Could it be that the Liberal Democrats, through the influence of Vince Cable, are winning the economic arguments in Cabinet?
Discussing George Osborne's appearance before the Treasury select committee today on the Spectator's Coffee House blog, Isabel Hardman suggests this may be so.
After observing that "by this stage in the Coalition, everyone would have expected at least one major bust-up between George Osborne and Vince Cable," she goes on to say that Osborne's evidence to the 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. Osborne told the committee that the current target ‘has served this country well and provided stability’, but he added that he was ‘glad’ the next Bank of England governor Mark Carney was involved in the ‘debate about the future of monetary policy’. Moving to a growth target would be an endorsement of Vince Cable’s focus on growth rather than deficit reduction.It would not do to get too excited here. Whichever government we have in power for years to come will have to act to reduce the deficit.
Keynesian policies are hard to implement now precisely because the previous government failed to implement them when the economy was doing well by cutting spending or increasing taxes - "taking away the punch bowl", as Chris Huhne used to be fond of quoting.
But if Osborne's remarks today show he has moved on the from the simplicities of his early days as Chancellor, that is to be welcomed.