George osborne

Ministers aren't just getting ready for March's Budget: they're also trying to work out a 'budget setting process' for 2015/16. The content of that slimmed-down departmental spending review formed the discussion at today's Cabinet meeting, with George Osborne and Danny Alexander leading. It's not clear when this spending review will be announced, other than that it will take place in the first half of 2013. But the discussion centred around that old chestnut, the 'difficult decisions'. The Prime Minister's official spokesman said: 'They set out that there was going to be a budget setting process for 15/16 in the first half of this year that the treasury will set out more on that process in due course.

Another week, another former Tory cabinet minister working a room. Last week I brought you news of Liam Fox entertaining the great and good of the Tory party. Now I hear that Andrew Mitchell has been making an extra special effort to be nice to absolutely everyone. The former chief whip was being very friendly to the commentariat at a drinks party at a recently opened hotel in Westminster. He shunned sceptical news journalists, but made determined passes at those with influential column inches. Whatever could he want them to say? George Osborne was at the same private party, pressing flesh like a coiffured madam in a brothel.

An impressive turnout in the Churchill Room of the Carlton Club last night for Liam Fox’s New Year drinks. My eyes in the room reports that a smiling Liam claimed he had ‘invited 180 people’ and 162 had turned up. Interestingly, the big beasts came out for the former Defence Secretary, who is said to be eyeing a political comeback. Chancellor George Osborne stopped by, as did Party Chairman Grant Shapps, and Chris Grayling joined the party together with ‘a smattering of Whips’. Though he was left high and dry by colleagues during the scandal that ended his frontbench career in October 2011, his friends were back for the free bar and mini fish and chips.

The battle-lines over the Welfare Benefits Up-rating Bill — which faces its second reading in the Commons this afternoon — have been drawn. Labour has tied its opposition to the Resolution Foundation's analysis showing that the bulk of the policy will hit working families. As Ed Balls put it last week, 'Two-thirds of people who will be hit by David Cameron and George Osborne’s real terms cuts to tax credits and benefits are in work.' They've labelled the move a 'strivers' tax', a continuation of the divisive rhetoric from both them and the Conservatives that seeks to pit 'hardworking families' against 'people who won't work' (as a recent Tory ad put it).

'We have reduced the deficit by a quarter in just two years' — the coalition's mid-term review. True. But when Gordon Brown proposed to do precisely the same in Labour's last budget, George Osborne criticised him for not moving fast enough and endangering the economy. The ONS shows that public sector net borrowing was down 24 per cent from 2009-10 to 2011-12. But George Osborne cannot claim to have stuck to his deficit reduction plan. That has been torn up. The below graph shows Brown's plan (in the middle), Osborne's original plan (at the bottom) and his current plan (at the top): As you can see, Osborne is now cutting the deficit more slowly than Alistair Darling proposed in 2010. Darling planned to cut the deficit by 33.9 per cent by this year, compared to the 24.

Have you personally suffered from George Osborne's spending cuts? Your answer depends largely on where you live. I’ve witnessed both over the past few days. This Christmas, I’m enjoying my first prolonged stay away from London in some time and the impact of austerity in the North East has really struck me. First to note is spending cuts in local government. In this part of the world, the public sector is a vast beast. The Guardian reported in 2010 34 per cent of the total employment in Newcastle upon Tyne is in the public sector, one of the top 15 councils in the country. The authorities of Sunderland, Northumberland, North Tyneside and Darlington all have above-national average employment in the public sector.

By this stage in the Coalition, everyone would have expected at least one major bust-up between George Osborne and Vince Cable. But his evidence to today's Treasury Select Committee suggested that the Chancellor isn't so much involved in a stand-off with the Business Secretary as he is taking on his point of view. It was significant how many times Osborne had to explain a softening in what were previously hard-and-fast economic rules, and hard-and-fast policies. His refusal to rule out replacing the Bank of England's inflation target with a growth target is the most significant sign of a coalescing between the two men.

Britain will lose its AAA rating within 18 months because George Osborne 'no longer has credible plans to put the debt/GDP ratio on a stable or declining path' according to Citi. Its verdict is worth reading in full (pdf) and is important because it adds weight to the idea that — as a result of Osborne’s lack of progress on the deficit — 2013 will be the year of the British downgrade. What did it for Michael Saunders, the Citi analyst, was seeing Osborne take what James Forsyth refers to in this week’s political column as the St Augustine approach to deficit reduction: 'Lord, let me balance the books but not yet.' This eats away at Osborne's credibility.

In addition to his effective attack on Labour's welfare policy, George Osborne used the Autumn Statement to take on Ed Miliband on another key electoral battleground. Over the past few months, the Labour leader has been trying to convince voters that he has the solution to their cost of living woes. His biggest offer so far has been the Living Wage, which sounds lovely to voters because it involves them being paid more money, but actually doesn't work (something Miliband is clearly sufficiently aware of to stop him pledging to make a living wage mandatory). The coalition already had its own offer in the form of the rise in the personal tax allowance announced in March's budget, but that got little airtime as everyone was upset about pasties and caravans.

From our sub-arctic chancellor this was a rip-roaring performance. Using all the arts perfected by Gordon Brown, he dazzled the house with his Autumn Statement. A chancellor should never be entirely candid. His job is to blame others for failure, to take credit for all successes, (no matter what their true origin), to engender confidence in the future and to attract cautious applause. George Osborne did all this. The bad news came out first. There were sharp intakes of breath as he revealed that the economy had shrunk by 6.9 per cent during the credit crunch. And he offered a personal confession which, in accordance with tradition, was masked in flowery statistical language.