Thatcher was of course very right in taking the view point that a soveriegn state should concentrate on balancing its books. This can include of course, having a national mortgage and paying it off consienciously while also like the Uk managed in some years in the mid eighties, to be a national creditor and have a surplus like Norway of course does.
Osborne has the difficult job of fixing this again post Thatcerist 'revolution'. The wheel of capitalist systems has revolved maybe its full and inevitable course to the western societies which embraced the Neo Conservative mantra of low tax low wages, high freedom for business to organise internationally. High unemployment and massive under-employment as industry organised to relocate production and entire brands to Socialist Command Capital China. The anarchy of the global financial system has had nearly a decade of ruin and coroporate and banker welfare in its wake. Let run free by the Laisez Faire and later confusion governance in the US in particular, but the weaknesses of all soveriegn states, it came back to bite the countries which had levered too much money through their national banks and allowed merchant banks to follow. Ireland, Spain and Greece have just impossible debts to ever realistically pay off within any normal commercial terms.
Also the Thatcherite Neo Conservative philosophy has been firmly bitten by its own rabid dogs - the financial system, the mega billionaires and the mass under-employment we see in the west today. Instead of creating less socialism and state intervention, the revolution has created new, huge forms of socialism in order to avoid social unrest and collapse in trust within the anarchic financial markets. Instead of paying manufacturing industries to survive and perhaps modernise, they now pay for service industries to have a super flexible, disposable, cheap workforce. Instead of increasing public spending on better schooling for all, better health care and better public sports facilities and preventative medicine, they have bailed out the same banks, financial institutes and uber-wealthy oligarchs who demanded they stop bailing out manufacturing industry and opened up trade to China. We see also that former public utilities and privatised services command far higher sums from either the public purse or in comparison to RPI, from the consumer than they did when they were publically owned. While the worker gets most often less take home in these industries, and profits are exported.
George Osborne then finds the biggest sump of money for working age, healthy workers in the public spend is in what Labour tried to address - getting people out of dependancy culture by making work always pay more than not working - in work benefits and tax credits, which by in large now prop up part-time, temporary work or extremely low wages and lack of access to overtime payments. The trouble being that these also prop up bad management practices and marginally profitably business models. In turn his problem is that these are in consumer services, privatised public services and some business services which are all the growth potential areas for the UK as more manufacturing leaves for China. (for example the remnants of the steel industry - Trident 2 will be built from Chinese steel mills)
On the other hand, the years of subsidising and spending on R^&D Linked to supposedly new business creation has turned out to be very closely linked to public spending anyway- a huge proportion is towards defence and health care which in the UK and indeed the US via public employer contributions to health care, are the largest single spends , as for western nations by in large.
If you look at the FTSE top one hundred and other listings, you find that a large proportion of companies are linked into public spending - defence, pharma and of course the propped up financial sector whose debt to societty should be seen as staggering and should be reigned in with new payments. Also we then see the formerly public utilities, who have been exacting above inflation price rises via confusion marketing for two decades now.
Osborne opens Pandoras box with ideoligical mittens and discovers that his economy is running in a crypto Keynsianist nightmare with money circulating through the state as almost never before. Despite trying to find the usual 'blame Labour' rhetoric, he should really reflect on the Thatcher Revolution being a wheel which will break the back of its own ideology.