Tag Archives: double-dip

The State of Osborne: a visitor’s guide

A moment of crisis for David Cameron as he realises it is unlikely that George Osborne has the faintest idea what the Autumn Statement means.

A moment of crisis for David Cameron as he realises it is unlikely that George Osborne has the faintest idea what the Autumn Statement means.

If anybody else had prattled on for 50 minutes while hardly uttering a single sensible word, they would have been consigned to a mental hospital forthwith.

But this is Coalition Britain, and the speaker was George Osborne, the man who likes to tell us all that he is in charge of the nation’s finances. Thanks to his government’s Department for Work and Pensions, nobody is allowed to have mental illnesses anymore; after this speech, it seems likely we all have an idea about the reason for that.

A 50-minute speech is a lot of verbiage, and it is certain that worthier journalists across Britain – if not the world – have already analysed it to exhaustion. Allow me to let you into a secret:

They’re probably trying too hard.

Most of the speech was about putting Labour down. The Opposition has made all the headway over the past few weeks, and we all knew Osborne was under orders to change the mood music of the nation in time for Christmas.

Did he manage it? Not really. His speeches always come across as strained events, where he’s making an effort to be clever without ever achieving it. As a result, the message gets lost. We can therefore discount the Labour-bashing.

That leaves us with what he actually said. Even here, his meaning was at times opaque. What follows is an attempt to provide a handy guide to George-speak, for anyone unfortunate enough to have heard him yesterday.

Osborne: “We have held our nerve while those who predicted there would be no growth until we turned the spending taps back on have been proved comprehensively wrong.”/Meaning: “I am lying. Austerity failed miserably and the economy flatlined. A few months ago I realised that we would have nothing to show at election time so I turned the spending taps back on, with Help To Buy and Funding For Lending. I know that these are exactly the sort of Keynesian economic levers that I preached against for three years but I’m hoping that nobody noticed.”

The hard work of the British people is paying off, and we will not squander their efforts./Osborne appears to be celebrating his three years of stagnation. He inherited growth and decided to trash it. (MagsNews on Twitter)

There was no double-dip recession./“Phew! Lucky escape there!”

At the time of the Budget in March, the Office of Budget Responsibility forecast that growth this year would be 0.6 per cent. Today, it more than doubles that forecast and the estimate for growth will be 1.4 per cent./“Please God don’t let anybody remember that three years ago, the forecast for this year was 2.9 per cent.”

Today in Britain, employment is at an all-time high… We have the lowest proportion of workless households for 17 years./These jobs have increased the numbers of the working poor. Too few are full-time; too many are part-time, zero-hours or self-employed, serving up no National Insurance contributions from employers, no holiday or sick pay, or making contractors work long hours for less than the minimum wage.

The number of people claiming unemployment benefit has fallen by more than 200,000 in the past six months—the largest such fall for 16 years./“And we have imposed sanctions on more people on Jobseekers’ Allowance than ever before, in order to produce that figure.”

By 2018-19, on this measure, the OBR does not expect a deficit at all. Instead, it expects Britain to run a small surplus. These numbers mean that the Government will meet their fiscal mandate to bring the structural current budget into balance and meet it one year early./Although of course the books were initially supposed to be balanced by 2015. (Huffington Post live blog)

This year, we will borrow £111 billion, which is £9 billion less than was feared in March./…and £41 billion more than forecast in 2010.

