Tag Archives: Resolution Foundation

£30bn cuts – has anybody actually READ the Charter for Budget Responsibility?

z30billionausterity

Why do anti-Labour cultists keep ranting on about assumed crimes against the people that have never taken place?

Last night, This Writer had to endure the ravings of SNP cultists who were adamant that Labour signed up to £30 billion of Tory austerity cuts when the Party supported the Charter for Budget Responsibility. This simply isn’t true, as an examination of the Charter itself will prove. It’s only 20 pages long, and many of them are blank, so it isn’t exactly hard work.

The trouble is, the critics are as this blog has defined them – cultists. They’re not interested in the facts; they want to publicise the lines they’ve been fed by their leaders. Nicola Sturgeon said in last week’s televised leader debate that Labour supported £30 billion of austerity cuts, so to the cultists it must be true.

They are like the Catholic Church, when it imprisoned Galileo for claiming the Earth revolves around the sun. Fortunately for their sanity, the Catholics realised their mistake; it is doubtful the cultists ever will.

Last night, one of them claimed (wrongly) that in the Scottish leaders’ debate, Labour’s Jim Murphy had admitted that Labour has accepted the disputed amount of cuts: “OMG you obviously didn’t see tonight debate they admitted it ! Live on TV Jim Murphy had to admit it because LiBDEms And tory leaders made him… He got pulled up by all parties on his lies.”

This Writer hadn’t seen the debate (was at band practice instead), so had to check the news media for the facts – and found them in the Irish Times: “The Irish Times says he pulled Sturgeon up for lying about it: ‘You might get away with that in England but not here in Scotland.'”

Another cultist then took up the baton and tried quoting from the debate on the Charter for Budget Responsibility – the source of the claim that Labour supported £30 billion of austerity cuts (the claim is that, in supporting the Charter, Labour supported the Tory cuts). It is impossible to bring you a direct quote from this person as they have now blocked This Writer – a common tactic among those who can’t accept their mistakes.

This writer’s response was: “Try reading the charter instead… no mention of ‘£30 billion’ or ‘cuts’… The £30 billion does not exist outside of George Osborne’s own plans… If you read the Charter, you will see that is absolutely correct to say the charter could be supported with no problem.”

The Charter itself – in the version debated in Parliament on January 13 – is available on the web here. It states:

“The Treasury’s objectives for fiscal policy are to:

  • ensure sustainable public finances that support confidence in the economy, promote intergenerational fairness, and ensure the effectiveness of wider Government policy; and  
  • support and improve the effectiveness of monetary policy in stabilising economic fluctuations.

The Treasury’s mandate for fiscal policy for this Parliament, announced in the Budget on 22 June 2010, is:

  • a forward-looking target to achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period.

At this time of rapidly rising debt, the Treasury’s mandate for fiscal policy is supplemented by:

  • a target for public sector net debt as a percentage of GDP to be falling at a fixed date of 2015-16, ensuring the public finances are restored to a sustainable path.

To ensure that expenditure on welfare remains sustainable, the Treasury’s mandate for fiscal policy is further supplemented by:

  • the cap on welfare spending, at a level set out by the Treasury in the most recently published Budget report, over the rolling five-year forecast period, to ensure that expenditure on welfare is contained within a predetermined ceiling.”

No money figures are mentioned at all.

Shadow Chancellor Ed Balls capitalised on this in his speech during that day’s debate: “Let me explain what is going on here. It is a three-year rolling target, so in 2015the three-year target presumably refers to 2017-18, but in 2016 it is rolled forward to 2019 because that is three years later. In 2017, it rolls on to 2020 and in 2018 it rolls on to 2021.

“It is a three-year rolling target, so it rolls on, which means that the Chancellor could come back to the House in 2020 and say, ‘It is okay. Consistent with the charter, I am meeting the aim because I am balancing the current budget in 2023.’ That is what this says and it is utterly ridiculous. It does not even sign him and his party up to balancing the current budget by the end of the next Parliament.

“The fact is that for all the boasts, the rhetoric and the talk of traps, in this new charter before the House it is not targets but aims; it is not balancing the overall budget but the current budget; it is not an absolute commitment to deliver a surplus in the next Parliament, but an absolute commitment to a three-year rolling five-year target.

“The Chancellor has spent all of the past nine months telling everybody what a clever wheeze this is and, once again, it has totally backfired. It is less of a trap and more of a load of complete pony and trap.”

