We hate to say we told you so

28.11.11 Martin Rowson

Today we saw Gideon (George Osborne) unveil his first ever Autumn Statement (last year it was a Comprehensive Spending Review) which used to be Brown and then Darling’s Pre-Budget Report, although it’s still the same thing more or less.

What we saw today was a Chancellor willing to blame everyone except himself for his own failures. Gideon may claim as much as he likes that the growing crisis in the Eurozone may have put a dent in its works, but that would just be disingenuous as it’s not at that stage to truly have an impact on a non-Eurozone country such as the UK.

But in a nutshell what we had is:

  1. Growth forecasts for UK economy cut 0.9% this year and 0.7% next year (And we all know you can’t truly get the deficit down without growth)
  2. Borrowing forecasts revised up – an extra £111bn to be borrowed over five years (This was the one thing they set about to do, this was the be all and end all test of the Coalition and they are set to fail upon it)
  3. Pay cap of 1% for public sector workers once two-year pay freeze ends (Which is really going to encourage consumer confidence and spending, the true engine of economic growth)
  4. Unemployment to rise from 8.1% this year to 8.7% next year and more public sector jobs forecast to go – 710,000 over five years (Again, nothing new there)
  5. Credit easing and numerous infrastructure projects (I will welcome these, but it’s rather ironic after 18 months of austerity mantra)
  6. January rise in regulated rail fares to be capped at 6.2%, not 8.2% (While this is certainly better but as a semi-regular rail user, this needs to be below RPI, 5%, we already have the most expensive rail fares in Europe)
  7. Doubling of free childcare places for deprived two-year-olds to 260,000 in England (The one true policy I’m sure we can all get behind)
  8. 3p fuel duty rise due in January to be delayed or frozen (Which is still entirely negated with the rise in VAT in January)
  9. Bank levy to be increased (Which is all very well but not when you remember this is balanced out with the cut in Corporation Tax)

So essentially, we have growth being revised down for the fourth time in 18 months and borrowing expected to be £111 billion higher in 2015.

So when Gideon said “we are out of the danger zone.” around a year ago I didn’t think we’d get around to us saying “we told you so” so soon.

Max

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The pressure mounts

With inflation around 5%, consumer confidence falling for four months on the trot, business confidence falling to a two year low, growth flat-lining in the past 9 months and growth expectations themselves being cut, you would have thought Gideon (George) Osborne would think things could not get any worse.

Well apparently they can. It seems 100 leading economists have written into the Observer to tell Gideon to adopt a plan B. Now while letters like this have been done in the past, the difference being that this time it has an alternative outline. It’s an alternative Miliband and Balls should take head to:

  1. An immediate halt to cuts, to protect jobs in the public sector. (Although I wouldn’t not cut entirely, for one, I’d cut the renewal of Trident).
  2. A new round of quantitative easing but the money wouldn’t go to the banks. Rather to finance a “Green New Deal” to create thousands of new jobs.
  3. Benefit increases to put money into the pockets of those on lower and middle incomes and give a boost to spending.
  4. A financial transaction tax to raise funds from the City to pay for investment in transport, energy and house building. (Robin Hood Tax anyone?)
  5. Introduce a truly progressive tax system so that those at the bottom don’t face the greatest burden proportionately (Or simply having the rich pay their taxes will be a start)
  6. Introduce a tax on land value to increase revenue and reduce the possibility of another debt-fuelled housing price boom.
  7. Copy South Korea and China’s model of state assistance for industry by creating a British investment bank. (Something that Lord Mandelson was beginning to champion in the last year of the Labour Government)
  8. Invest in transport and infrastructure to create jobs, but also to encourage people out of their cars and into trains or on to bicycles
  9. Judge the economy not on whether there is growth in GDP, but on a new catch-all criterion that takes into account the desire for minimal unemployment, and for work-life balance, economic and social stability, and job satisfaction.
So Gideon, even though we know you wont, please take heed of the recommendations. Simply living in the nostalgia of a failed plan of the early 1980s wont guarantee success. And Miliband and Balls, these recommendations should be the essence of your policy review, take them on board!
Max

We told you so

Going to use a bit of the Brigid Jones BULS blog formula this morning.

