George Osborne: don’t ignore housing crisis, weak wage growth

Former UK chancellor George Osborne has warned centre-right parties.

George Osborne in the London Evening Standard newsroom.

Former Conservative British chancellor George Osborne, recently appointed editor of a top London newspaper, has warned centre-right political parties around the world not to neglect voter concern about anaemic wage growth or worsening housing affordability — including considering scrapping negative gearing — or risk looking like “angry old men on the park bench”.

Mr Osborne, whose six-year tenure as chancellor was associated with slashing government spending, corporate tax and strident opposition to Brexit, said the right needed to take inequality seriously, suggesting advocating lower taxes was “necessary but not sufficient”, and singling out the importance of supporting same-sex marriage and minimum wage rules.

“Not an incredibly conservative thing to do, but if you want to maintain support for a free market economy, people need to see a return on their labour,” Mr Osborne said.

Now six months into his stint as editor of the Evening Standard, a high circulation “freesheet’’ paper that has become sharply critical of government of Theresa May, Mr Osborne said he had caught up with Prime Minister Malcolm Turnbull recently, and wholeheartedly endorsed his support of same-sex marriage.

“I know there’s all sorts of reasons why that (survey) has come about … I personally think gay marriage is morally right and socially sensible,” he told The Australian in an interview at the Standard’s headquarters in Kensington, London.

“And there is electoral benefit by the way of being ahead on these issues,” he added, noting a majority of gay people voted for the Conservative Party in the 2015 general election after it became legal a year earlier.

Mr Osborne, perhaps the most outspoken campaigner against Brexit in the Cameron government, said Australians shouldn’t expect any special immigration deals in the wake of Brexit.

“I’m all for more stronger ties with Australia ... and I’d like to see more Australians coming to Britain to study, to work here, but not at the expense of fewer Europeans.”

“I don’t think Brexit’s going to make any difference; if anything the EU is likely to do a trade deal with Australia at least as quickly as Britain is,” he added.

The former chancellor said housing — British house price-to-income ratios can be as high as in Sydney or Melbourne, or even higher in London — was the No. 1 political issue.

“As a conservative this is a terrible trap for us. If we just become the party of existing rather than future homeowners we’ll see ... our voters slowly dying off,” he said, highlighting how he as chancellor abolished deductibility of interest for investment properties and increased stamp duty on second home purchases.

“Certainly the better off middle-class people objected … but I said I’d rather help the younger family who can’t get their first home rather than someone who wants to get 2nd or 3rd or 4th home,” he explained.

The Turnbull government has appeared torn over what to do about negative gearing, settling in May on ending the tax deductibility of the costs of travelling to investment properties.

In his 2015 budget, Mr ­Osborne announced a gradual increase in the British minimum wage from £7.2 to £9 ($15.40) an hour by 2020 (Australia’s is currently $18.29). Britain’s unemployment rate has fallen from 5.6 per cent to 4.3 per cent, a 42-year low, since then.

Mr Osborne, who in government was seen as one of the Tory’s top political strategists, also suggested conservatives should embrace sugar taxes, widely slammed by centre-right politicians as a “nanny state” overreach.

“The overwhelming evidence was sugar was doing enormous damage to kids’ health,” he said.

“Taxes are things that discourage behaviour, so reduce tax on things we want — like business — and increase it on the things we don’t.”

Mr Osborne is working on a book, provisionally titled the Age of Unreason, on how conservative movements can stay relevant — something he feels “very strongly about”.

“I’ve had to delay it because of taking on the paper … (but) the centre right has to work very hard at it because there’s always a risk of being nostalgic,” he added.

“The danger for the right is you end up being an angry man on the park bench, claiming everything used to be better 20, 30 40 years ago,” he said.

The former Tory MP, who left the House of Commons in May, distanced himself from suggestions the May government should end a 1 per cent public sector pay growth cap, which he introduced, earlier than 2020.

“Borrowing for a public sector pay rise is a classic example of deferring costs of something you’re incurring today,” he said.