A “load of complete pony and trap” is exactly what all the talk of Labour supporting £30 billion of cuts is.

So what is Labour’s plan? This blog has already outlined it, but for clarity here’s the relevant information from the Vox Political article:

“The ‘Charter for Budget Responsibility’ is highly elastic: it’s not based on a firm commitment to reach balance in 2017-18,” states the Resolution Foundation… “Instead it represents a rolling ‘aim’ of planning to reach current balance three years down the road.” The article adds: “Most economists are sceptical about how much difference it (the charter) will make.

“So what if Labour targets a current balance in 2019-20 instead? Based on current OBR assumptions this could be achieved with as little as £7 billion of fiscal consolidation in the four years to 2019-20 (including the cost of extra debt interest).”

Labour has made it clear that it plans to make only £7 billion of cuts. As this coincides exactly with the Resolution Foundation’s figures for a 2019-20 budget balance, logic suggests that this is most likely to be what Ed Balls is planning.

So now you know. Anybody suggesting Labour is planning huge, Tory-size, austerity cuts should be sent to this article and told to get a clue.

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Setting the record straight on Sturgeon’s fiscal policy

The Resolution Foundation's predictions for government spending, based on the different parties' declared plans.

The Resolution Foundation’s predictions for government spending, based on the different parties’ declared plans.

Vox Political’s article on Nicola Sturgeon’s London speech provoked a disgruntled response from Jonathan Portes. The NIESR boss sent a message stating that the article’s fiscal arguments were out of whack.

He didn’t ask for this blog to straighten them out, but the information he sent, coupled with some other pieces he suggested – by Professor Simon Wren-Lewis and the Resolution Foundation – make it inevitable that another stab is required. If you support the SNP, you’re still not going to like it.

The first comment from Mr Portes is as follows: “1. SNP plan is slower deficit reduction than Lab/LDs, which in turn slower than Cons. All consistent with falling debt/GDP ratio. So all are sustainable.  Haven’t looked at detail, but Simon WL & I both think Lab too cautious – so SNP not obviously crazy.”

Simon Wren-Lewis’s article states:  “In reality what Sturgeon was proposing was still deficit and debt reduction, but just not at the pace currently proposed by Labour.”

And the Resolution Foundation adds: “The SNP would commit to delivering existing 2015-16 plans, as each of the Westminster parties have, before changing course.”

There’s a major point to make here, which all three of the sources above have missed. It’s that the SNP and its adherents have been cursing Labour from High Heaven to Low Hell for committing to Tory austerity policies because Ed Balls promised a Labour government would stick to Coalition spending – note that word, spending – limits for the first year after the general election.

Why have SNP adherents been slating Labour when the SNP has committed itself to the exact same Conservative spending limits, for the exact same period of time? Doesn’t this also make the SNP a party of austerity?

This leads us neatly to a point made by the Resolution Foundation. Ms Sturgeon wants to put a lot of space between SNP plans and those of Labour by claiming that Labour is committed to eliminating the UK’s structural deficit by 2017-18. They say Labour signed up to that when it voted to support the Charter for Budget Responsibility. You may recall there was another big fuss about Labour supporting Tory austerity, being just the same as the Tories, and there being only 17 MPs who oppose austerity (the number who voted against the CBR). Bunkum, according to the Resolution Foundation.

“The ‘Charter for Budget Responsibility’ is highly elastic: it’s not based on a firm commitment to reach balance in 2017-18,” states the Resolution Foundation article. “Instead it represents a rolling ‘aim’ of planning to reach current balance three years down the road.” The article adds: “Most economists are sceptical about how much difference it (the charter) will make.

“So what if Labour targets a current balance in 2019-20 instead? Based on current OBR assumptions this could be achieved with as little as £7 billion of fiscal consolidation in the four years to 2019-20 (including the cost of extra debt interest).”

Labour has made it clear that it plans to make only £7 billion of cuts. As this coincides exactly with the Resolution Foundation’s figures for a 2019-20 budget balance, logic suggests that this is most likely to be what Ed Balls is planning.

So SNP (and Green) adherents who crowed about Labour austerity being as bad as that of the Tories need to apologise – sharpish.