We will cap overall welfare spending./But this will not include the state pension (half the social security budget) or the most cyclical jobseeker benefits./”A living wage would mean less dosh on in-work benefits; letting councils build would mean less subsidies for private landlords.” (Owen Jones on Twitter)

Pensioners will be more than £800 better off every year./But as usual he’s ignoring the VAT elephant in the room. (Mark Ferguson on Twitter)

We think that a fair principle is that, as now, people should expect to spend up to a third of their adult lives in retirement. Based on the latest life expectancy figures, applying that principle would mean an increase in the state pension age to 68 in the mid-2030s and to 69 in the late 2040s./But life expectancy depends on where you live and how much money you have, meaning the poor continue to pay more towards the pensions of the rich./”Current pensioners better off – future pensioners paying for it. What was that about “making our kids pay for current spending” George?” (Mark Ferguson of LabourList on Twitter)

Most wealthy people pay their taxes and make a huge contribution to funding our public services; the latest figures show that 30 per cent of all income tax is paid by just one per cent of taxpayers./Estimates of the amount of tax that is not collected range between £25-£120 billion per year and it is not the poor who aren’t paying up.

This year the rich pay a greater share of the nation’s income taxes than was the case in any year under the last Labour Government./Because they now have more income. Simple really. (Tom Clark of The Guardian, on Twitter)

Today we set out in detail the largest package of measures to tackle tax avoidance, tax evasion, fraud and error so far this Parliament. Together it will raise over £9 billion over the next five years./Including capital gains tax for foreign investors on sales of UK property, which has nothing to do with tax avoidance/evasion, fraud or error.

We must confront this simple truth: if we want more people to own a home, we have to build more homes… The latest survey data showed residential construction growing at its fastest rate for a decade./The rate of house building is at its lowest peacetime level since the 1920s

This autumn statement has found the financial resources to fund the expansion of free school meals to all school children in reception, year 1 and year 2, announced by the Deputy Prime Minister and supported by me./On Wednesday, the Lib Dems and Michael Gove’s education department argued over who had to pay for it.

Extra funding will be provided to science, technology, and engineering courses [in universities]. The new loans will be financed by selling the old student loan book, allowing thousands more to achieve their potential./And pushing thousands into the hands of debt collectors.

The best way to help business is by lowering the burden of tax. KPMG’s report last week confirmed for the second year running that Britain has the most competitive business tax system in the world./KPMG would know – it writes the tax system and also runs some of the larger tax avoidance schemes.

From April 2015 we will introduce a new transferable tax allowance for married couples… Four million families will benefit, many of them among the poorest working families in our country./Osborne says the Tories are backing British Families – but only ones who are married it seems. (Mark Ferguson on Twitter)/While the new tax arrangements bribe families to marry, the benefit cap will bribe big families to split up. (Tom Clark on Twitter)

We are all in this together./The biggest lie of this Parliament.

We are also helping families with their energy bills./Commence the cutting of the “green crap”. This from the “Greenest government ever”. (Mark Ferguson on Twitter)

Next year’s fuel duty rise will be cancelled./This is a cut in a tax that was never imposed in the first place.

We are going to abolish the jobs tax on young people under the age of 21. Employer national insurance contributions will be removed altogether on a million and a half jobs for young people./Young people will therefore have less chance to get contribution-based benefit. National Insurance assures people their pension contributions – except when it isn’t paid. So they will have no contributions to show for any years they worked before 21 and will have to work until their late 60s.

The cost for a business of employing a young person on a salary of £12,000 will fall by over £500./This is a bonus for businesses, not employees.

“Jobs tax” – it’s ludicrous, isn’t it? National Insurance has been a respected part of British life for more than 100 years but Osborne, living as he does in a mythical Victorian-era golden age that never actually existed, thinks it is a “jobs tax”. Either that or he’s still bruised by the fact that Labour’s labelling of the under-occupation charge as a Bedroom Tax caught on with the public.

Shadow Chancellor Ed Balls got on his feet and immediately attacked Osborne’s “breathtaking complacency” for denying the drop in living standards faced by everyone in the country, with families already £1,600 per year worse off. Osborne laughed. He thought that was funny.

The Shadow Chancellor pointed out that we are enduring the slowest recovery in a century, and that average real wages will have dropped by 5.8 per cent by the end of the Parliament (except for fatcat business bosses).

He was having a hard time getting his points across, however, because Tory MPs were heckling him very loudly. Owen Jones tweeted, appositely, “Do the Tories think that a bunch of braying MPs dripping with privilege, while ordinary people’s living standards crash, is good TV?”

