Deficit nonsense

It is extraordinary that both the main parties have now put forward their plans for meeting the deficit, which is going to prove the centrepiece of the election, yet neither plan carries credibility.   Osborne has once again committed the Tories to £30bn of further spending cuts on a rolling 3-year programme, i.e. currently targeted at 2017-8.   Even if that were politically practicable, which is far from certain,  the idea that this will eliminate the structural deficit within that timescale is laughable.   The deficit this year is likely to end up at around £100bn, and because of the fall in the government’s tax take (caused by the continuing squeeze on incomes, very low wages and zero hours contracts), the deficit is already growing, not falling, and for the reasons just given will continue to rise further in future.   Osborne grandiosely claimed yesterday that “it commits us to finishing the job – and getting our national debt falling……….Once we have got rid of the deficit and have debt falling, we should be running an overall budget surplus”.   This is total arrant nonsense.

Osborne framed this ‘commitment’ in the form of a new Charter of Budget Responsibility, which again has no substance behind it and is only used as a political gimmick to try to force Labour to fall into line behind his own flawed proposals which are not credible.   Ed Balls’ response has been to say he would vote for the charter, but not be bound by a timetable, and that he would allow more flexibility in capital expenditure.   These are helpful relaxations of an otherwise implausible target, but they fail to address the fundamental error in going down Osborne’s route in the first place.   Put at its simplest, this is the wrong policy for cutting the deficit – largely because it isn’t cutting the deficit.   The right policy is steadily to shift away from prolonged austerity, which isn’t working, to a gradual and increasing expansion of the economy bringing in its train real jobs, genuine growth, rising wages, higher household incomes, and thus a greater government tax take with which to pay down the deficit.

So why doesn’t Labour put this forward more confidently and assertively.   It’s because the private polls show that people believe that Labour caused the deficit problem in the first place and therefore cannot be trusted with the nation’s finances.   But people only believe that because the Tories say it incessantly and Labour never denies it.   But Labour didn’t cause the deficit in the first place, the bankers did.   And once the bankers had caused all this mayhem, Labour under the financial leadership of Alastair Darling did exactly the right thing to get the deficit coming down fast – a reduction of £40bn in 2 years.   So why on earth doesn’t Labour start telling the truth instead of leaving themselves wide open to Tory lies throughout the election campaign?

6 thoughts on “Deficit nonsense

  1. Thanks for highlighting this, I have looked at the figures and despite lacking Mr. Osborne’s mathematical credentials, even I can see our children can look forward to inheriting this debt, long after we are gone. I think this is something that should be brought to the public’s attention.

  2. This I cant work out labour not pointing out to Osborne that its lies his party tells on labours leadership of britain before them yes they kept it ship shape for them to take over yet this boy has you shouldn’t call him anything else couldn’t run a p up I a brewery yet he crows its labours fault I wonder at ed hes another tony b suporter but going down this road of austerity hasnt worked infact its killing people has of it labour needs to show they left the country in good health Osborne hasn’t he’s hocked us off to his mates companies through it all saving no monies but getting the tories the backhanders they want
    funny world isnt it crooks in power stealing all yet this show goes on
    isnt it about time labour put its red ties back on and started the fight back against their damed lies and said we going to build and give these so called companies they brought in the boot and took control once more has then monies being payed out stays in this country eds talking like a tory either he and his erk change back to that redtie or labours doomed us once again to more tory rule jeff3

  3. I watched BBC Parliament, Daily Politics on Wednesday 17th December 2014,
    State of the Parties with Andrew Neil, about the deficit:

    Chuka Umunna MP, Shadow Business Secretary said: (Quote)
    I think we have a different narrative [on deficit cutting]. The OBR has said that the trajectory that Osborne wishes to take us will take us to levels of public spending that we haven’t seen as a percentage of GDP since the 1930s is very significant.

    The other thing that the OBR has pointed out was the fact that the Chancellor has undershot his deficit and debt targets is because we’ve seen a stagnation in wages.

    The most significant thing is that if we want to deal with the debt and the deficit is

    1. You’ve got to look at taxes and whether you get the very wealthy in society to make more of a contribution

    2. Of course there will be consolidation but

    3. You’ve got to make sure that people will be earning more money so we get higher income tax and National Insurance receipts.

    And that is an argument that has moved over the course of this year, as we’ve seen a coming together of the arguments and debates about deficit reduction and debt as they’ve had on shows many times, and the cost of living argument. For me, that’s the most significant. (Unquote)

  4. “So why on earth doesn’t Labour start telling the truth instead of leaving themselves wide open to Tory lies throughout the election campaign”

    Well Mr Meacher, I agree entirely but surely as a labour MP you are in a better position to answer this question than your readers? :/

  5. I don’t suppose anyone will see this, so long after the posting of the article, but I agree. I could never understand why Labour let the Tories get away with their poisonous propaganda, unchallenged. Perhaps it’s because they intend to prolong the austerity if they win the election and are happy to let the Tories take the blame for starting it. Either that, or they’re bought-and-paid-for 5th columnists obeying the same masters as the Tories, and help in maintaining an illusion of a meaningful democracy, when in reality there is none. Or maybe that’s just me…
    And, as John says, why don’t you kick up more of a stink about this, Michael? Personally, I wish you’d run for Labour leader, because you’re one of the few left in the party who have proper Labour values in their soul…

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