Thursday 26 November 2015

Osborne the Master Illusionist

 No need to spend (from) £17 for a ticket to the Shaftesbury Theatre to try to spot the tricks of Illusionists: just study George Osborne's budgetary performance, in which he contrives to turn what is in reality a humiliating defeat into what, for the time being at any rate, appears to be a career-enhancing success.

Precisely one month ago today, on the 26th October, Osborne's acolytes in the House of Lords were arguing that that cuts to Working Tax Credits must remain, that denying the chancellor's right to make them would be constitutional sabotage, they were essential to his much-vaunted "long term economic plan" and to frustrate them would endanger our economic security and, for good measure, our national security to boot. 

Multi-millionaire Lord (Andrew) Lloyd Webber was flown in from across the Atlantic to shore up the Tory vote, and billionaire Lord (Anthony) Bamford, owner and boss of JCB, was Rolls Royced (presumably) in for the same purpose.  To no avail: the Lords rejected the cuts. 

This was a massive humiliation for both the government and the Chancellor, whose ambitions to eventually become PM were though to have received a severe jolt.

Yet yesterday Osborne declared that the cuts were no longer necessary.  His excuse:  the Office of Budget Responsibility had found an extra £27bn in the public finances.

Is Osborne seriously trying to tell us that, only a month ago, he was not aware of that, or, if not the precise figure, at least the possibility?  If he didn't know than he is quite obviously not on top of his job.  If he did, then persisting with the cuts was clearly a political ploy to further shrink the state and put the blame, and the punishment, on the poorest.

In fact the £27bn is not actual money received, but what might be received if the economy grows at 2.4% for the next five years.  And it's not necessarily the result of improving figures, just a different method of calculating them. Only a few days ago I read that government borrowing last month (October) was  higher than predicted, largely because of a fall-off in tax receipts. So watch out for revisions.

Osborne's technique appears to be, before any of the great economic occasion, to drip feed bad news to the media, who faithfully report it, with accounts of the terrible struggles in various government departments as they seek to avoid the latest version of the Geddes Axe. This time, along with  social security expenditure  it was the police, who were predicted to have to endure further swinging cuts.  Having prepared us for the worst, Osborne then pulls his "surprises": the worst is not going to happen after all.   And he bows out to resounding cheers from his own side and ineffective gasping from the Opposition.

Much of the press has been deceived.  But the reality is that our libraries continue to be closed, our parks neglected, 16 to 18 and adult education strapped for cash, the NHS on its financial knees, social care crumbling, and the departments of Energy (those vital renewables), Business Innovation and Skills (productivity) and Transport (our infrastrucure) subject to yet  further reductions .

Even the Treasury itself is to be further cut.  This is the department responsible for collecting our taxes, which, if collected  effectively, are the means by which the government deficit will be reduced.

Daftest of all, the aim of a permanent government surplus, of £10bn by the end of this parliament. remains intact. As even a modestly competent A-level student would know, this is economic nonsense.  A government surplus is a leakage from the circular flow of income.  Unless it is balanced by a reduction in the other leakages, savings and imports (highly unlikely) or an increase in other injections, investment and exports (not much sign of either) then the national income remains in a downward spiral.

Liberal Democrats, the Greens, the SNP  and Labour need to be shouting, preferably for once in unison, that the cuts continue and they are not an economic necessity but a political choice.

1 comment:

  1. Yes, I had also recently read about the government's October borrowing being the worst for 6 years, so was more than amazed to hear Osborne saying that the economic figures were "better than expected". Certainly, a Master Illusionist (or Delusionist)