Maybe they did. Maybe they thought they had the public on their side.

Let’s have a look at a few comments from the public – courtesy of the Huffington Post:

“Planning to kill more people, George?” (Robin Stacey)

“Spend more you wet lipped monkey.” (Will Moriarty)

“No one has an ounce of faith in anything you say, you parasitic pool of curdled warthog’s puke.” (Anthony Nicholas)

And finally: “Hope you end the speech with your resignation x” (Joanne Wood – and yes, she did mean to end with a kiss).

What a shame Osborne did not follow her advice.

 

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Why are you complaining? The economy is running exactly according to plan!

Celebrating Britain's ruin: The Bullingdon boys rave it up in Davos - David 'Flashman' Cameron (centre, facing us), George 'Slasher' Osborne (left, back to us), Boris 'Zipwire' Johnson (right, back to us)

Celebrating Britain’s ruin: The Bullingdon boys rave it up in Davos – David ‘Flashman’ Cameron (centre, facing us), George ‘Slasher’ Osborne (left, back to us), Boris ‘Zipwire’ Johnson (right, back to us)

Confirmation has come through from the Office for National Statistics that the UK economy shrank in the last months of 2012.

It’s no surprise – you only had to look at the shop sales figures for December to know that something was going wrong.

The poor performance has negated the effects of the growth bump in the previous quarter, when the economy improved by 0.9 per cent, boosted by the London Olympics.

The official Treasury line is: “While the economy is healing, it is a difficult road.” Healing? Total growth for the whole of 2012 has flatlined. Again. If the economy was a hospital patient it would need a sharp electric shock to get it going again (but we’ll come back to that)!

The total economic growth since the Conservative-led Coalition government came into power is 0.4 per cent; less than that recorded during the first quarter of the Parliament when the government was still working under Labour Chancellor Alistair Darling’s spending rules.

“Today’s GDP figures are extremely disappointing, but not surprising. We warned the UK Govt their cuts were too deep, too fast,” said Carwyn Jones, the Welsh Government’s First Minister.

“UK Government cuts to capital investment in major infrastructure projects is causing damage to our economy. A new plan for growth and jobs should now be a major priority for the Prime Minister and the Chancellor of the Exchequer.”

Economist Danny Blanchflower tweeted: “-0.3% lack of growth comes as no surprise but is appalling this was made in #11 Downing Street. The question is what is Slasher going to do?

“Given that the coalition in June 10 predicted growth would be +6 per cent and we now have +0.3 per cent we are entitled to know what went wrong. One-twentieth won’t do.”

Sky News ran with this: “Osborne says Britain faces a difficult economic situation and that he will confront problems to create jobs.”

Comedy Prime Minister David Cameron received early warning of the figures, and responded by having a slap-up meal with his Bullingdon chums Gideon George Osborne (the man responsible for the mess) and London’s comedy mayor Boris ‘zipwire’ Johnson.

Osborne later responded: “We can either run away from these problems or confront them, and I am determined to confront them so that we go on creating jobs for the people of this country.” What jobs?

In fact, this is the very predictable result of the Conservatives’ ideology-led dogma, that put a project to shrink the state ahead of prosperity.

The Tories have always wanted to pin the blame for our debt woes on the state. They suggest that we are in crisis because public spending got out of control, and that this is what happens when the state gets too big.

But this is a fantasy, unsupported by any sound economic analysis and designed to pursue a reckless plan that puts the economy and long-term recovery at risk.

The image of a bloated state getting fatter on taxpayers’ money while crowding out a budding private sector is nothing but propaganda, and here’s why: Before the credit crunch, public sector debt was less than 40 per cent of national income – it was the private corporate sector that was out of control, with debt at almost 300 per cent of national income.

The Tories wanted to say the private sector was being crowded out by the public sector, but in fact, it was being propped up by it.

