U.K. Prime Minister David Cameron re-appointed George Osborne as chancellor of the exchequer as he began setting out the first majority Conservative government in almost 20 years.
Osborne, one of the main architects of the Tories’ successful election campaign, begins his sixth year at the Treasury with a mandate to step up his budget-cutting strategy and prepare for a referendum on whether Britain should leave the European Union. The Tories gained a 12-seat majority in the House of Commons, defying widespread predictions of a hung Parliament.
Announcing the appointment on Twitter, Cameron also said Osborne will be first secretary of state, the highest-ranking minister in the cabinet after the prime minister.
In a campaign many criticized as overly negative, Cameron focused on the promise of an EU referendum and the need to keep cutting a budget deficit that still stands at almost 5 percent of gross domestic product. Osborne will play a pivotal role in both, deciding where precisely the spending ax should fall and masterminding efforts to win better terms from the EU before a popular vote that Cameron has pledged to hold by the end of 2017.
The election result was a vindication of a Tory campaign that relied heavily on the party’s record of returning Britain to growth after the financial crisis and reducing government spending. Labour’s line of attack, that the National Health Service was at risk from spending cuts set to be deeper than anything seen in the past five years, failed to sway voters who polls predicted would back both parties in equal measure.
Speaking after his re-election in the district of Tatton, northern England, Osborne, 43, said this was “compelling instructions from the British people to continue with the task in hand.”
Osborne resumes his job with the economy set for a tenth quarter of expansion, inflation at zero and interest rates at record lows. Investors pushed back bets on the timing of the first rate increase, predicting the Tories’ pledge to balance the books by 2018 -- a tougher commitment than Labour made -- will allow the Bank of England to keep borrowing costs lower for longer.
Osborne will face a new opponent across the floor of the House of Commons after Ed Balls, who shadowed him for the opposition Labour Party, lost his seat to the Conservatives. Ed Miliband, who replied to Osborne in Parliament after budget announcements, resigned as Labour leader.
Osborne also said the Conservatives would not ignore the surge in support for the pro-independence Scottish National Party, which swept to victory across Scotland, leaving the Tories, Labour and the Liberal Democrat with just one lawmaker each.
“We have to listen to what the Scottish people are telling us.,” he said. “If we can find common ground we will seek it.”
Theresa May, one of the favorites to be the next Tory leader, was re-appointed as home secretary, a post she held throughout the last parliament. May, 58, has waged a long-standing battle to rid the Tories of their image as the “nasty party.”
Her biggest challenge may be to get net immigration down after Cameron failed to deliver a 2010 pledge to cut it to below 100,000 -- a third of its level last year.
She will also have to deal with privacy concerns over proposals to step up the monitoring of phone and internet communications for evidence of terrorist plotting.
Philip Hammond, promoted to foreign secretary in Cameron’s last cabinet reshuffle in July, was also re-appointed. Hammond, 59, was previously in charge of defense and transport.
Michael Fallon, who replaced Hammond at the Ministry of Defence, stays in the post. Fallon, 62, previously served as a junior minister in both the business and energy departments. He was criticized during the election campaign for describing Miliband’s battle with his brother David to become Labour leader in 2010 as a “shabby maneuver.”