Tag Archives: George Osborne

Osborne wants to take us back to 1948. Time to look forward instead

 


Powered by Guardian.co.ukThis article titled “Osborne wants to take us back to 1948. Time to look forward instead” was written by Will Hutton, for The Observer on Sunday 8th December 2013 06.20 UTC

It is an incidental sentence, but it brought me up short. By 2018, general government consumption will be proportionally no larger than it was in 1948. So declared the Office for Budget Responsibility in its report accompanying the autumn statement. The work of three generations in building the sinews of a state that support systems of health, transport, education, environment, policing, science and the rest is to be summarily withdrawn over the next five years. It is a landmark moment in our national life.

Next year the coalition – deputy prime minister Nick Clegg supporting Cameron and Osborne – is aiming to legislate that the reduction of the deficit on this scale and speed should be a statutory obligation. Stunningly – apart from some allegedly effective new measures against tax avoidance, and asking non-residents to pay capital-gains tax on the sale of their homes – all of the work is to be done by cutting spending, by a cumulative £75bn in ways yet to be specified.

The IMF, after assessing the experience of 107 countries between 1980 and 2012, recommends that, after a credit-crunch deficit, there should be a balance between tax increases and spending reductions. In Osborne-land over the next five years more than 95% is to come from spending cuts – a global first in self-harm.

I worried in my column last week that the principal risk of the recovery – induced by Osborne actually introducing measures contrary to those he is supposed to believe in – was that his apparent economic success would seduce him into actively damaging prescriptions. So it has come to pass. The OBR shares my view that all we are witnessing is a cyclical snapback of the economy driven by a recovery of demand. This should not be the excuse to shrug off the calamity of irrational total austerity, and hack away at the state with abandon. But sure enough that is what is now promised. It is a deliberate challenge to the Labour party, but importantly also to the Liberal Democrats. I am not sure that, once the enormity of what is proposed is grasped by his party, Clegg will be able to persuade it to sign up to such a dark vision. He had to take the coalition agreement to a special conference of party members before he could formally agree to it. Already key figures aware of what is proposed, I’m led to believe, feel the whole party, as in May 2010, must be involved in another decision of parallel importance. I don’t think he can win any such vote. And what future would there be for the coalition – or indeed him – if it did come to that? Osborne’s calculation is that he and his party are on the right side of the argument. A jihad against government, backed by a rampant centre-right press, is capturing the popular mood. For alongside the proposal to create a 1948-scale state is another highly toxic proposal, at least for any Lib Dem worth their salt: to introduce a cap of just over £100bn on welfare spending, excluding pensions and the jobseeker’s allowance. Any last element of Beveridgean underpinning to the British approach of supporting the least well-off is to be removed. All there will be is a limited pot into which the needs of Britain’s disadvantaged will be shoe-horned. No Lib Dem can support this, surely.

The story is that this is all in support of “hard-working” people, as the Treasury declares on its webpage – bizarrely reducing a great state institution into a mouthpiece of Tory central office. The assumption is that the public and social institutions built up over the last 70 years are unnecessary and held in the same contempt by “hard-working” people as a highly ideological Tory party. It is a bet that only politicians insulated from the reality across Britain could make.

Some of the intense pressures on government departments are already surfacing. Leaked papers from the Department for Business show its cumulative spending cuts are at least £1.6bn, with more unspecified for 2018/19. Two proposals are privately under active consideration: one is to turn £350m of grants to students from less well-off households into loans, which I doubt will be cheered by their “hard-working” parents. The other is to cut the science budget. Indeed any ambition to lift research and development spending from its current 1.8% of GDP to the 3% benchmark spent by the world’s best can be abandoned. We are to stay in the second or even third division.

It will be the same across the board. From flood defences to class sizes, from the capabilities of our regulators to the effectiveness of our police, from assistance to the elderly or the scale of our performing arts – everything is under threat. And this is unrelieved by any attempt to look for tax revenue to mitigate the impact, as every other country does and is advised to do. Instead, more asset disposals are proposed. The east coast mainline, generating £209m of surplus on £700m turnover, will be sold despite its fabulous returns to the taxpayer. The same will take place with EuroStar. To give up such great financial returns along with the benefits of ownership is daft. The new owners will demand even higher returns on their investment, with only enfeebled regulators left to protect “hard-working” people from being skinned. Ownership matters.