Those of us who listened to the experts knew that cutting would make things worse, rather than better, but we heard yesterday that Osborne is now ignoring the advice of his former bosom-buddies at the IMF and intends to keep chopping away at the carcass, presumably until there’s nothing left at all.

The same experts, last year, were warning of a double-dip recession – or what legendary economist John Maynard Keynes called the “death spiral”. Now we’re facing a TRIPLE-dip. We haven’t just entered the death spiral; we’re well into it!

Osborne’s solution is to cut benefits and wages so that people have less money to spend on the UK economy. With less money in circulation, shops will close and businesses will go to the wall. Foreign investors will turn away from a nation where they will see there is no profit to be gained. Creditors will start to worry and our credit rating will suffer. By the next election in 2015, there may not be any life in UK business worth mentioning.

Does anyone remember when David Cameron said, “The good news will keep on coming”?

He’s a public relations man, you see. His skill is in saying the opposite of what he means, in order to make a message palatable to the public. You could say he’s not very good at it, because his greatest feat was to persuade the British public to reject his Conservatism a little less harshly than that if all the other Tory leaders since John Major – which is what made it possible for him and Osborne to put us all in this mess by forming a dirty backroom deal with the Liberal Democrats.

I’d like to talk to some of the people he persuaded to vote for his squalid little gang of cutthroats. What would they have done, if they had know what would happen?

Smaller recession won’t stop the agony for the sick, disabled, unemployed, low-waged…

Official figures have been revised to show the UK economy contracted by less than thought in the second quarter of 2012. Apparently the recession only deepened by 0.4 per cent, rather than the 0.5 per cent to which it was revised last month. The original estimate was 0.7 per cent.

Big deal.

It’s a far cry from original Office of Budget Irresponsibility estimates for 2012, which had the economy growing (if you can believe it) by 2.5 per cent during the year. Instead it has contracted by around 1 per cent. That’s a huge error margin – around 1/28 of GDP.

And it’s a far cry from what the Coalition were predicting in 2010, when public sector job losses were going to be offset by a huge inrush of private sector jobs that never came. David Cameron can swan off to New York (incidentally avoiding the reappearance of his friend Rebekah Brooks in court) and talk about a million jobs being created, but that doesn’t even begin to cover the harm that his austerity measures have perpetuated.

And of course it means that we’re all still in the longest double-dip recession since the end of World War II, thanks to the Coalition – they can blame Labour all they want, but the figures tell the truth: GDP started dropping after the Tories and the Liberal Democrats took the reins of power.

What does this mean for the less well-off in society? Well, it’s obvious…

Continued recession means that there will be less tax money available to the Treasury (and there’s still no real effort being made to track down those tens – maybe hundreds – of billions being kept away by tax avoidance).

This will allow Messrs Cameron, Osborne et al to continue their persecution of the poorest in society – those who had nothing to do with the causes of the recession – and their programme of rewards for those who made this possible – the bankers and financiers who did dump us all in it.

So we will see further deep cuts in the welfare budget. More sick and disabled people will be driven to suicide. We have already seen news stories in which it has been admitted that failed ESA claimants have ended up destitute – expect many more in the future.

The Universal Credit will come in, capping the amount of benefit families will be able to receive and ensuring that they are plunged into poverty, through no fault of their own.

The Localism Bill will come in, forcing councils to create council tax relief schemes that will force the lowest-paid in society out of their homes to search for accommodation in less “attractive” parts of the UK – if they can find anywhere at all.

And as I’m typing this, in the back of my mind I can hear Nick Clegg, leader of the Liberal Democrat Party, whose coalition with the Conservatives has made all this possible, saying: “Only the Liberal Democrats can be trusted with the economy and relied upon to deliver a fairer society too.”

And that’s the funny part!

Trouble at the top – who’s best for Britain?

There’s trouble at the top of both the UK’s main political parties, according to the latest Guardian/ICM poll.

