Tag Archives: Osborne

Osborne targets small man to collect debts, ignores fat cat tax avoiders

Osborne unveils the classic Tory way to collect unpaid taxes and fines.   Ignore HMRC and DWP which are there precisely for this purpose, but suffer from a fatal disadvantage – they’re in the public sector.   So strike a deal instead with a private US-owned company – creating a joint venture with TDX Group, a so-called ‘recovery management’ company whose parent company, Equifax, is based in the US.   TDX will have a 75% stake in the new entity, Integrated Debt Services Ltd, with the government holding the other 25%.   TDX will get a percentage of any unpaid debts collected beyond the level collected in the last year, though the Cabinet Office won’t reveal what the percentage commission is on grounds of commercial confidentiality, as though this wasn’t a service for the public sector!
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Osborne’s boastfulness comes back to haunt him

Osborne is now in trouble.   One after another, all the things he so confidently promised 5 years ago have now turned to dust.   He pledged then that the deficit would be down to £37bn by the end of 2014; it is now actually about £100bn.   He said that with economic growth real terms pay rises would soon return; they never have.   He loved to boast endlessly that Britain had the fastest rate of growth in the Western world; now that has been blown apart today’s announcement that Britain’s annual rate of GDP growth in the 3rd quarter of this year was just 2.6%, whereas the annual rate of growth in the US in the 3rd quarter was nearly double that, namely 5%.   He claimed he would rebalance the economy in favour of manufacturing and set in place ‘the march of the makers’; the opposite has happened, with the latest export figures registering the worst in Britain’s history.   He promised that private investment would rapidly recover; it has recovered a bit from a deep fall in 2008, but is still below pre-crash levels and far short of what is needed to bolster sustainable growth.   It is one long dreary story of blown promises.
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Osborne overplays his hand

The two most recent polls, one showing Labour with a 5-point lead and then a second two days later indicating a 7 -point lead for Labour, may just possibly suggest that the electorate is finally getting its mind around what the Tories plan to do over the next 5 years if they win, and they don’t like what they see.   They keep on being told by the Tories that the cuts are more than half over, which they plainly are not, and they had previously put up with austerity on the grounds that  by 2015 nothing much more would need to be done, and anyway cuts were for shirkers and scroungers, not hard-working people like themselves.   It is now beginning to dawn on them that all these sweet billets-doux cooed at them by Cameron and Osborne are just so much moonshine.   The £30bn further cuts (at least) in the next Parliament are going to hit them hard – tax credits cutbacks, huge benefit cuts focused 80% on women, further large squeezes on local authority budgets leading to big job cuts, etc. – and understandably they don’t think that’s fair.   In fact they’re seething.
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Osborne decimating the State will finally trigger the resistance

Osborne’s central objective, he would have you believe, is to cut the deficit.   He has failed: the deficit he predicted would be £40bn this year turns out to be £100bn and, worse still, it is actually now rising because of the fall in the government’s income (tax receipts) brought about by his own policy of squeezing wages.   His other key concern is holding down and reducing taxes.   In this he’s succeeded: such reduction in the deficit as there has been is almost exclusively the result of cutting public expenditure and benefits, the only exception being the rise in VAT which hits the poor far harder than the rich.   In Osborne’s parallel universe the State is the residual item: it has to make do with what the first two principles leave over.  Indeed I would argue that the shrinkage of the State as a result of the first two strictures is not just an unfortunate side-effect, but the real latent objective of the whole exercise.
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Osborne is bang to rights – when is Labour going to take him down?

Osborne over-reached himself badly in this last week, what with bare-faced lies, twisting of the figures to save his own skin but which no independent expert can validate, childish responses to well-placed questions which left him rattled and blustering, concealing his real underlying motive to take Britain back to the enfeebled state of the 1930s, insisting in every other breath that he has a long-term economic plan which is true only in the sense that it’s the wrong one, and now to cap it all taking on the BBC with accusations of ‘utter hyperbolic nonsense’.    Yet he continues to dominate the landscape because the Opposition still does not have a recognisable alternative macroeconomic policy, their appeal to cutting less far and more slowly over a longer period does not present a convincing shift away from austerity, and above all does not go for the jugular that Osborne has handled the deficit disastrously with maximum pain to the country and minimum benefit because he’s fixated on decimating public services rather than generating sustainable growth (which his ‘recovery’ soon to fizzle out certainly isn’t).
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Even by Osborne’s standards this is the most dishonest budget since the war