It turns out there’s going to be the biggest drop in middle-income families incomes since the 1970s and so pushing 600,000 more children into poverty according to the IFS. This is while Gideon (George) Osborne has announced a £840 million tax break for multinationals using tax heavens while it turns out the amount of tax money lost in the FTSE 100 by tax avoidance is estimated to be £18bn. So much for the cuts being “progressive”.

To insult to misery, it turns out public sector job losses will 50% higher than originally predicted. So much for Cameron’s pre-election claim that any Minister who came to him with front-line public sector cuts would be told to go back and have a rethink.

Max

The expectation

After Gideon’s (Osborne’s) low-key and rather dull speech at the Tory Conference today where he claimed his economic plan to be working and even, dare I say it, “flexible”. I’d like to draw attention to the only aspect of Gideon’s plan that has so far proved to be “flexible”, the growth expectations  by the IMF over the last 6 months or so, curtsey of LabourList:

IMF osborne effect.JPG

The fact is, the CBI, the IMF and now even some Tory backbenchers and Chairs of Treasury select committees have called for a plan for growth or at least attempts to stimulate it. Like we said a few weeks ago, a temporary cut in VAT would be a huge stimulus as pointed out by the IFS.

It seems Gideon was only really to parade the the low interest rates in his speech, but with the abysmal growth over the last year or so, it seems we may have a rise in interest rates regardless if growth doesn’t pick up.

So please Gideon, think again.

Max

9/11 Ten Years On, Coalition Politics and Blood Donation

9/11 – A Warning from Recent History

For someone of the age of the current crop of Labour Students, it is particularly difficult to believe that it is ten years tomorrow since the lives of millions were changed forever on September 11th, 2001. Most of us were still in primary school at the time, and it is perhaps apt that our generation – one that was constantly told we were growing up too fast – had our innocence of the world around us robbed so suddenly on that bright Tuesday morning. Hearing and seeing the images of the planes hitting the World Trade Center still transfixes all of us, and as much as we might want to look away having seen enough, we can’t quite bring ourselves to stop watching.

However it is our generation – the 9/11 generation – who will be the politicians and headline-makers of the coming years, and if anything good can come of the last decade, it is surely the lesson  that those in power have a responsibility not to overreact when faced with such onslaughts. Our party’s most successful leader (in electoral terms) no doubt had good intentions, but made the grave error of marching the troops gung-ho into an unplanned and illegal war, probably creating a whole new generation of terrorists in the process, while at home him and those around him were complicit in eroding many of the freedoms we were meant to be protecting, including detention without charge and freedom from torture. If the horror of terrorism reaches us again, we must pause and assess the causes before acting. The same rule should apply for other crises, like the riots this summer.

Backbench Tories Have Nothing To Worry About

Today is the final day of the Plaid Cymru autumn conference in Llandudno, north Wales. The outgoing leader, Ieuan Wyn Jones, made his final conference speech yesterday after an electoral drubbing for the nationalist party in the Welsh Assembly elections in May. Unlike in Scotland, where the SNP have been successful, he argued that coalition government in Cardiff Bay (of which Plaid was the junior party) meant Plaid’s achievements in government were smothered by Labour, and that the party was punished by voters for not claiming credit for them.