Now that these points are cleared up, let’s look at the substantive issue. Here’s the Resolution Foundation again: “The first minister’s headline was that she favours £180 billion of extra spending in the next parliament relative to current coalition plans… an increase in ‘departmental spending’ of 0.5 per cent a year in real terms over four years [we’ve established that the first year’s spending would adhere to Coalition-planned spending levels]. Our estimates suggest that raising departmental spending by 0.5 per cent in each of the four years after 2015-16 would indeed yield a cumulative increase in spending of around £180 billion (in 2019-20 prices, £160bn in today’s) compared to existing coalition plans. So that seems to fit.

“Another, more conventional, way of putting this is that in the final year of the next parliament, departmental spending would be around £60 billion higher in the SNP scenario than it would be under the coalition’s outline plans. This means that departmental spending would end up in roughly the same place in 2019-20 (in real terms) as it is now. We’d see £8 billion or so of departmental cuts in 2015-16 broadly cancelled out by a rise of around £7 billion across the following four years. It also means that, all else equal, there would still be a (small) UK-wide current deficit come the 2020 election.”

As you can see from the graph, the scenario that suggests a Labour balance in 2017-18 would imply a big difference with the SNP, particularly in the first half of the next Parliament – but, come 2019-20, “there would still be a £48 billion gap between Labour and the coalition plans; not that far short of the £60 billion gap that would exist between the SNP and the coalition”.

The scenario in which Labour balances its budget by 2019-20 “would in theory be consistent with spending roughly £140 billion more than coalition plans.

“The SNP proposal implies increases in total departmental spending of £1-2 billion per year over four years whereas Labour’s 2019-20 scenario implies cuts of £1-2 billion per year over the same period. This is against total departmental spending of around £350 billion. By 2019-20 this difference adds up to roughly a £14 billion gap between the two parties. Now, that’s a real difference but given the scale of the numbers involved, (and the fact that some of Labour’s consolidation may come from tax increases rather than spending cuts), it’s also a relatively modest one.”

It’s more or less the same amount the Coalition Government borrows every month, in fact.

Now let’s throw a spanner in the SNP’s works. The Resolution Foundation points out: “Fiscal discussions of this type tend to suffer from a severe case of false precision. None of the party leaders knows any better than you or I what will happen to productivity next year, never mind in 2020… Any difference between, say, the Labour and SNP spending plans would be dwarfed by the fiscal implications of even modest boosts (or dips) in productivity. Indeed, even the very large difference between the SNP (or Labour) and the coalition’s plans could be overshadowed by a significant shift in productivity trends. And, to Sturgeon’s credit, her remarks this week emphasised productivity.”

Yes – productivity. Does anybody remember that, prior to the referendum, the SNP wanted Scottish voters to believe that any borrowing that might be necessary in an independent Scotland would be offset by increased productivity? What did Simon Wren-Lewis have to say about that? Oh yes: “Governments that try to borrow today in the hope of a more optimistic future are not behaving very responsibly.”

But that is exactly what Ms Sturgeon was proposing for the whole of the UK; borrowing on the assumption of increased productivity.

Here’s a chance to put another SNP myth to bed, from the same writer. In his article about Ms Sturgeon’s speech, Professor Wren-Lewis states: “Of course this is the same person who, with Alex Salmond, was only six months ago proposing a policy that would have put the people of Scotland in a far worse fiscal position than they currently are, an argument that has been reinforced so dramatically by the falling oil price. You could say that it is a little hypocritical to argue against UK austerity on the one hand, and be prepared to impose much greater austerity on your own people with the other.”

The argument he mentions ran as follows: “Scotland’s fiscal position would be worse as a result of leaving the UK for two main reasons. First, demographic trends are less favourable. Second, revenues from the North Sea are expected to decline. This tells us that under current policies Scotland would be getting an increasingly good deal out of being part of the UK [and therefore independence would be detrimental].”

He added that the Institute for Fiscal Studies, which had independently analysed the SNP figures, had made a mistake on interest rates. The IFS analysis, he wrote, “assumes that Scotland would have to pay the same rate of interest on its debt as the rUK. This has to be wrong. Even under the most favourable assumption of a new Scottish currency, Scotland could easily have to pay around one per cent more to borrow than rUK. In their original analysis the IFS look at the implications of that (p35), and the numbers are large.”

The Resolution Foundation notes that “the flipside of higher spending, all else equal, would be higher debt and higher debt interest payments”.

So the SNP plan, as this blog pointed out, could create an interest-payment problem for the next government that bites into the extra money said to be for services.