Shadow chancellor Ed Balls has become slightly more popular than the Labour leader Ed Miliband, allowing the newspaper to stoke fears of a new power battle at the top, mirroring the problems of the Blair/Brown rivalry.

But the Conservatives are no better off, after George Osborne was singled out as the weakest member of the Coalition cabinet and the one most people wanted moved in the much-anticipated autumn reshuffle.

The Guardian article asks you to believe that Balls and his shadow treasury team have become hard work, demanding that no commitments can be made on anything that has spending implications without clearing it with them first. He is said to be demanding that shadow ministers should just keep repeating his five pledges for growth.

I think this is media-manufactured mischief.

My instinct tells me it is an attempt to continue a narrative that has been created around Ed Balls, that he was a key supporter of Gordon Brown against Tony Blair, while Brown was preparing to take over as Labour leader and Prime Minister, a few years ago – by suggesting that he remains a disruptive influence today.

This would be invaluable to supporters of the Conservative Party, which is losing support rapidly for reasons I will tackle shortly.

But I think it is a false assumption. We’ve all moved on a long way from the time when Mr Miliband parroted the same answer, no less than six times, to a series of questions from a television interviewer. That made him – and Labour – look silly and Mr Balls would be a fool to encourage any repeat of that situation now. And he’s nobody’s fool.

The Blair/Brown rivalry was played out while Labour was in power; today that party is in opposition and the greater priority by far must be the removal of the Conservatives from government. All other considerations should be secondary to the people at the top of the party. If Ed Balls is guilty of the kind of posturing suggested by the newspaper, he needs to suck it in, get behind his leader, and show – by example – that Labour is united.

The problems within the Conservative leadership are far more serious.

I think, as a nation, we are more or less agreed that George Osborne’s tenure as Chancellor of the Exchequer has been a disaster.

His spending review in late 2010 stalled the economy. Growth flatlined for a period, then the UK fell into double-dip recession, with GDP now less than it was when Labour left office.

His budget in March this year is now generally considered the most ridiculous travesty in living memory, featuring plans to give a tax break to the richest in society – the now infamous cut in the top rate of tax from 50 per cent to 45 per cent – which would be supported by a range of hare-brained schemes including taxing static caravans and heated pasties.

And it is now accepted that the Coalition is unlikely to reach its two main economic goals – the reason the Conservatives and Liberal Democrats came together to form a government in the first place – before the next election in 2015, according to the Tories’ own Centre for Policy Studies thinktank. This is due to the failure of Mr Osborne’s fiscal policy.

The coalition had already given up hope of getting rid of the structural deficit by 2015 and the chance of ensuring that public-sector debt is falling by the time of the next election is now slim, the organisation has stated.

The Guardian/ICM poll says 39 per cent of those who voted Conservative in 2010 want Osborne moved to a different cabinet role, if not sacked outright. Asked if Osborne is doing a bad job, agreement goes up to 44 per cent.

But it seems Mr Cameron might keep Osborne, firstly because the chancellor is his closest cabinet ally – his own position is stronger if Osborne remains in place; and secondly, because he believes changing chancellor midway through a Parliament indicates weakness to the country – and, in particular, the markets.

Mr Osborne might be the most prominent problem for the Tories, but he isn’t the only one. There have been calls for the sacking of Andrew Lansley, the Health Secretary who brought privatisation into the NHS despite Mr Cameron’s claim – on Tory election posters – that he would not harm the health service. Michael Gove and Jeremy Hunt are also in the firing line.

Transport secretary Justine Greening has threatened to resign over plans for a third runway at Heathrow airport, and internecine squabbles have broken out, with Nadine Dorries attacking fellow Conservative Louise Mensch, who is quitting as an MP, for being “void of principle”.

So which party is in the most disarray?

Call me a loony leftie Labourite if you want, but on the evidence above, I don’t think there can be any doubt. Despite attempts to manufacture disunity in Her Majesty’s Opposition, it is the Conservative Party – and therefore the government – that is falling apart.

Or am I misreading the situation?