Aside from the fact that Plaid achieved very little in government in a time of economic turmoil other than a referendum with poor turnout which managed to bore even political anoraks, their experience in coalition should serve as a lesson to Westminster politics. This week Tory backbenchers, angry over law and order, Europe and abortion, moaned that the Lib Dem ‘tail’ was wagging the Tory ‘dog’ and that Nick Clegg was being given too many concessions by the Prime Minister. However come the election in 2015, the Tories will have nothing to worry about, as the voters are likely to give them sole credit for any successes – particularly if the economy picks up (not a given considering Osborne’s slash-and-burn approach) – and they will certainly not be looking to make some sort of permanent alliance with the Lib Dems, contrary to what some commentators are predicting. The coalition dog will probably have his tail docked when the voters are next given a choice.

About Bloody Time

This week the ban on gay and bisexual men giving blood for life in Britain was finally overturned (although you’d be forgiven for not noticing the leap forward because the BBC thought Strictly Come Dancing was more important on the news bulletins that night). This is a triumph that equality campaigners have been working tirelessly for for years, and at last gay men will be able to save lives and help tackle the urgent need for more donors. No more will the official policy imply that gay men cannot be trusted to practice safe sex and ‘probably have HIV’.

Although the ban was only replaced with a one-year time lag since a donor’s last encounter, it is still progress, and puts us more in line with the situation in similar countries.

Thanks Gideon

This is a table taken from the LabourList website. Just lets you appreciate the good work Gideon Osborne has done for this country so far.

GDP Growth over the last three quarters

Osborneeffecteurope.JPG

Ireland and Greece’s figures haven’t been released yet, but either way, it’s not looking good.

Max

All things economic

Sorry for the lack of blogging in the past couple of weeks, I myself have been working almost full-time with a work-placement on the side. Anyway, I’d like to focus on two of the biggest economic updates in a news dominated by the ongoing phone hacking scandal. The up coming growth figures for Tuesday and the situation over the debt talks in the USA.

First off, who needs a plan B, right? Judging by what is being said by the likes of the National Institute for Economic and Social Research (NIESR) this stubbornness is not quite paying off. The GDP growth figures are mainly regarded as the be and end all test for a government’s economic credibility. To meet budget forecasts for growth this year the UK will need 0.8% of that well needed boost. What the NIESR is predicting the Office for National Statistics to actually say is that the UK has grown by a mere 0.1% with some City forecasts predicting a contraction.

Now don’t get me wrong, here in BULS we are capable of recognising that the Chancellor (Gideon) can not control every aspect of the economy. The rise in oil and food prices and the growing concern over the Eurozone crisis aren’t the greatest assets ever. In fact, the idea of austerity does have the vague potential to work, as seen in Canada in the 90s and in the UK in the 80s. But these are totally dependant upon favourable economic circumstances in neighbouring nations such as Europe and the USA. Sadly though, we currently don’t have those circumstances. We don’t have secure and confident markets in Europe and the USA and this is something Gideon totally fails to grasp. Cutting spending to reduce the deficit is all very well but once again, it’s pointless without growth to fuel this deficit reduction and with average pay rising at 2.3% and inflation at 4.2% (thank you VAT hike) this recovery is still far from certain.

Turning our attention over across the Atlantic it seems Federal government has seen a roadblock to progress because of dogged stubbornness with Republican House Speaker John Boehner walking out on a crucial debt talks with Senate leaders and the White House. Now anyone who’s studied the US governmental and political structure will always recognise that it is a system based upon compromise. With an increasingly ideologically driven Republican based House of Representatives, Obama has had to make drastic compromises in the name of reaching a deal for the good of America.

The President has already pledged to double his cuts particularly in the area of medicare which many supporters (such as myself) are completely aghast at, with $650bn of extra cuts pledged recently. Either way, this is a man who will attempt to build the bridge with his conservative law-makers. Sadly, it takes two to build a bridge and this is not what we are seeing from the Republican end of the river who refuse to raise any taxes (I thought they were rather keen on deficit reduction?). The Republicans have increasingly gone down the road of stubbornness in the past few years, but now it’s time to walk the walk as well as talk the talk as they put aside ideological differences. Sadly, given the ever increasing grip of the Tea Party, I doubt this much needed maturity will happen any time soon.

Max