June 25, 2010 11:14 pm

Man in the News: George Osborne

Chancellor’s reputation is rising, writes George Parker
George Osborne

In the course of seven momentous days, George Osborne has redrawn the way Britain regulates its banks and redefined the country’s politics with an audacious £113bn austerity Budget. In the process – and against many expectations – the 39-year-old chancellor of the exchequer has undergone a startling political transformation.

Power suits Mr Osborne. Before Britain’s election he was widely depicted as “Boy George”, as a political opportunist with a shaky grasp of economics whose wealthy background and supposedly sneering manner made him a political liability. Lacking popular appeal, he played a low-key role in the Conservative election campaign.

After less than two months, he has almost visibly grown into the job. On visits to Brussels and in a speech to City grandees at Mansion House, onlookers remarked that he seemed bigger than they had imagined. His office and the scale of his task have somehow magnified him.

Some sceptical Tory colleagues joke that his political stock was always likely to rise in office. “He managed expectations very well,” says one MP. “He was so bad in opposition, his reputation had only one way to go.” But even critics are reappraising him after he set out in dispassionate terms how he intended to fill the hole in Britain’s public finances in one parliament. One minister who has crossed swords with him in the past said: “The Budget was very well done indeed. He is growing very fast.”

The Conservative-supporting Spectator magazine pondered this week whether he was now “the true Tory leader”. That would have seemed laughable in 2008 when his career hung by a thread, after an ill-judged trip on to a Russian oligarch’s yacht. Only the patronage of David Cameron, now the prime minister, saved him.

Born in 1971, the son of a baronet, and the scion of a family fortune made from wallpaper and fabric, Mr Osborne was educated at the elite London private school St Paul’s, and (like Mr Cameron) was a member of Oxford University’s Bullingdon Club, renowned for drunken, upper-class rowdiness. With his slightly nasal voice and occasionally patronising manner, he made political enemies easily.

But the May 6 general election changed everything. The Conservatives failed to win a majority and Mr Osborne and his colleagues were forced into an unlikely coalition with the centre-left Liberal Democrats.

His new partners in government saw him as an economic lightweight, with a suspiciously hawkish foreign policy stance and neocon friends in Washington; his first job in Tory politics had been drawing up policies to destroy the Lib Dems. It was an unlikely marriage.

But the coalition brought out a more collaborative streak that his aides insisted had been there all along. Lib Dems working alongside him on his “unavoidable Budget” describe him as ready to listen and prepared to compromise.

They were also impressed that he was prepared to back up his claim to be “progressive” by adopting a number of their policies, including lifting almost 900,000 people out of the income tax net, funnelling £2bn into helping poorer families and raising taxes on unearned income.

Paddy Ashdown, the former Lib Dem leader, compares the chancellor to the Victorian Tory social progressive Benjamin Disraeli, saying: “Osborne is a genuine reformer and a genuine Disraeli Tory – arguably even more so than his boss.”

Some senior Lib Dems seem to have developed a political crush on Mr Osborne, whom they see as a clear-sighted fellow economic liberal; they also regard him as more socially liberal than Mr Cameron, citing his voting record on issues such as gay adoption and abortion.

His background in London (as opposed to Mr Cameron’s upbringing in the shires west of the capital) is often said to give him more of a metropolitan outlook. The day after his Budget, he was delighted to find himself in a television studio with one of his favourite US bands, the flamboyant Scissor Sisters.

The Lib Dems also note approvingly his role in tempering the euroscepticism of many Tory MPs, and reinforcing Mr Cameron’s bid to play a constructive role in Europe and not pursue his party’s ancient feud with Brussels. His confident start has been built on two solid relationships. The first is with Mr Cameron, with whom he worked closely in preparing the Budget – a degree of co-operation between the Treasury and Number 10 absent in Gordon Brown’s 13-year domination of economic policy.

Some have speculated that Mr Osborne may feel disgruntled that the prime minister now has another close political friendship, with Nick Clegg, the Lib Dem leader and deputy prime minister. They note the chancellor has taken to referring to his old friend as “Cameron” when talking to other ministers.

But his aides demur. “He calls him Cameron because he wants to show there is some distance between him and the prime minister and to show a degree of respect,” said one ally. “Other people might find it unsettling if he called him ‘Dave’. They are as close as ever.”

His other vital relationship is with Mervyn King, the Bank of England governor, who played a decisive role in persuading the chancellor that the Budget’s priority had to be the elimination of the £155bn deficit.

The chancellor’s team say Mr Osborne’s most agonising Budget decision was over the risks to the economy from cutting too deeply and too soon. Mr King insisted it was vital to take questions of Britain’s creditworthiness off the table for good.

Mr King’s willingness to dispense such advice – and his pointed reference this month to the fact he is 23 years older than the chancellor – has raised questions about whether Mr Osborne is over-reliant on the governor, whose judgment in the financial crisis was hardly flawless. The chancellor rewarded the governor this month with new powers over banking supervision and financial stability that make Mr King one of the world’s most powerful central bankers.

Mr Osborne, who is married to an author, Frances, and has two children, believes he has made a good start. “We have political capital in the bank and we have got to spend it,” he tells friends. But he also knows that announcing tough measures is the easy bit; putting them into practice will be the true test of his political renaissance.

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