Osborne Finds A Line

George Osborne's piece in the Evening Standard today sets just the right tone for the Tories with respect to the current banking crisis. They musn't be worried by being phased out of the news in the short term and the apparent recovery of Gordon Brown. They are playing the long term game and whatever apparent bounce Gordon Brown does receive, he will not be forgiven by the public come election time.

There is a chance, of course, that the election may come sooner rather than later now. Gordon Brown may take the opportunity, once the markets settle, to call the election on the basis of his handling of the economic crisis and to take advantage of any bounce in the polls he does get.  If Labour's approach remains 'this is no time for a novice', then this may be their most opportune time for an election.  But Labour will still lose. Handling the crisis now, and who the public wants to handle the economy for the next five years is a very different matter.  It will be seen, quite rightly, as an opportunistic move and the price will be paid for that.

But the approach to adopt now by the Conservatives doesn't matter on when there might be an election.  The approach adopted by Osborne in his piece is spot on.  It is a fivefold approach.  First, be seen to show support for the measures the Government is putting in place to deal with the crisis. Whether they agree with the proposals or not is irrelevent, they are the opposition and don't get to make the decisions. All they can do is show support.  Unity at a time of national crisis. He sets this out at the beginning of the article:

So we had to rescue the banks to rescue the whole economy. That is why David Cameron made the right judgment when he said this kind of recapitalisation might be necessary a week ago and why he showed the right leadership when he said the Conservatives would work constructively with other political parties on solving the immediate crisis.

The second part of the approach is to hold the Government to account for it's actions. Make clear that the crisis could and should have been avoided and that Brown and Darling have been reactive rather than proactive in dealing with it.

For we should never, ever have reached this point. There was nothing inevitable about it. Our banks could and should have behaved more responsibly and taken fewer risks. Indeed, those that did, like HSBC, have been rewarded for their prudence by emerging relatively unscathed. Our regulators could and should have spotted the risky bets many of the banks were taking and stopped them.

That's what some bank regulators around the world did, such as in Spain, but not here in Britain. And our government could and should have used the good years of global growth to set aside money for a rainy day. That's what many governments did by building up budget surpluses, such as they did in Australia and Sweden; but in Britain, Gordon Brown racked up the biggest budget deficit in the western world.

The next part is to give yourself a get-out clause for your support of the Government's rescue package in case it doesn't work. This was the mistake the Conservative's made with their support for the Iraq war which. It made it all too easy for the Government to mock their criticisms at a later date. Michael Howard should have said that in an advanced  democracy, on a matter as important as going to war it was the duty and responsibility of the Opposition to accept the word of the Government with resect to the Intelligence it has, and to support it fully. But that if the Government was found to have lied and misled us then it would be held to account in the strongest possible terms.  It would have given them such a strong moral case to force the resignation of Tony Blair earlier. But Osborne does provide the get-out clause in his article.

Let us sincerely hope that the billions of pounds of public funds we are putting at risk today do the job, bring some semblance of calm to the financial markets and start the credit flowing again through the veins of the economy. That shouldn't prevent us from seeing this for what it is: the final, sorry chapter of the Age of Irresponsibility. The moment when Gordon Brown was finally forced to confront the consequences of building a 10-year economic boom on a mountain of debt.

The forth element of the approach is to make sure that the Conservatives are seem to be coming up with ideas and proposals of their own. It shows that they are a government in waiting and if elected can deal with such a crisis effectively. It also has the added bonus that if the Government do adopt any of the proposals, they can claim all credit.  Even if, in reality, such proposals would have been looked at and considered by the Treasury for a long while now.  Again, Osborne does just that.

So what next? In the short term, we taxpayers must insist on certain conditions in return for our money. I will look carefully at the small print of the deals signed with the banks over the weekend. I want to make sure that everything is being done to keep the risk to the taxpayer to the minimum possible. That means asking existing shareholders first to stump up the cash. It means ensuring that the taxpayer benefits if the value of the banks increase as a result of this deal.

I will also want to know why the plan changed over recent days so that the Government is now potentially taking majority control of some of the biggest banks like Royal Bank of Scotland, and could put representatives on the board. Just five days ago, Mr Brown and Alistair Darling were telling us that appointments to the board were "entirely a matter for the bank". What changed?

In the medium term, we need to overhaul the banking practices and regulatory system that left us in this mess. When Gordon Brown scrapped the old system and replaced it 10 years ago with the new Financial Services Authority, he also removed the power of the Bank of England to keep an eye on overall levels of debt in the economy. I think that was a huge mistake. We Conservatives want to give that responsibility back to the Bank of England, so someone has the power to call time when bank borrowing gets too high.

Of course, this won't do anything to help families who are struggling now to pay their bills or who are worrying about their jobs. So the Government should adopt our plans to support people in the economic slowdown instead of leaving them to cope on their own. Conservative plans to freeze council tax, abandon the new car tax, keep businesses facing bankruptcy afloat and help low-income families with heating bills could all be put in place in the coming months.

Finally, in the long term, we all have to learn some profound lessons about the way free markets work. Laissez faire is dead. But let us not replace it with suffocating state control, for we know that it, too, leads to economic ruin. When I hear Gordon Brown claim that all the problems we face "came from America" and the expensive solutions devised around the world were "made in Britain", it makes me wonder whether he is prepared to learn anything from his own mistakes.

It was in Britain not America where families borrowed more than any in the world, and where we became so dependent on the success of financial services. It was in Britain not America that a government based its entire economic policy on the delusional belief that boom and bust had been abolished.

Lastly, and very importantly, highlight the fact that Gordon Brown seems to be enjoying managing this crisis. It will not go down well with the public if he is seen to smile and crow through he crisis. If he is seen to be benefitting personally from the crisis, than his days will be numbered.

But to regard today as a triumph, as some in government seem to do, is bizarre. And it misjudges the public mood. For this is no triumph. It is a necessary but desperate last-ditch attempt to prevent catastrophe.

George Osborne has shown himself to be adept at knowing exactly how to play out the crisis. He has gained in public profile while dealing extremely well with difficult questions in interviews. Without doubt he wants to be seen as a feasible Chancellor of the Exchequer. He wants to be seen to be intelligent, capable and dour. Remind you of anybody...