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Don’t get your hopes up! The box is probably as empty of good ideas as his head.
What a lot of twaddle Gideon George Osborne was peddling to Andrew Marr yesterday!
Speaking in advance of his Autumn Statement (or mini-budget) on Wednesday, Gideon told us all that cutting the UK’s financial deficit was “taking longer” than planned. This is because his government hasn’t invested in any infrastructure projects worth mentioning, or created jobs any other way. Where projects have been identified (HS2, new airport/runway), his political party has descended into squabbles over price and place.
He said “to turn back now would be a complete disaster”, which is true but pointless, as nobody is contemplating it. If Labour were to take over in 2015, they would have to look at the situation then and find a way to progress from there – they wouldn’t try to turn back the clock; that’s not possible.
He said richer people would “pay their fair share”, which means nothing when we don’t know what Mr Osborne considers is fair to richer people. What we’ve seen so far would suggest he likes to hammer the poor while handing richer people a tax rebate. Do you think that’s paying their fair share?
But I’ve already tackled what I would do with taxation.
He said the deficit was down by a quarter. This is a statistic that the Tories like to peddle but it is utterly meaningless when you see that borrowing for October hit £8.6 billion – £2.7 billion more than in October 2011. How is this an improvement?
He did show one flash of wisdom; he wisely refused to divulge any of the Office for Budget Irresponsibility’s economic forecasts in advance of Wednesday’s Statement. This is an organisation that has been consistently wrong, ever since it was set up. I wouldn’t trust it to speak my weight.
His worst transgression, though, was this: “To go back to the borrowing and the debt and the spending that Ed Balls represents would be a complete disaster for our country.”
Get a grip, Gideon! Borrowing during the Labour years was around 2 per cent LESS than during any preceding Conservative administration over the last 40 years! As for debt, even after the financial crisis and the bank bailout, the UK’s debt was a lower percentage of GDP than it had been for most of the 20th century! You are peddling an infantile justification narrative that even a child can see is nonsense!
I think the biggest problem here is one of perception. Gideon‘s idea of borrowing and spending involves borrowing money to give to his party’s fatcat business friends through government schemes like the work programme (don’t let them tell you it’s payment by results – even the DWP has admitted it isn’t). If he actually got down to proper investment, in proper infrastructure projects, the economy would start to rally.
Government investment of this kind would, in fact, pay for itself – and help pay off the deficit.
Any spending has a greater impact on the rest of the economy than the initial outlay; this is known in the jargon as the ‘multiplier effect’. There are a variety of multipliers depending on the sector. The highest multiplier is attached to construction at 1:2.06, meaning that every £1bn invested in construction will actually generate £2.06bn in new activity.
The government could, for example, embark on a massive programme of publicly-owned housing, to help reduce the deficit. It can do so much more efficiently than the private sector for three reasons: First, government has a return in the form of taxes; secondly, welfare spending falls as people are brought into work; thirdly, government borrows at much lower interest rates.
For these reasons, government can actually build the same house for a much lower net outlay than the developer and so offer affordable housing which contributes to reducing the deficit.
Also, there are 1.8 million families (representing over five million people) on council house waiting lists. There is an urgent need to build affordable housing for these people, which would also help reduce housing benefit payments.
There is no obstacle to increasing borrowing in order to fund investment. The interest rate on 10-year government borrowing is currently well below the level of inflation – meaning the government can borrow at interest rates that are less than zero in real terms. Why doesn’t anyone ask Gideon why he isn’t taking full advantage of these amazingly favourable opportunities?
This is the kind of investment that creates real jobs. You don’t create jobs by bullying people on benefits into work that doesn’t exist, Gideon! Here are a few more examples of where public sector jobs would benefit the economy as a whole:
It has been estimated that over a million ‘climate jobs’ could be created if the government was serious about tackling both climate change and unemployment – these would include areas like housing, renewable energy and public transport investment including high speed rail, bus networks and electric car manufacture.
Much of the country outside of London also needs huge investment in bus services – and, just as we should invest in electric car technology, we should also invest in electric buses and tram networks.
Only 2.2% of UK energy comes from renewable sources compared with 8.9% in Germany, 11% in France, and an impressive 44.4% in Sweden. If we are committed to tackling climate change and ensuring domestic energy security there needs to be investment in renewable energy technology.
Are you going to mention any of those in your Autumn Statement, Gideon?
I think not.