Mr Portes made two other minor points, as follows: “2. Your stuff about Lab could spend more if economy does better wrong way round. If economy worse, we need higher deficit. Over time, as income goes up, so does/should spending. But short-term macro should be countercyclical.”

When I wrote the material about Labour spending more in a better-performing economy, I was thinking of the Labour government immediately after World War II. The current Labour Party has mentioned this period in recent speeches and releases, and it seems clear that Messrs Miliband, Balls et al consider their task, if elected in May, to be similar to that faced by Mr Attlee and his party – the reconstruction of the UK after a long period of destruction.

Are we to believe the economy is likely to worsen, in which case more borrowing will be needed? It’s certainly possible that major shocks are on the horizon. This writer is in no position to speculate.

“3. Finally, stuff about credit rating agencies/bond markets/Greece is absurd propaganda. I’ve written on this many times.” He’s right; it wouldn’t have been included it if Yr Obdt Srvt had stopped to think about it, but the article was up against a deadline and this writer was throwing in all the cautionary words he could find.

So let us forget about them. Here are a few more. Simon Wren-Lewis, at the end of his article, notes: “I read a blog post recently that suggested this was an election Labour would be better off losing… A Labour government dependent on SNP support would be abandoned by the SNP at the moment of greatest political advantage to the SNP and disadvantage to Labour. However if we assume that the oil price stays low there is no way a rational SNP would want to go for independence again within the next five years. It might be much more to its long term advantage to appear to be representing Scotland in a responsible way as part of a pact with Labour.”

Is the SNP rational? All the evidence available so far suggests it isn’t.

It put forward arguments that were deceptive about an independent Scotland’s economic future.

Its representatives and followers spread lies about Labour economic policy.

All indications suggest the SNP will try to create the conditions required for Scottish independence at the earliest opportunity, and then leave the rest of the UK hanging.

The original article on Ms Sturgeon’s speech ended by saying the SNP would be hard to trust.

After the findings of this one, it is nigh-on impossible to do so.

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The Conservative Party – nasty, stupid and clumsy

Is this the face of a 'Caring' Conservative? Or is he nasty and clumsy? And if he is, does that mean the supporters behind him are stupid?

Is this the face of a ‘Caring’ Conservative? Or is he nasty and clumsy? And if he is, does that mean the supporters behind him are stupid?

Independent luminary Andreas Whittam Smith reckons the Conservative Party in its current form is both nasty and stupid – and also clumsy, if his latest article is to be believed.

Nasty because of its aggressive behaviour – such as the decision to withdraw support for rescue operations that save thousands of migrants from drowning as they attempt to cross the Mediterranean to Europe.

Or because of benefit assessment policies that mean people living with progressive and degenerative conditions such as Parkinson’s, motor neurone disease and rheumatoid arthritis are being subjected to what a group of charities describes as “upsetting and unnecessary” examinations to see whether they will recover enough to look for work in the future – a pointless exercise because their conditions are flagged up from the start as progressive and degenerative; they’re never going to get better.

Or because, after the Resolution Foundation found that one-in-five employees (4.9 million people) earned less than the living wage, George Osborne is promising that if the Conservative Party wins next year’s general election, then most welfare payments that the working poor rely on – including child benefit, tax credits, jobseeker’s allowance, housing benefit and income support – will be frozen in April 2016 for two years. They are currently rising by 1 per cent a year. He will make the working poor poorer.

zTorypromise

Clumsy because they have imposed unpopular decisions on the people in an unfair way. Mr Whittam Smith defines fairness in terms of “the four main elements that go into creating a sense of procedural justice: Those concerned should have been able to play an active part in the process. The rules should be applied with sensitivity to individual situations. Decision-makers should be impartial and fair. And the agents of the system with whom people have to deal should treat them with respect.”

He continues: “There is no evidence that people living with progressive and degenerative conditions or members of the working poor or families struggling to pay care bills for elderly relatives have been consulted. There is no evidence of sensitivity to individual situations or else the bedroom tax legislation would have recognised the special difficulties of disabled tenants who are unable to share a bedroom and would have taken into account where homes have been specially adapted.

“As for the agents of the system with whom people have to deal, outsourcing many of these tasks has not produced happy results. Naturally the outsourced staff work by the book. They cannot be flexible or understanding. They are chiefly concerned with getting the job done as quickly as possible so as to reach the profits targets set by their employers. And then, in the final analysis, claimants are not dealing directly with the state at all but with a sort or mercenary army. Mutual respect cannot exist in these circumstances.”

