Economy

As compliments go, there's something slightly backhanded about Vince Cable's claim that, "Having worked with [the Tories] at close quarters, I've been pleasantly surprised that they're not as I'd envisaged them." And that's just one of the little nuggets embedded within his interview with Decca Aitkenhead this morning. The Business Secretary touches on everything from what he thinks of George Osborne ("he's clearly able") to his own ability to craft a joke ("I'm actually quite good at one-liners"). If you want a sense of where Cable is at, then Aitkenhead's piece is worth a quick read.

David Cameron's neatly-constructed article in the Sunday Times (£) perfectly typifies the balancing act he is performing ahead of this autumn's Spending Review. The Prime Minister has to sound tough on the deficit because, thanks to the fiscal brinksmanship of one G. Brown, that's the job he has been appointed to do. But he doesn't want to come across as sadistic or gloomy, lest it alienate voters and coalition partners alike. The edges of the cuts need to be rounded off, made more presentable. To that end, Cameron suggests first that the cuts aren't ideological. There are, he says, items of spending that he'd like to keep – but wider budget constraints mean that he can't.

Few MPs have made quite so many waves recenty as last year's Spectator backbencher of the year, Andrew Tyrie. Under his chairmanship, the Treasury Select Committee seems to have gained a new vitality and edge. And it has certainly accumulated more powers, with the ability to veto the government's appointments to, and dismissals from, the Office for Budget Responsibility. As he put it himself in an interview with the Independent last week, "The fight back by Parliament is beginning now." Just how aggressively he intends to prosecute that fight back is suggested by his comments in the Times (£) today.

In 1690, Thomas ‘Diamond’ Pitt led an opulent delegation of the East India Company’s Madras factors, bearing their wares, to the Nawab of the Carnatic, the richest man in southern India, with the intention of buying him out. They succeeded, but Pitt had nothing on David Cameron’s delegation.  Six cabinet ministers, more than 10 CEOs and God knows how many diplomats are accompanying the Prime Minister. The only person missing is Nick – but that sort of thing is frowned upon by Delhi’s Edwardianly genteel political classes. As I wrote yesterday, pageantry titillates commercial diplomacy, and Cameron is staking everything on this mission.

Tim Montgomerie observes that the FCO now stands for Foreign and Commerce Office. David Cameron is determined to conduct British foreign policy in our economic interest. And, in that spirit, he is off to charm India in the hope of gaining access to that enormous emerging market – last week’s magazine has exhaustive coverage of the trip. Tim also claims that the Foreign Office won’t like this ‘redirection of their mission’. I’m not so sure. From what I hear, the Foreign Office is loving it; it’s just like old times. The FO was marginalised under the previous government; Labour cut staff in embassies and consulates around the globe.

Alistair Darling has been on Sky News doing a lap of honour for today’s GDP growth figures. “Vindicates everything we did,” he said - his narrative being that the extra debt did indeed boost the economy and produced 1.1 percent growth in this quarter. This chimes with what I wrote in the Daily Telegraph a few weeks ago: that the economy is better, not worse, than the Tories thought. Even if, or should I say when, the ONS say the figure was wrong and needs to be revised downwards it will still mean tax revenue churning in at a far faster rate than thought. This will give Osborne a get-out clause if he wants to go softer on the cuts, or the tax rises (any adjustment would have to be consistent with his 80/20 split between cuts and taxes).

George Osborne has talked of simplifying the tax system for years, and today he launched the OTS, The Office for Tax Simplification. The OTS will be chaired by Michael Jack, s Treasury minister in the Major government, and John Whiting of PWC and Chartered Institute of Taxation. The OTS looks suspiciously like a quango, but some public bodies are necessary and welcome. The tax system is unintelligible, and, needless to say, Gordon Brown complicated it further with morass of stealth taxes, tax credits and new loopholes opened more by chance than design. This has particularly affected small businesses and the OTS will identify salient businesses taxes and recommend their simplification. That can only assist hard-pressed small businesses.

Most of Tim Yeo’s proselytising on climate change must be resisted. He calls for a dramatic reduction in carbon emissions in the short-term, which would paralyse Britain’s already geriatric economic competitiveness. He also endorses a policy that would push consumer energy prices to punitive levels in the hope that their behaviour is moderated. And he is adamant that David Cameron’s Husky photo-op was the last word in political positioning. But, his central point, one shared with John Redwood and Peter Lilley, is unanswerable: ‘Working towards a low carbon economy is not a “luxury”; it is essential to our future prosperity.

Given that the Labour leadership campaign is so dull, we should thank Chuka Umunna for cheering us up with his comedy economic analysis. Now on the Treasury Select Committee, he has regaled us with an ‘Open letter to George Osborne' where he makes many entertaining points. It’s worth looking at, because it sums up a few errors swirling around the Labour benches.   1)   During our exchange, you insisted your budget was "progressive"… you stood by your decision to apply a 10 percent cut to the housing benefit of those who have been on JSA for more than 12 months. Osborne has to use words like “progressive" to assuage the LibDems, but by their definition he is right.