If Labour can’t take on Osborne and win, he’ll be PM in 2020

George Osborne is a smart imitator. A shadow Chancellor in his early thirties and a Chancellor before he was 40, Osborne looked to Geoffrey Howe, Nigel Lawson, Gordon Brown and others as models to follow. Now a mighty Chancellor in his second term, he can imitate himself.

In the opening weeks of this parliament Osborne is the dominant figure, as he was in 2010. Again he seeks to define the political and economic terms of the national debate immediately, planning how to win the next election within weeks of the last. Personally the stakes are even higher now. In 2020 he may be prime minister. There is heightened interest in tomorrow’s Prime Minister’s Questions when he stands in for David Cameron. Is this a sign of things to come?

Osborne opened his second term as Chancellor with a historic statement, more historic than the one he outlined at the start of the previous parliament. Last week he declared he would legally compel governments to run a surplus in “normal” times. The legislation to bring about this vision will be joined by a new law that will make it illegal for him to raise certain taxes.

The political calculations are obvious. Osborne is nothing if not a transparent strategist, even if his opponents are repeatedly outwitted by what they see in front of their eyes. Within days of becoming Chancellor in 2010, Osborne had established – with the help of a compliant media – the fact that the previous Labour government was responsible for the 2008 crash, having run a historically small deficit at the time. His objective, indeed his plan, was to wipe out the deficit in a single parliament.

Although he failed to meet his target by a comically wide margin, he triumphantly wrong-footed Labour. For all their vast experience in economic policy, Ed Miliband and Ed Balls never succeeded in challenging this wholly misleading narrative about the causes of the crash. It is a widely held view in No 10 and the Treasury that last month’s election was won within weeks of the 2010 result when Osborne made the deficit and Labour’s culpability his twin themes.

This time Osborne aims higher. Will Labour support him in his surplus law? If not, he will argue, again with a compliant media, that Labour has learnt nothing and still cannot be trusted to run the economy.

Once again the substance of Osborne’s policy objectives is frightening. After 2010 the fearful consequences were not fully realised because in policy terms, though not in his language, he adopted a second, less rigid, more sensible plan, half-way through the parliament. This time he is in effect declaring that although he could borrow to invest in the UK’s creaking infrastructure, and at low interest rates, he will not do so.

The infrastructure can creak. Individuals and businesses can borrow, running up huge debts, but the government will not do so. There are houses to be built, railways to be modernised and more improvements to congested roads urgently required. Forget all that. The government must sit passively on top of a surplus or risk breaking the law.

This objective is so freakish that Osborne needs, and has already given himself, some wriggle room. The economy must be in surplus in “good times”, a vague phrase to be fleshed out by the Office of Budget Responsibility, one of its more complex challenges. Just as Brown used to do, Osborne establishes rules with escape routes. Already I can hear him say that because of the eurozone crisis and in spite of the UK’s triumphant economy the times are not “good” enough to require a surplus. But while other governments will borrow willingly to invest in capital spending, creating stronger economies, the poor old UK will stagger on as the Chancellor turns his back on ready money at low interest rates, a bargain for those seeking to invest in long-term projects.

Did I just write the word “bargain” in relation to borrowing? I seem to have done. Such are Osborne’s mesmerising powers his opponents do not even dare to develop a populist language to compete with his. Instead of agonising about Tony Blair, Labour’s senior figures should learn from what Brown did as shadow Chancellor from 1992, a post he took up after Labour had been defeated again because it was not trusted to run the economy.

With a determined, stubborn brilliance that made him internally unpopular, Brown turned the debate over “tax and spend” on its head, condemning “Tory tax rises”, arguing against “high taxes” while advocating “fair taxes” and putting the case relentlessly for “prudence”. Famously, he was being prudent for a purpose. That purpose was social democratic, but many noted only the prudence and felt Brown had indeed “learnt the lessons” of Labour’s defeats, the great cliché applied to losers.

Osborne’s fearful opponents must respond in a similar manner. Instead of waffling nervously about “supporting” surpluses, they must turn his arguments on their head. Wait for the CBI’s submission before the spending review, when it will call, justifiably, for big increases in investment in transport infrastructure (it always does). Argue that Osborne’s surplus fetish makes him anti-business. Cite Nigel Lawson and others on the right when opposing laws banning tax rises. Although an admirer of Osborne, Lawson warned the measure was unwise when chancellors could not predict the state of future public finances.

More widely, make the point every hour of every day that it is fiscally irresponsible to rule out borrowing at low rates for long-term investments. Form alliances with business and others to say that competitor countries will stride ahead of the tottering UK. Otherwise Osborne will win the argument decisively by the end of the year and win the election in 2020, this time as Prime Minister.