Let’s expand on the last point for a moment, and connect it with the previous points about benefit assessment, with this snippet of information: An academic report from Edinburgh Napier University and the University of Stirling has confirmed that the Tories’ welfare reforms are not helping people to find work.

According to Alan Wyllie on the A Working Class Man blog, the report showed:

  • “The current welfare system is not helping people find work. Those who had moved into employment found work independently and not due to Jobcentre Plus services;
  • “There was limited support on offer to help recipients of out of work benefits move into work. Those participating in the Work Programme did not report that it was helpful;
  • “Most people wanted to work but issues such as childcare, illness and training made it difficult for them to do so;
  • “The current welfare system also does not appear to meet its aim of ‘make work pay’. People who had moved into work felt only slightly better off and continued to find it difficult to make ends meet;
  • “Benefit freezes or restricted increases have meant falling real-term incomes, with many study participants finding it hard to meet basic needs.

“The report concludes that: ‘Participants with a health condition or a disability, and those who were lone parents, reported that they wanted to be in work but faced considerable barriers to doing so, which were unlikely to be addressed by increasing conditionality.

“’According to the views of participants, stronger conditionality is unlikely to get more people into work, due to a lack of suitable work and barriers in the areas of education, skills, employability, childcare and health.’

“The researchers found that claimants who did not abide by the new conditions faced serious consequences.

“’The impact on benefit recipients who fall foul of new rules – or who are affected by a mistake on the part of a benefits agency that is not their fault – can be severe,’ they said.”

That’s nasty – not only have benefit changes been forced onto people without any regard for them, but they don’t even work.

However, this – moving back to Mr Whittam Smith – may be the Tories’ downfall. He points out: “Nowadays we are no longer a homogenous mass but an agglomeration of minorities. In my own circle of family and friends, for instance, there are people who are disabled and others with serious illnesses. There are those who are single parents, others who are retired. There are middle-aged people with back-breaking mortgages, others who are and young and ambitious. There are regular Church-goers as well as non-believers. There are people in jobs, and people who cannot find work. There are Londoners who can’t conceive of living anywhere else (I am one of these), and people who resent the capital city and all its works.

“Each of these minorities has its own particular concerns and needs, prejudices and resentments, but yet feels sympathy for any group that is badly treated.

“The Coalition led by its Conservative ministers has often gone about its work in an unfeeling, insensitive manner. And for that shortcoming there could be a price to pay at the next general election.”

Quite so – especially as they came into government under the banner of ‘Compassionate Conservatism’. What a terrible joke.

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National interest? Cameron governs in his own – and that of the rich

znationalinterest

We were discussing David Cameron and the respect due to him for his record in government.

You may recall that the phrase used most often when the Coalition was formed (publicly, at least) in May 2010 was “in the national interest“.

This week, his government’s work has included extending the amount of time new claimants will have to wait for Employment and Support Allowance (ESA) and Jobseeker’s Allowance (JSA) from three days to seven days. This will be music to the ears of payday lender companies like Conservative Party donor Wonga.com, whose shareholder Adrian Beecroft has given more than £500,000 to the Tories since 2006.

The Coalition also awarded a contract treating NHS patients with brain tumours to the private healthcare company Hospital Corporation of America, a firm that has been accused by the Competition Commission of overcharging for its services by up to £193 million between 2009 and 2011 – but that has also donated at leave £17,000 to the Conservative Party since it came into office.

According to the National Health Action Party, £10 billion worth of NHS contracts have been awarded to private firms since the Health and Social Care Act was passed in 2012. How many of these have donated money to the Conservative Party, and in what quantities?

Meanwhile, a record five million working people are now in low-paid jobs, according to the Resolution Foundation. That’s around one-sixth of the total workforce. This is a direct result of government policies that threaten people on benefits with the loss of their financial support if they do not take any job available to them – at whatever rate of pay is being offered. The insecurity this creates means firms are free to offer the bare minimum, and keep workers on that rate for years at a time, and pocket the profits for themselves – after donating money to the Conservative Party for making it all possible.

