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You can find the current article at its original source at http://www.theguardian.com/commentisfree/2015/jun/11/george-osborne-surplus-labour-leadership-nonsense
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| Osborne’s ludicrous surplus plan will be the biggest test for Labour’s candidates | Osborne’s ludicrous surplus plan will be the biggest test for Labour’s candidates |
| (about 1 hour later) | |
| Here comes the great test for Labour’s candidates. At Mansion House, George Osborne threw down the gauntlet to them all. Will they vote to pass a law commanding all governments to run a surplus (in “normal times”)? Will they vote for an equally bad law not to raise income tax, national insurance or VAT for ever more, the three main revenue-raisers? Ha! Thinks Osborne, ever the shoddy, short-term tactician, Got ’em there! | Here comes the great test for Labour’s candidates. At Mansion House, George Osborne threw down the gauntlet to them all. Will they vote to pass a law commanding all governments to run a surplus (in “normal times”)? Will they vote for an equally bad law not to raise income tax, national insurance or VAT for ever more, the three main revenue-raisers? Ha! Thinks Osborne, ever the shoddy, short-term tactician, Got ’em there! |
| But he may be doing Labour a favour. We shall see who thinks they have the political nerve and the intellectual clout to call him out and explain in robust terms to the public what most serious economists and the IFS say: this is economic nonsense. Yes, the deficit needs to keep coming down each year: at 5% of GDP it’s too high. But of course the government can borrow, as all governments do, if it borrows a bit less than the growth rate. Growth is everything. | |
| Ed Miliband never found the language to escape the blame the Tories heaped on Labour for the crash | Ed Miliband never found the language to escape the blame the Tories heaped on Labour for the crash |
| Receipts coming into the Treasury from a productive economy are what determine the strength of government. The reason borrowing this year will be four times higher than Osborne forecast is because those receipts are so weak. | Receipts coming into the Treasury from a productive economy are what determine the strength of government. The reason borrowing this year will be four times higher than Osborne forecast is because those receipts are so weak. |
| Why? Because his own cuts helped keep the country flatlining and his sluggish recovery sees growth is nowhere near the steep upward trajectory it should be on. Because his deeper cuts are likely to depress growth again. Because his “march of the makers” in manufacturing is still going backwards. Because pay is so low for a swelling army of sub-living-waged workers. Because productivity is abysmal – 14-15 percentage points lower than France and 17 percentage points below the average for the rest of the G7 in 2013 – the widest productivity gap since 1992. Because exports are dire, and so is the balance of trade. Because household debt is rising, as people struggle to get by on low pay. | Why? Because his own cuts helped keep the country flatlining and his sluggish recovery sees growth is nowhere near the steep upward trajectory it should be on. Because his deeper cuts are likely to depress growth again. Because his “march of the makers” in manufacturing is still going backwards. Because pay is so low for a swelling army of sub-living-waged workers. Because productivity is abysmal – 14-15 percentage points lower than France and 17 percentage points below the average for the rest of the G7 in 2013 – the widest productivity gap since 1992. Because exports are dire, and so is the balance of trade. Because household debt is rising, as people struggle to get by on low pay. |
| Can any of the leading candidates say all this – and say it well? They might start by mocking all declaratory legislation of this kind – and that includes making fun of Gordon Brown’s own 2010 Fiscal Responsibility Act. That was designed to prove his prudence but voters were unimpressed. Osborne called it “vacuous and irrelevant” and on coming to power, he repealed it: so much for setting things in stone. Labour, in its dying days, brought in the equally impossible, though at least well-intentioned, Child Poverty Act to “eradicate” it by 2020: that was also a trap for the Tories. They heartily endorsed it in Cameron’s pre-election hoodie-hugging guise – and promptly ignored it. The IFS predicts the government is plunging 300,000 more children into poverty: the coming £5bn cut in child tax credits cutting £1,400 from low-paid families will add to that considerably. | Can any of the leading candidates say all this – and say it well? They might start by mocking all declaratory legislation of this kind – and that includes making fun of Gordon Brown’s own 2010 Fiscal Responsibility Act. That was designed to prove his prudence but voters were unimpressed. Osborne called it “vacuous and irrelevant” and on coming to power, he repealed it: so much for setting things in stone. Labour, in its dying days, brought in the equally impossible, though at least well-intentioned, Child Poverty Act to “eradicate” it by 2020: that was also a trap for the Tories. They heartily endorsed it in Cameron’s pre-election hoodie-hugging guise – and promptly ignored it. The IFS predicts the government is plunging 300,000 more children into poverty: the coming £5bn cut in child tax credits cutting £1,400 from low-paid families will add to that considerably. |
