4 things we learned from George Osborne's New Year speech

Chancellor George Osborne’s New Year speech has been the subject of much debate.

While the Chancellor insisted that “we’ve got the right plan now”, the speech warned against “dangerous complacency”, insisting that “2014 is the year of hard truths.”

So what did we learn?

1. The cuts are about to get worse…

The big headline from the Chancellor’s speech is the announcement that there will be a further £25 billion of cuts made between 2016 and 2017, and that of these cuts almost half will come from the welfare budget. That £25 billion brings the total cuts forecast from now until 2017 to more than £60 billion.

The Chancellor maintains that the cuts are necessary in order to “make us safe,” but that he has potentially set himself up for a fall. Osborne also pledged to offer Parliament the opportunity to vote on the proposed cuts and, while the details of the vote are not yet clear, the plans may well face opposition in the House of Commons.

2. …but there is disagreement in Parliament

But the Labour Party is not the only worry for the Chancellor. Over the last two days the newspapers have been dominated by accounts of a coalition rift over Osborne’s speech, with deputy Prime Minister Nick Clegg calling the welfare cuts “unrealistic [and] unfair”. Meanwhile Whitehall sources have suggested that the Chancellor is very unlikely to be able to meet his targets without touching the state pension – and newspapers including The Times and The Financial Times have urged the government to spread the burden across benefit recipients of all ages.

The Chancellor’s speech is an attempt to set out the Conservative Party’s stall ahead of the next general election, but many see Nick Clegg’s opposition as an opportunity for the Liberal Democrats to smooth the way for a potential Liberal-Labour coalition in 2015.

3. The “cost of living crisis” is rubbing off

Ed Miliband has made great play of what he dubs the “cost of living crisis”. The Labour leader has attempted to centre public debate on the rising everyday costs incurred by families – a topic that he perceives to be a weak point for the coalition. In his speech, though, the Chancellor explicitly refers to the cost of living, suggesting that the way to tackle the problem is by instituting tax cuts. He points to the personal allowance, which will rise to £10,000 in April, as evidence that the coalition is just as well equipped to deal with the cost of living.

4. The Chancellor wants to “instil a new belief in Britain”

Finally, towards the end of his speech, George Osborne set out “what our long term economic plan is really for – what the motivation behind it is.” The plan, the Chancellor said, “is about more than rescuing our economy from the brink of collapse.

“It’s about instilling a new belief in Britain.”

The line is likely to raise eyebrows amongst those who describe the cuts as ideologically motivated, but may appeal to voters who, like the Chancellor, want to see a long-term shift not only in the state of the economy, but in the relationship between the state and the population.