Upon taking office, David Cameron promised himself that he would resist the temptation to sack ministers in response to every scandal. He would have a major reshuffle halfway through his government and another one before the election. That would be all. He is now understood to be weeks away from deciding who should go where, and Labour-supporting newspapers are commissioning opinion polls to help the Prime Minister in his deliberations. The main verdict: sack George Osborne. Some Tory MPs agree. If there is to be a new Chancellor, now would be the time, because any new economic strategy would take three years to have much effect.
This argument is as misleading as it is simplistic. To remove a Chancellor is a radical step for any British government, and one that should only be made if it serves a clear purpose. In this case, there is no such clear purpose. Sacking Osborne would delight the Labour party, who have been outfoxed by him on several occasions. It would force Cameron to admit that the most important appointment of his government — that of Chancellor — was a wrong one. It would send out a message of panic to the markets, which are nervous enough about Britain’s debt as it is. And there is not the slightest evidence that any replacement would be any better.
The problem facing the Conservatives is not one of personnel, but of ideas. Osborne is sitting in the Treasury surrounded by the baggage of the Gordon Brown years. Labour’s 2010 budget proposed a five-year plan cutting departmental spending by just over 2 per cent a year. Osborne hardened this only slightly, to just under 3 per cent. But the overall plan (slow-motion cuts, eased through by the world’s largest money-printing programme) was never going to revive the economy, because there was nothing to promote growth. Austerity is not enough: radical steps are needed to encourage people to hire, work, invest or start a company.
Osborne still has many levers left to pull. His most obvious option is to stimulate the economy by cutting tax for the low-paid. Under Osborne, the number of foreign-born workers has been rising at twice the rate as British-born workers, suggesting an urgent need to improve incentives to work. One example is to introduce German-style ‘mini jobs’ that would allow people to earn £400 tax-free, even from a second job, with minimal cost to the employer — a small but valuable example of supply-side thinking. That the Treasury is now considering this very proposal is a sign that Osborne is more adaptable than his enemies suggest. The past two years have shown that countries which try to borrow their way out of the debt crisis have failed, while those which have cut taxes to encourage growth have succeeded. Only the Conservatives realise this. The Labour party is captured by Ed Balls’s peculiar 1970s economics. The Liberal Democrats now want to tax the rich more, failing to understand that countries compete for people and Britain needs to lure job creators.
Osborne has many demands being made of him, from his role as election co-ordinator to being used as a general government troubleshooter. This burden ought to be lifted, and the Chancellor left to devote his full attention to schemes that can encourage recovery. There are not many other government appointments which would make a difference: as long as Michael Gove stays in education and Iain Duncan Smith in welfare this will continue to be a reforming government. Britain does not need a new Chancellor. It just needs a more focused George Osborne. Hopefully, after the reshuffle, that is what we will get.
Red tape revolution
Governments are not usually slow to boast about their achievements, but one real advance has only come to light thanks to written questions from the Conservative backbencher Elizabeth Truss. The Department for Education has revealed that the number of pages of health and safety guidance issued to schools has fallen from 150 to eight. It would be easy to underestimate the effect of such a reform on productivity. Excessive rules do not just take up time; they sap initiative. They do not make anyone safer. Give head teachers an eight-page document and they will read it; send 150 pages and the document is likely to be consigned to a shelf.
Excessive rules and regulations are often portrayed as the work of deranged bureaucrats, but many of them are not insane at all: they are the result of scheming vested interests. Behind every regulation demanding that business be conducted in a certain way is a lobbyist for a company that can help with the job. Labour was a soft touch for such lobbying. It allowed large chains of care homes more or less to draft the Care Standards Act of 2000, for example, which put many of their smaller rivals out of business. If the government has started to bear down on unnecessary legislation, it need not be shy about it. On the contrary, it should be proud that of all the governments over the years who have promised a ‘bonfire of red tape’, this is one which has actually started to deliver.
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