George Osborne: an autumn statement full of political calculation. Photograph: PA
George Osborne's true colours had already become clear to the crowd of several tens of thousands who booed him with gusto at the Paralympics in September. But if there were any doubt that he is a true-blue Tory chancellor, it was blown away on Wednesday.
The economics of the chancellor's autumn statement were, as expected, unremittingly grim – the Office for Budget Responsibility's latest forecasts, which have been yanked back into line with the consensus, show Britain well on the way to a lost decade, with the age of austerity now expected to go on until 2017-18.
But if the economics were sobering, the politics were downright dismal. Osborne's £3.7bn-a-year raid on the welfare budget – by uprating most benefits by just 1% a year for the next three years, instead of in line with inflation – may have been less drastic than the all-out freeze the Lib Dems claim credit for blocking. And a modest raid on top earners – through limiting tax-free pension contributions and dragging more people into the higher tax rate, worth a couple of billion between them – at least allowed the coalition to claim the highest-paid would contribute too.
But it would be a mistake to underestimate the severity of the hit to the poorest. The Institute for Fiscal Studies said the worst-hit group, just above the bottom of the income scale, would lose out by £5.10 a week by 2015: more than 1.5% of their income.
In other words, Osborne has surrendered any remaining claim he might have had to "fairness". He can't even be said to be "balancing the books on the backs of the poor": it's worse than that, since more than half of the cash raised from the benefits raid is not being banked, but instead handed to multinationals (corporation tax will fall by another 1p in 2014), and motorists.
As an aside, the economics of welfare cuts is also questionable: people struggling to make ends meet tend to spend every penny they earn, so every pound taken out of their pockets is a pound of demand sucked out of local economies.
But the second, and more serious, charge against the chancellor is that he has shattered one of the longstanding principles of the welfare state.
Donald Hirsch, director of the centre for the study of social policy at Loughborough University, argues that the 1% cap is "the most historic moment for the economic welfare of the poorest people in Britain for 30 years". Since 1981, it has been accepted that benefits increase each year with prices, so that the living standards of the poorest are not eaten away by inflation. Osborne's stated rationale for breaking this tradition is that it would be unfair for welfare claimants to see their standard of living rise more rapidly than people in work: wages have been falling in real terms since the crisis began.
But although the 1% rise is only planned to last for three years, that's a very, very long time in politics. Below-inflation increases will rapidly come to seem like the norm. Labour, or any other progressive party wanting to argue for a re-establishment of the link with prices, would probably have to expend a significant amount of political capital to restore the consensus.
And the third criticism of Osborne's approach is that it was less about cutting Britain's coat according to its cloth, and more about a poisonous and cynical attempt to box Labour in.
Ed Balls's flummoxed response to the statement was partly because he couldn't immediately see how the Treasury had pulled off the feat of making the deficit decline between last year and this. But it was also because, as a shrewd tactician himself, he was wary of falling into the political trap Osborne had set for him, of being seen to back "scroungers" against "strivers".
The Resolution Foundation quickly pointed out that more than 60% of the impact of the below-inflation welfare rise will fall on people who are in work. So there are actually more strivers than scroungers in the chancellor's sights.
Nevertheless, Balls is extremely fearful of being seen as a friend of that hazily sketched star of many of Osborne's speeches – the stay-in-bed layabout whose curtains are closed when his neighbours drag themselves off to work at the crack of dawn.
Labour does appear to be edging towards rejecting the proposals when they are put to a vote – no doubt under intense pressure from its backbenchers; it seems unlikely that the party's rising stars went into politics to defend swingeing cuts in living standards for Britain's poorest families. But the frontbench are well aware that public polling suggests that so far at least, the voters support welfare cuts.
And when Osborne puts some flesh on the bones of his latest austerity plans, in a spending review now planned for 2013, he will have a whole list of charges to chuck at Balls and his colleagues. Would they reverse the benefits cuts? Yes? Then what else would they cut instead, or what taxes would they raise to pay for it?
But if Labour fails to stand up and be counted, we will face a general election campaign in 2015 that is the mirror-image of the pseudo-battle on tax and spending in 2005.
Back then, Gordon Brown, who was still holed up in No 11, had ramped up health spending, and promised more increases to come. The Tories, conscious of the public's fondness for the NHS and wary of Labour jibes about sacking nurses, said they would stick like glue to Labour's spending plans – which they later derided as the height of fiscal irresponsibility. The entire debate was sterile, nitpicking and bore little relation to reality.
So – quite apart from the abject failure of his economic and fiscal strategy and the whiff of fudge over the figures – Osborne's autumn statement was deeply unfair, nakedly cynical, and tugged at the fragile foundations of the modern welfare state. Compassionate conservatism has been exposed as a passing fancy almost as brief as David Cameron's infatuation with environmentalism.