There has been no benefit to the national economy from any of these actions; the deficit that Cameron said he would eliminate is currently at £100.7 billion per year and the national debt is almost twice as high as when he first darkened the doors of Number 10. This is because any improvement in the national finances would interfere with his real plan, which is to dismantle all public services (except possibly national security and the judiciary – albeit a court system available only to the rich) and hand the provision of those services to the private sector in return for fat backhanders from the companies involved.

The evidence is beyond question. David Cameron said he would govern in the national interest but has used his time as prime minister to further enrich his already-wealthy business donors, and consequently his own political party, through the impoverishment of working people and those who rely on the State for support.

What sort of respect is due to a man like that?

By custom, here in the UK, the prime minister is given a degree of respect due to his or her position as the head of the government – but respect must be earned and we judge our politicians on their actions.

Cameron has earned nothing from the British people other than our disgust. He is a liar, at the head of a government whose mendaciousness seemingly knows no bounds. And he is a thief; every benefit claimant who has had their payments sanctioned or their claim denied had paid into the system – via direct or indirect taxation – and had a right to expect the support they had funded.

He should be in prison.

Unfortunately, we (the people) do not currently have the wherewithal to put him there. We have to register our opinion in other ways.

This means he gets no respect at all. He is not the prime minister – he is the Downing Street squatter. There is no need to make way for him when he passes – Dean Balboa Farley was right to run into him. There is no need to pay attention to the things he says – if you get a chance to talk to him, just talk over him as though he wasn’t there. He is a pariah; he should be shunned at every opportunity.

He has disrespected and dishonoured the highest public office in the land. He deserves no better.

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Are the Tories planning to bury us in debt when interest rates rise?

Don't look so smug, George - we know what you're trying to do.

Don’t look so smug, George – we know what you’re trying to do.

It is surprising that they don’t seem to think we can make the connections.

Two articles have leapt from the national media to trouble us this week. The first, in the Telegraph, states that the economic recovery that has made George Osborne so proud is built on mounting consumer debt and a housing bubble.

(This is something that has been known to us for several months, in fact. Osborne’s ‘Help to Buy’ scheme is the principle cause of the bubble, and it was recently revealed that there is no way to slow it down. Let’s not forget that the taxpayer is underwriting the scheme – so when the bubble bursts we will have to pay both as individuals and as a nation!)

The second article is on the BBC News website, which tells us that up to 1.4 million extra households could face “perilous” levels of debt when interest rates begin to rise – in addition to the 600,000 families already in that situation.

(It adds that mortgages are the largest source of household debt.)

Vox Political has long held the belief that the Conservatives have been trying to increase personal debt. Whether the plan was to decrease the national debt in this way is debatable as the deficit has plateaued at around £120 billion for the last few years.

When Mark Carney became governor of the Bank of England, he said he would not raise interest rates until unemployment falls below seven per cent – which might provide a bit of breathing-room for those having to deal with mounting debt.

However a few months ago, at the Conservative conference, we heard that George Osborne wants to falsify unemployment figures by putting the long-term unemployed on Workfare indefinitely.

If a person is put on Workfare, they are removed from unemployment statistics, even though they only receive social security payments for the work they do.

We already know that figures show a larger fall in unemployment than commentators had anticipated, so it now stands at 7.4 per cent, according to official statistics. Putting hundreds of thousands more people on Workfare should cut that figure below Mr Carney’s benchmark.

Meanwhile, household debt is due to rise to 160 per cent of income by 2018, partly because wages are dropping in comparison with inflation. The number of households using half their disposable income to repay debt could rise from 600,000 to 1.1 million if interest rates rise to three per cent (according to the Resolution Foundation, as quoted in the BBC piece) – and to two million if rates hit five per cent.

In the light of this information we must ask ourselves: Is this a Tory trap? Are they trying to create conditions in which more people on low or middle incomes become indebted to the rich, just by fiddling interest rates?

What do you think?

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Thinktank’s schizoid report will not help Osborne to secure more cuts

Schizoid report: José Ángel Gurría, secretary general of the OECD. He'd probably object to the way we've defaced his sign, but it now provides a more accurate description of his organisation's opinions.

Schizoid report: José Ángel Gurría, secretary general of the OECD. He’d probably object to the way we’ve defaced his sign, but it now provides a more accurate description of his organisation’s opinions.

How can the Organisation for Economic Co-operation and Development tell George Osborne that he should invest in infrastructure projects but continue with his policy of cutting public spending, when the first public spending he cut was infrastructure projects?