As the IMF argues, the knock-on depressive effects of spending cuts on such a scale is much higher than a more balanced approach involving tax increases, especially when the banking system is still palpably weak. The next 18 months will see a clawback of some of the ground lost over the last six years. There could be a substantive follow-through for the rest of the decade. Instead growth will be much more subdued as the next wave of the jihad kicks in, all to create a 1948-scale state and a giant leap backwards to a 19th-century system of poverty relief. Is this the civilisation, and wider economy, in which “hard working” people want to live and work – and where so much risk is transferred from social institutions to the individual.

The autumn statement is a seminal event. The obligation is on the Labour party, and the Lib Dems, to make the counter case. Great politicians must have vision, and back it with argument and evidence. Miliband and his shadow cabinet must be brave enough to set out what kind of state and social settlement they want, and how best to lift the stagnating productivity of British workers, which is at the root of the “cost-of-living crisis”. Lib Dems need to ask themselves if they really want to be allies in creating the regressive, punitive civilisation Cameron and Osborne have in mind. Back to 1948? Or onward to something smarter, fairer and more generous? It’s decision time.

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The Conservatives are much more unpopular than they realise

Well guess what, they have been pretty unpopular with me for quite  a while so not much change there.


Powered by Guardian.co.ukThis article titled “The Conservatives are much more unpopular than they realise” was written by Sunny Hundal, for theguardian.com on Saturday 27th April 2013 11.00 UTC

Much of modern politics is based on a series of confidence tricks. After Thursday’s “better than expected” (by 0.2 percentage points) growth figures, the mood around Westminster has changed. George Osborne claims the economy is “healing” and Tory MPs feel more convinced that, with a triple-dip recession avoided, the economy is on its way up. Only 0.4 percentage points the other way and it would have been a disaster. But Conservatives shouldn’t be so self-assured because, outside the Westminster bubble, they are much more unpopular than they realise or accept.

A few weeks ago, on the eve of the budget, a flurry of polls showed Labour had drawn level with the Conservatives on economic competence, and voters were losing faith in the chancellor. In another poll, people were more likely to reject an argument on the economy if Osborne advocated it.

This kind of unpopularity is extraordinary for a chancellor who has been in the job for less than three years. Most leftwingers think they know why (“they’re Tories”), but it’s curious that even conventional Westminster wisdom says Labour should be doing better on economic matters.

But there is no historical precedent for this; in fact Labour should be languishing way behind in the polls.

The key reason is that they were in power during the biggest economic crash of the past 80 years. Voters always blame the party in power for not preventing such big crashes, and take years to forget. The Conservatives were in power when Britain crashed out of the ERM in 1992, and it took the calamity of 2007 for them to be seen as better at managing the economy – a full 15 years later.

So why have people forgiven Labour so quickly? This question is more perplexing, as Labour has made two unpopular accusations against George Osborne since 2010: first that cuts to spending are too hard and too fast, and hit the poor hardest; secondly that austerity is hurting our economic growth and leading to stagnation. Neither of those arguments were popular for Labour to make.

Osborne has argued since 2009 that cuts need to be made to public spending to reduce Britain’s debts. Voters have not liked the cuts but a majority have always accepted their need. In fact more voters have consistently blamed Labour for the cuts than the coalition government. Voters have also mostly preferred more austerity over extra spending on growth. Similarly, on UK’s economic stagnation, most voters blame the previous Labour government, the Eurozone, banks or even higher oil prices for our mess.

If Labour are making arguments that voters don’t agree with, why aren’t more rejecting the party? Maybe the Tories are just feeling midterm blues? But this explanation does not make much sense either: Labour’s reputation for managing the economy increased after they were elected in 1997, and stayed high even during the midterm.

In other words, Labour has pushed ahead with unpopular (if true) arguments in the face of a very hostile media press. Plus, voters very clearly remember they were in charge when the economy crashed in 2007. And yet the Conservative record on economic competence is just barely ahead of Labour. It’s astounding that Labour aren’t languishing in obscurity in the polls.

This suggests to me that the issue here isn’t just the economy but something wider. The speed at which the Conservatives have become so unpopular says less about the cuts they’ve implemented and more about their overall brand. This is the practical impact of the failure of Cameron’s detoxification process, which died in the face of a weak leader unable to take on his own backbenchers. Westminster wisdom downplays Tory unpopularity to mask a hostility so deep that, as Ed Miliband cuttingly said at PMQs a few weeks ago, we were united when Osborne is booed at the Paralympics. It’s only a matter of time before the latest confidence trick also falls apart.

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