| So far, Labour candidates have tiptoed about the great issues, posing a little left, a little right, dodging their perceived negatives. This is the big challenge – and it comes at the right time. Dare they echo Osborne and call this “vacuous and irrelevant” too? More important, have they the language and persuasiveness to explain why government borrowing is not like maxing out the credit card and the Treasury isn’t Margaret Thatcher’s handbag? Everyone knows that good borrowing for investment is essential, whether to start a new business or take out a mortgage on a family home. Lack of good borrowing choked off the economy, shut down businesses and all but stopped house-building. | So far, Labour candidates have tiptoed about the great issues, posing a little left, a little right, dodging their perceived negatives. This is the big challenge – and it comes at the right time. Dare they echo Osborne and call this “vacuous and irrelevant” too? More important, have they the language and persuasiveness to explain why government borrowing is not like maxing out the credit card and the Treasury isn’t Margaret Thatcher’s handbag? Everyone knows that good borrowing for investment is essential, whether to start a new business or take out a mortgage on a family home. Lack of good borrowing choked off the economy, shut down businesses and all but stopped house-building. |
| Ed Miliband never found the language to escape the blame the Tories heaped on Labour for the crash. The dilemma was – should he lie and grovel that yes, it was Labour overspending that caused the crisis? At least voters might give him credit for “honesty”? Should he say: “Well, yes, there was a little more spending than was wise while the sun shone, but it was virtually irrelevant to the sudden catastrophic loss of £92bn in treasury receipts in the crash.” | Ed Miliband never found the language to escape the blame the Tories heaped on Labour for the crash. The dilemma was – should he lie and grovel that yes, it was Labour overspending that caused the crisis? At least voters might give him credit for “honesty”? Should he say: “Well, yes, there was a little more spending than was wise while the sun shone, but it was virtually irrelevant to the sudden catastrophic loss of £92bn in treasury receipts in the crash.” |
| But with the vengeful mood of press – and the public – any slight concession would have spelled trouble. | But with the vengeful mood of press – and the public – any slight concession would have spelled trouble. |
| But this election has moved everything on. Osborne’s act is not about the past but the future. As Steve Bell draws him, he is chaining himself to a ruthless low-tax and low-spending regime that forces a colossal shrinkage in the state, back to pre-war, pre-welfare state levels. If Labour can’t stand up against that, what’s the point? If they want to stiffen their nerve, just read today’s contemptuous FT editorial on Osborne’s law, accusing him of spurning pragmatism “to impose unnecessary limits on his freedom for manoeuvre”. He should “concentrate on governing” instead of “taking easy potshots at political foes”, it said. | But this election has moved everything on. Osborne’s act is not about the past but the future. As Steve Bell draws him, he is chaining himself to a ruthless low-tax and low-spending regime that forces a colossal shrinkage in the state, back to pre-war, pre-welfare state levels. If Labour can’t stand up against that, what’s the point? If they want to stiffen their nerve, just read today’s contemptuous FT editorial on Osborne’s law, accusing him of spurning pragmatism “to impose unnecessary limits on his freedom for manoeuvre”. He should “concentrate on governing” instead of “taking easy potshots at political foes”, it said. |
| We have just had an election in which all the big questions were ducked. Where was discussion of the shape of an economy that sucks money up to the top, depressing wages, denuding skilled jobs in the middle? Where the urgency of facing up to climate change? Or the great dysfunctions of tax-avoiding global behemoth companies that defy democracy in TTIP negotiations? Let’s hear fewer banalities – “I want equal opportunities for all children” – and more about how galloping inequality might be slowed. Let’s hear them think big. | We have just had an election in which all the big questions were ducked. Where was discussion of the shape of an economy that sucks money up to the top, depressing wages, denuding skilled jobs in the middle? Where the urgency of facing up to climate change? Or the great dysfunctions of tax-avoiding global behemoth companies that defy democracy in TTIP negotiations? Let’s hear fewer banalities – “I want equal opportunities for all children” – and more about how galloping inequality might be slowed. Let’s hear them think big. |
| • This article was amended on 11 June to correct the deficit percentage figure from 80% to 5%. |