Is this a sign of the delirium into which the western economies are sinking, partly through slavish adherence to neoliberal nonsense – in the face of all the facts – and party through a lack of raw intelligence?

The OECD, according to The Guardian, has revised down its economic growth forecast for the UK. What a surprise; they haven’t revised our growth upwards since before Osborne became Chancellor – and that alone indicates where the problem lies.

It says spending cuts and a lack of consumer and business confidence are restricting what we should all call “the recovery” only in mocking terms.

But, as the newspaper reports, “it [the OECD] backed George Osborne’s plans for further spending cuts, saying: ‘With a high budget deficit and gross government debt rising to 90 per cent of GDP in 2012, further fiscal consolidation is necessary to restore the sustainability of public finances.'”

What? It’s still supporting the discredited view that when public debt hits 90 per cent of GDP, growth is slowed? Hasn’t that idea been comprehensively rubbished – not only on paper but in the fact that UK growth hit standstill point the instant Osborne came in as Chancellor and inflicted his policies on us all?

It isn’t the amount of debt that’s the problem – its the stupid things that blinkered upper-class idiots do in response!

The OECD said the Labour market was “resilient”, so it obviously has been paying too much attention to DWP press releases when it should have looked up the facts. According to the Resolution Foundation (yes, another thinktank), as reported in The Independent, “The jobs market remains weak and is likely to continue to struggle well into the second half of the decade, making this a more severe downturn for employment levels than the two previous recessions”.

The article states: “The Resolution Foundation has performed an analysis of the total adult employment rate – which reflects the increase in the size of the population and the growth of the available workforce – and found that there remains a “jobs gap” of 930,000. This is the number of new jobs that would be required to restore the employment rate from its present level of 58.5 per cent to the 60.3 per cent recorded in 2008. This jobs gap has actually grown from 830,000 in the final quarter of last year.”

Once again, we see the facts do not support Coalition government press releases.

The OECD’s claim that average real earnings are “weak”, on the other hand, is realistic and gives the necessary perspective to a report from the Office for National Statistics that the total number of weekly hours worked across the economy hit a new record high of 950.3 million in the first quarter of the year.

If everybody’s working so much, why haven’t we got any money? Answer: Because the Tory-led government has been pushing wages downwards, ever since it came into power. Average earnings for bosses of FT350 companies have rocketed upwards, but the worker on the street had a pay rise of just 0.8 per cent last year. Look at the way benefit increases have been pushed below the rate of inflation (the DWP again!) in order to make the unemployed desperate to take whatever work they can get – no matter how poorly-paid – and to put those who have jobs in fear of losing them, so that they won’t be demanding pay rises anytime soon.

Back to the OECD: It wants a house-building programme to spur jobs growth. Without this, it warned that house values could overheat, sparking another price bubble. Isn’t that what George Osborne wants? Look at the so-called “second-home subsidy” he announced in the March budget, when he said the government would underwrite a percentage of new house purchases. Already we have seen warnings (from Sir Mervyn King in this Vox article) that it will create a price bubble.

So not only is Osborne right; he’s also wrong. Growth is down because of his policy of cuts, but he should continue making them. Unemployment is down – but the jobs gap has grown.

Also, not only is Osborne wrong; he’s very wrong. Low wages mean economy-boosting demand is also low – but the government is pushing wages down still further. House-building is needed to spur jobs growth and prevent a price bubble – but he isn’t building houses and he is actively pursuing the creation of a price bubble.

That’s what the OECD report says. There’s no way Osborne should be using it to support his policies but I bet he will.

If I were the secretary of state in one of the government departments he’s trying to squeeze for more cuts, I would be phoning the local mental hospital, saying a dangerous madman was loose in Whitehall and demanding that he should be sectioned.

But it seems that, instead of this, the ministers who’ve dragged their feet will be subjected to a grilling by the all-new ‘Star Chamber’, which is the name for the public expenditure committee Osborne has set up. Apparently ‘Star Chamber’ has a “mystique” about it (according to The Guardian); in fact it will consist of Osborne, Danny Alexander and those ministers who’ve given in and agreed cuts, haranguing the dissenters until they fold up like cheap thugs who’ve been punched in the kidneys once too often.

The fact that they will all eventually capitulate means we can laugh at them next time they’re on television trying to act tough, but the whole sorry story leaves us with one immutable fact:

This is no way to run an economy.