This was the thinnest Autumn Statement (mini-budget) in living memory.   There was nothing new in it of any significance except the change from the slab system to the stepped system for stamp duty.   But on the key issue which underpinned the whole statement, namely that this year the deficit is rising, not falling, there was a shock.   Since admitting that the deficit will this year rise from £86bn to about £91bn, and then next year to around £100bn, was too much loss of face for Osborne to bear, he decided to resort to an enormous lie.   He solemnly declared to the House that the cost of servicing government debt would fall £18bn a year by 2018-19.   Economists have pored over the small print of this mini-budget, and without exception no-one has been able to find any evidence whatsoever to back up this claim.   Osborne just made it up!   He sought to explain this away by an admission of “an error in our forecast model” which led to “over-predicting the stock of debt over time”.   Needless to say, this is gobbledigook.   But this purports to allow him to bank £4bn of the £18bn this year, and thus save his fiscal bacon.
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Osborne checkmated by his own austerity

Politics has a curious way of coming back to haunt politicians in a way they never intended or expected.   Osborne is a case in point.   The whole thrust of his austerity strategy, as he repeatedly told us, was to eliminate the structural deficit in this Parliament.   On that basis he predicted in 2010 that the deficit would be down to £40bn this year.   It is actually around £100bn.   Worse, the deficit is no longer shrinking at all, it is rising.   Alasdair Darling’s two expansionary budgets in 2009-10 set in motion economic stimulus which reduced the budget deficit from its peak of £165bn (at 2013-4 prices) to £115bn, a cut of no less than £50bn in two years.   Osborne’s austerity budgets then kicked in  and the deficit actually increased to £121bn in 2012-3, before falling to £98bn last year.   This year it is set to rise again to either just below or just above £100bn.   The whole deficit reduction programme, after all the impoverishment and pain it has inflicted, has gone pear-shaped.   It is worth asking why.
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Fracking: Osborne’s latest 18th century-style ‘folly’

It’s a safe bet that Osborne’s Autumn Statement this Wednesday will hail a fracking revolution as the start of a new energy cornucopia for Britain.   Like everything else politicians say 5 months before an election, it needs to be taken with a piece of salt.   Only one shale well has been fracked in Britain – Cuadrilla’s PH1 at Preese Hall near Blackpool – and that had to be suspended when in 2011 when it caused minor earth tremors.   Another attempt was made by Cuadrilla to set up a fracking operation, thistime on the mainland at Balcombe in the Sussex Weald, but that had to be called off as a result of determined opposition by the Tory rural brolly brigade, a resistance group that has now established a widespread network across the country pledged to fight fracking wherever it rears its head.

The Blackpool saga is revealing.   Cuadrilla now wants, egged on by the government, to get permission to bore 8 further wells in Lancashire within the next 6 months.   The county council is taking its time to consider this and is looking at the history of PH1, as well they might.   It is a textbook case of how pathetic is the regulation of fracking:  the Environment Agency and Health & Safety Executive visit drilling operations only very rarely, relying instead on the drillers’ own weekly reports and letting them make their own appraisal.
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Govt no more has a ‘long-term economic plan’ than my cat

Yesterday we had a debate on the floor of the House on economic policy in the run-up to Osborne’s Autumn Statement (i.e. mini-budget) in a week’s time.   Here us what I said:

2:29 pm

Photo of Michael Meacher

Michael Meacher (Oldham West and Royton, Labour)

On 3 December, the Chancellor will be confronted with a whole array of facts and statistics that he never intended or expected to see. Like an echolaliac obsessive, he has constantly repeated on every available occasion—it has been the same today—that the Government have a long-term economic plan.

So was it the Government’s long-term economic plan that average wages should fall by an average of 9% in real terms—the biggest fall since the depression of Victorian times in the 1870s—and that in the past year the rise in the average wage should be a pitiful £1 a year, which, after adjusting for inflation, is a chunky fall of 1.6%? Was it the Government’s long-term economic plan that UK productivity should now be the worst in the G7 leading high-income countries, and that while output per hour between 2007 and 2013 rose by 8% in the United States, by 5% in Japan, by 3% in Canada, by 2% in Germany, and by 1% in France, in the UK, uniquely, it fell by 3% and shows no sign of improving in the future?

