists that he wants to deal with a “broken society” as well as a
broken economy. “What we’ve got to do as a country is deal with the bills of
social failure. Those are things like poverty, inequality, family breakdown.
It’s not a question of morality it’s a question of good public policy.
Marriage is beneficial to society.”
In his conference speech, Mr Cameron said the Tories were now the party of the
poor. Does Mr Osborne want to narrow the gap between the haves and
have-nots? “I don’t subscribe to the Peter Mandelson view that you should be
entirely indifferent about the gap between rich and poor,” he replies. “But
the key Conservative insight is that it’s not just about income, it’s also
about aspiration and opportunity.”
His upbringing was more urban than the Tory leader’s but it was also
privileged. Educated at St Paul’s and Oxford, he admits that he cringes
every time he sees the photograph of himself dressed in white tie and tails
for the Bullingdon Club. “Of course sometimes pictures of yourself when
you’re 19 are embarrassing, but you can’t go back and rewrite your past.”
He does, however, regret joining Lord Mandelson on a Russian oligarch’s yacht.
“My plan is that come next May he’ll have a lot more time to spend on
shooting parties and yachts.”
And he thinks that Labour is making a massive error by waging class war
against the Tories. “Alistair Darling went to a private school. Harriet
Harman went to the sister school of my school, so I’m not sure how far this
attack is going to get them. They are lurching to the left, after all those
years spent hauling themselves on to centre ground. It’s like a retreating
army, with a policy of scorch and burn.”
It was Mr Osborne and Mr Cameron who persuaded the Tory party to move on to
the centre ground. They remain close, and there is talk that, if elected,
they could create a British version of the West Wing with a shared office
complex in Downing Street.
Some Conservatives resent the alliance — but Mr Osborne insists that they are
not part of a wealthy West London clique. “It’s not the Dave and George
show. We’ve got Ken Clarke, William Hague, Eric Pickles — they are all
part of the top team.
“Conservative Party policy is not all settled in salons in Notting Hill.”
CURRICULUM VITAE
Age 38
Educated St Paul’s School and Magdalen College, Oxford
Career 1994, Conservative research department, 1994; special adviser at
Ministry of Agriculture, 1994-97; speechwriter and political adviser to
William Hague, 1997-2001; elected MP for Tatton, 2001; Shadow Chief
Secretary to the Treasury, 2004; Shadow Chancellor, 2005
Family Married to the author Frances Osborne. They have two children,
Luke and Liberty
QUICK FIRE
Black Eyed Peas or Red Hot Chili Peppers? Black Eyed Peas
Charlie or Lola? Lola, of course
Anthony Trollope or Jane Austen? Jane Austen
The X Factor or Strictly Come Dancing? Both. My children and I have
voted for Olly in the past
Dinner parties or drinks parties? Kitchen table suppers
Christmas pudding or cake? Christmas pudding
Pretty Woman or Octopussy? Octopussy
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