George Osborne is trapped in a loop, doomed to keep peddling the same failed solutions to the same unsolved problems.
You couldn’t make it up. A shadow chancellor widely suspected of being an unreconstructed Marxist (and apparently keen to show he isn’t) uses his first set-piece head-to-head with the Chancellor to quote Marx’s most errant pupil, Chairman Mao, and toss the mass murderer’s Little Red Book at the Treasury Bench. Osborne couldn’t believe his own luck. John McDonnell’s careless piece of Tomfoolery quickly became as big a story as Osborne’s U-turns or the Tories’ equally careless butchery of the machinery of British government.
Tory backbenchers were reported to have been banging their desks in approval (it’s a public school thing, apparently) when Osborne turned up at last week’s meeting of the 1922 Committee . But Tory delight at McDonnell’s gaffe may be short-lived. The 2015 Spending Review and Autumn Statement was a devious and dangerous package, but it was also a deal done from a position of weakness. It was a tacit admission from George Osborne that his strategy isn’t working – politically or economically.
The first sign of this is that Osborne has to keep coming back to problems he’s supposed to have already fixed. Five years of cuts and wage freezes in the public sector haven’t reduced the deficit by anything like what Osborne promised. In 2010, he said the deficit would be more or less eliminated by 2015-16; instead he’s borrowing more than £70bn, about the same as Alistair Darling planned to borrow in a plan that Osborne said would turn Britain into the next Greece. He’s increased Britain’s national debt to £1.6 trillion – almost 60% higher than the supposedly toxic level he inherited from Darling.
So, up he popped again five years later with another round of barely-credible cuts to departments like Transport, Business and Communities (i.e. your local council) which he thinks no one cares about. As custom dictates, Osborne waved another set of fantasy figures about growth and borrowing churned out by the supposedly independent Office for Budget Responsibility (OBR) – the self same organisation that told us his previous plans would eliminate the deficit. Osborne’s statements are like twice-yearly Groundhog Days, with the same failed solutions chasing the same unsolved problems.
It’s not just the deficit. Take housing, perhaps the most serious long-term problem we face now, right at the awkward interface between economic and social policy. Predictably, Osborne’s attempt to solve a crisis of over-priced housing by making housing more expensive failed, so he came back for another go, this time promising to double the pitiful £1bn “housing” budget. Not that any of this money will be spend on anything as useful as building houses. Instead, he offered yet another series of subsidies to a select group of homebuyers (which will probably just further stoke up prices) and some sweeteners for the very same private sector house-builders who have failed to deliver the affordable homes we need for the last 35 years. No doubt, he’ll be back again in a year or two with another set of variations on the same themes.
I can go on. The combination of disastrous structural reforms, a spending squeeze and a wage freeze having plunged the NHS into financial crisis, Osborne came up with a £3.8bn sticking plaster that might just get the NHS through the next year or two. At the same time massive cuts (“non-NHS” health spending is being cut by 21% in real terms by 2020-21) to the budgets for nurse training, keeping people healthy and, above all, social care, will pile cost pressures on the NHS. Osborne must know that he’s just storing up trouble for the future. But, hey, whatever gets him through the day…
Secondly, Osborne was forced into some humiliating climb-downs. Not only on tax credits, but also on widely trailed plans to slash police spending. The Paris terrorist attacks did for his plan to butcher police budgets (ISIS did the campaigning on that), while his tax credit cuts were undone by a highly effective political campaign which alarmed even many Tory backbenchers.
Of course, as superbly explained by Flip Chart Rick, Osborne’s is really just delaying the cuts to tax credits until they are sucked up into the crock of shit known as Universal Credit. As ever, Osborne avoided tackling the real issue: Britain’s economy can produce plenty of jobs, but they don’t pay enough to live on, and people know it. With his pathological hatred of trade unions, Osborne has no solution to this problem, and he knows it. Which is why he kicked the can down the road. Dressing up cuts in new clothes doesn’t change the political fact that people tend to get angry when you cut their income by thousands of pounds a year. All Osborne has done is push the day of reckoning closer to the next general election.
A third sign of Osborne’s weakness is that he doesn’t believe his own rhetoric any more. If Britain’s debts were so toxic, he would have used his pie in the sky windfall of £27bn from the OBR to reduce them further. Instead, he choose to use it to ease up (a little) on austerity and get himself out of a political hole of his own making. Osborne is being dragged kicking and screaming into accepting what many of us have been saying all along: Britain’s debts aren’t that big a deal compared to the other economic problems we face.
Like all Osborne’s budgets and reviews, this was a cobbled-together political fix — about as far away from a “long-term economic plan” as you can get, as it was neither economic nor long-term. The politics are hit and miss, but the economics are always crap. Sometimes, like with the 2012 “Omnishambles” budget, Osborne’s wheezes fall apart as quickly as a badly baked pasty. At other times, he scores political points only at the expense of further aggravating Britain’s deep-seated economic problems, which have nothing to do with the deficit and everything to do with investment, productivity and innovation. These are problems that Osborne, his hands tied by his extreme free market ideology, has no idea how to solve.
If John McDonnell wanted to throw a red book at Osborne, he would have been better off lobbing the 2010 Budget Red Book, with its catalogue of broken promises, dodgy predictions and massaged numbers. I’m surprised the Treasury hasn’t taken down this embarrassing farrago of fantasy already, so grab a copy while you still can (I’m keeping a downloaded copy in case they try any funny stuff). Read it to get a real measure of how Osborne has failed, and why he will fail again.