Was it the Government’s long-term economic plan—this really is important—that six years after the crash, business investment should still be flat, at a level 10% below pre-crash, or that the FTSE 100 companies should still now be sitting on cash stockpiles of over £500 billion and not investing because they do not believe the Chancellor’s so-called recovery is sustainable? Was it the Government’s long-term economic plan that net exports in traded goods—that is, manufactured imports less exports—should now be chalking up the biggest deficit in British history, perhaps as much as £110 billion this year? To cap it all, was it the Government’s long-term economic plan that after nearly five years of austerity, the budget deficit should not be falling at all but rising again this year, when it is still a whopping £100 billion?

That then leads to the central question in this debate: what is the rationale for continuing with austerity when the consequences of austerity—the draining of demand out of the economy, as I have explained—are actually increasing the deficit, not reducing it? What is the answer to that central question? The Minister, in an exceedingly shrill, partisan and strident speech, made no attempt at all to answer it.

Nor is the situation just a glitch this year. With economic growth now slipping from 0.9% in the second quarter to 0.7% in the third quarter, and predicted to be 0.5% in the current quarter, and with household incomes continuing to fall—indeed, the 1.6% real-terms fall in the past year is the largest since records began—the Government’s tax take, which is crucial to the deficit, is likely to drop still further in future years. The only way the Chancellor can then start to get the budget down again is by even more draconian cuts in public expenditure and benefits than in his first five years—perhaps by even double the £25 billion that he has already announced, as the Financial Times is predicting. Even if that were politically possible—that is highly doubtful, as polling evidence is clearly showing a public rapidly cooling towards any further austerity ravaging their livelihoods—it would only worsen the basic problem for the Government of making even deeper inroads into their tax income. The Government are finally ending up eating their own tail.

The truth is that the Government have only ever been able to point to two positive elements in their economic policy. One is the much-vaunted recovery, but that has always been over-dependent on a housing asset bubble. It has never rebalanced the economy from finance to manufacturing. It has never gained any legs because, as I have explained, all the potential sources of demand are now pointing firmly south and all the economic indicators show that it is beginning to fizzle out. The other is the unexpected increase in employment, which has been regularly mentioned in this debate, but there too the surface picture is very deceptive. Overwhelmingly, the jobs have come from self-employment, where the average wage has fallen by a massive 13%, or from part-time work.

But those are the details: what really matters about this awful episode of the past five years is that the Government have been pursuing a slash-and-burn policy that is ultimately self-destructive, as we are now seeing all too clearly. They are doing this because their primary motive is not to eliminate the structural deficit but to use the deficit as once-in-a-lifetime leverage to overthrow the post-war social democratic settlement and to shrink the state so that the public sector is transformed into a fully privatised market system.

It need not be like this. The Chancellor has handled the deficit appallingly badly, with maximum pain and minimum benefit, and it could have been so different. By comparison, the previous Labour Chancellor brought in two expansionary Budgets in 2009 and 2010 to counter the monetary collapse caused by the bankers. That cut the deficit from the peak of £157 billion to £118 billion—a reduction of nearly £40 billion in two years. The current Chancellor’s austerity Budgets then kicked in, and the rate of deficit reduction halved over the next three years. He had said that by this year the deficit would be £40 billion, yet it is actually about £100 billion.

What does the record show is the best way to cut the deficit? Is it by stimulating the economy to produce real jobs and boost incomes, as Labour did, or by slashing expenditure, degrading the foundations of our society, and delivering the biggest fall in average real incomes since Victorian times, as this Government have done? Frankly, it is a no-brainer. Continuing with austerity when it has ravaged the livelihoods of millions, destroyed so much of the social fabric of our society and is not now even cutting the deficit, which is supposed to be the whole object of the exercise, can only be described as a certifiable condition.

There is a better way of doing this. It can be funded, with no increase at all in public borrowing, by instructing the publicly owned banks—the Royal Bank of Scotland and Lloyds—to prioritise lending to British industry rather than financial speculation overseas, by having a modest further tranche of quantitative easing targeted directly on key industrial projects rather than wasted on the banks as hitherto, or by taxing the ultra-rich. That is the way we should go.