What the Tories don’t say about the deficit (austerity isn’t working)

mmeacher

Vox Political has been saying this for years. Now that grand master of pointing out the facts to politicians who just won’t see them – Michael Meacher – has written to the press with the same message.

Vindicated at last!

Here’s the esteemed Mr Meacher’s letter to The Guardian:

The Tories have enjoyed attacking Ed Miliband over his failure to mention the deficit in his conference speech (Report, 25 September), but more importantly they fail to mention what is happening to the deficit on their watch. The whole point of Osborne’s austerity was supposedly to reduce the budget deficit. But the data shows it’s actually rising. Last month he had to borrow £11.6bn, £700m more than a year ago, and, despite being forecast to borrow 12% less this year, he’s so far had to borrow 6% more.

When the bankers’ crash erupted in 2008-09, the deficit peaked at £159bn and Alistair Darling stimulated the economy with two expansionary budgets. The deficit fell £38bn in two years. Then Osborne’s austerity kicked in and the rate of deficit reduction halved in the next two years to £99bn last year. This year it seems likely that the deficit will increase to around £105bn. Why? Because if Osborne shrinks the economy – and average wages are already 9% down in real terms since the crash, and still falling – then tax receipts will shrink as well, and if they shrink faster than government expenditure is cut, the deficit will rise, which is exactly what is now happening.

This torpedoes several government claims:

That austerity is working; it isn’t, it’s proving counterproductive.

That the drop in unemployment is feeding growth and government revenues; it isn’t, the OBR forecast that tax receipts would rise 6.5% this year, but they’ve dropped by 0.8%.

And that the government is on track with its (fantasied) “long-term economic plan”. It isn’t, when the National Institute of Economic and Social Research estimates that growth is already starting to slow (with third-quarter growth down to 0.6%), manufacturing orders have nosedived, the trade gap is widening to an all-time record, business investment is still flat, and public finances – the heart of the Osborne experiment on the British economy – are now badly deteriorating.

Michael Meacher MP
Labour, Oldham West and Royton

Follow me on Twitter: @MidWalesMike

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9 thoughts on “What the Tories don’t say about the deficit (austerity isn’t working)

  1. Robert Fillies

    Thanks to Mr Meacher for putting the truth out there rather than the myth perpetuated by the tories and their friends in the media. Thanks to Mike for putting it on his blog, I wouldn’t have seen this letter otherwise because I refuse to buy newspapers.

  2. Richie Rants

    I’m no economics expert but I guess that it’s all based on numbers and facts, right? Well if that’s the case then how can George Osborne tell bare-faced lies over and over. I just watched his speech from the Conference and he said everything was on the up. He actually said that we were experiencing growth and the defect had been reduced more than in any other country affected by the crash. One of these two versions is simply not true. I do understand that many economists told the Tories back in 2010 that austerity measures wouldn’t work, and this would be the outcome. Most people can’t lie in their jobs, how come the Chancellor can?

    1. Mike Sivier Post author

      He opens his mouth and the words just come flowing out. He’s got a cover story and he’s sticking to it.

    2. spotthelemon

      In that context, they cherry pick the stats that suit their argument, that’s politics. When it comes to spreading economic concepts to people, there does seem to be a mass deception amongst mainstream politicians & some mainstream economists, they clearly don’t believe all the guff they come out with. Most of the memes politicians spread to the public only have any relevance to reality if the money supply is fixed with a constant value and they cheerfully manipulate the value of money so they can’t believe them entirely, but they do seem to believe there is some kind of fundamental truth in them. There is also a strong element of people are stupid so we have to give them economic ideas in simple little soundbites they can repeat & convince each other with (memes). Most of these are based on applying personal finances to the national economy which Keynes identified as a fallacy of composition in the 1930’s. You would have to issue your own internationally traded currency, have a population of workers and others about your person, also have businesses that employed that population & required infrastructure to operate & traded with businesses on other bodies for such comparisons to be remotely accurate

    3. Norma Roberts

      I think it works something like this Richie Rants: If I tell you that I have one leg and see out of one eye, I am not lying, and, because you cannot actually see me, the way I have given you that info implies: I ONLY have one leg, and I am blind in one eye.

      In reality I have another leg and see out of the other eye as well, BUT, I did not lie, I just said something in a certain way so that you would believe what I wanted you to believe.

  3. bookmanwales

    Unfortunately we don’t have degrees in economics or other such fantasy titles.. We just have plain old common sense, something that hs sadly been lacking in our so called leaders for many years.
    Cut peoples spending power and wages = less tax receipts now what is so hard to understand about that ?

    George Osbourne has a formula for it I’m told

    Revenue = mrp2 x goff3

    where r = some fictional figure pulled out of a hat
    m = some fictional figure pulled out of a hat
    r = some fictional figure pulled out of a hat
    p = some fictional figure pulled out of a hat
    goff = George Osbourne fantasy figures

    As we haven’t had the same education it’s obviously beyond us to understand !!

  4. Jeffrey Davies

    its more like mm attacking goerges figures but then they now that labour wasnt has bad has these devils but now he got carney in the bank and him outside with duncan fixing the unemployed figures its looking rather rossie in his garden pitty about all those thistles and weeds but how does labour allow them day in day out to get away with their lies jeff3

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