The Chancellor’s response to the £1.1bn windfall handed to him by the fine on the banks is a classic in Osborne double-speak. We’re told the money will be “used for the wider public good”. He means tax cuts as an electoral bribe. He says “today we take action to clean up corruption by a few so that we have a financial system that works for everyone”. Today? Why not when the corrupt manipulation of the £3.5 trillion a day foreign exchange markets was uncovered years ago? “Taken action to clean up corruption”? – almost nothing has been done to prevent another banking crash and the foreign exchange market remains, breathtakingly, unregulated. “Corruption by a few”? – the truth is the whole industry was (and still largely is) rotten to the core as the chatroom exchanges between the traders of all the main banks clearly reveal. “A financial system that works for everyone”? – one can only wonder at Osborne’s gall in spitting out a lie with such bravado, which he knows is a lie, and probably knows too that everyone else knows it’s a lie. The bankers’ bonuses, overseas speculation, contrived tax avoidance, and mortgaging of prime property in central London works works in no-one’s interests except their own. Read more “The Osborne forked tongue is already cranking up for the Autumn Statement” »
In the last week Osborne has staked out three positions which show the character of the man – duplicitous, machiavellian, dishonest. First he claimed that he had turned the £1.7bn EU budget bill into a triumph by factoring in Britain’s budget rebates in Europe which halved the amount due. This canard unravelled almost as soon as Osborne uttered it. Several other ministers at the EU meeting insisted that no-one, including Osborne, had actually contested the £1.7bn charge and that no discount had been awarded. What actually happened is that Osborne rushed out of the meeting, immediately made his statement to the press (which the BBC sycophantically, but wrongly, repeated almost verbatim) , and then left to return to the UK without taking any questions. The truth is that Britain’s automatic rebate on gross contributions to the EU budget, which have operated since 1980, would have been granted anyway and had nothing to do with Osborne’s arguments – or rather non-arguments since he never raised any objections anyway. The whole exercise was simply an Osborne ploy to pretend that he had fought and thwarted the dire plans of the EU.
Second, he made a disingenuous announcement that he was improving tax transparency by letting taxpayers at different income levels know what the tax they paid was spent on. It looked like an innocent attempt to extend useful and relevant information to the public. He would issue an ‘annual tax statement’ to every household showing where their taxes went. Thus someone earning £30,000 a year will be told that £1,663 goes on ‘welfare’ and £892 on ‘health’, i.e. nearly twice as much on ‘scroungers’ as on health. What Osborne does not say is that welfare lumps together expenditures of a wholly different kind. No less than 46% of it goes on pensions which pensioners have earned by paying national insurance contributions throughout their working lives. Only 3% goes to the unemployed. Osborne’s vaunted ‘transparency’ is in reality a cynical pre-election ploy to win support for further cuts and to turn voters against Labour.
Third, he reiterated yet again the need for still deeper cuts to pay down the deficit. What he didn’t say is that as a result of the very deep cuts he’s already made the deficit this year is not falling at all, but actually going up because falling household incomes have meant that the government’s tax take is now being eroded. What he also didn’t say is that if the rationale for austerity is to pay down the deficit, there’s no point in continuing with austerity if it’s now causing the deficit to go up.
There are now unmistakeable signs that Osborne’s so-called economic recovery is fading, despite all the right-wing think tanks and pro-Tory media to talk it up. A survey of 7,000 businesses by the British Chambers of Commerce has just found that manufacturers have suffered a sharp slowdown in export orders, and even more significantly domestic sales and orders – the part of manufacturing that has been faring better due to household expenditure based on rising debt – are now also reported to be slowing. The third quarter growth figures also show the UK economy losing steam, down from ).9% in the second quarter to 0.7%. The TUC has just reported that not since 1865-7 has there been a comparable squeeze on earnings for British workers, with an 8% fall in real earnings between 2007-14, and the fall is still continuing with the latest figures this year showing annual wage growth of 0.7% against inflation at 1.5%, i.e. a further real wage fall of 0.8%. There is then a serious knock-on adverse effect in a reduced tax take for the government which is actually this year increasing the deficit (from the current £100bn to around £105bn) when Osborne’s whole object is ostensibly above all else to cut the deficit. His austerity programme is now beginning to eat itself. Read more “Osborne’s own policies are shrinking tax revenues, yet he demands even bigger spending cuts to compensate” »
Osborne’s latest diatribe at an Institute of Directors meeting against the ‘anti-business views’ of charities, pressure groups and trade unions (he would no doubt include the churches too, but daren’t risk publicly attacking them) is yet another sign of this Tory government’s determination to suppress criticism and squeeze out dissent to ensure the paramountcy of the market beyond all other considerations. He appealed to company bosses to ‘put their head above the parapet’ to argue for ‘a country that is for business, for enterprise, for the free market’ – not for fairness, equal opportunity, public services, accountability of power, or social justice. Osborne’s sole objective is to consolidate a fundamentalist market system, dominated of course by the extremely narrow elitist group he was addressing, with all other interests marginalized. It’s the same Tory allergy to criticism that has provoked Grayling’s demand to limit political and civil rights by abandoning the ECHR, Cameron’s demand to restrict strikes to a 50% voting threshold of all those eligible to vote (a requirement that would disqualify all MPs if applied to parliamentary elections), May’s demand to override privacy by snooping on the communications of all citizens, the disgraced Newmark’s insulting demand that charities ‘stick to their knitting’, among many other examples. Read more “Osborne’s anti-business jibe is a cover for eliminating all dissent” »
Cameron’s closing speech to the Tory conference centred on trying to reassure the electorate that the NHS was safe in Tory hands. But the evidence he produced to justify this proved the opposite. He promised to protect the NHS in real terms for the next 5 years from 2015 to 2020, the same as he promised for the past 5 years. But in neither case does this protect the NHS, for two reasons. One is that the NHS requires expenditure, not just to keep up with inflation, but also even more importantly to keep up with two other sources of demand – the steadily rising number of elderly people, who make by far the greatest demands on the health service, together with the steadily rising costs of new technology and new drugs, both of which grow each year significantly faster than inflation. Throughout its history the NHS has had real terms funding increases of 4% a year. Cameron is proposing a 0% real terms increase over the next 5 years, exactly what has happened over the last 5 years where the official figures claim a 0.1% increase since 2010. This is at least an annual 2% fall in what the NHS needs each year to maintain its existing standards. Read more “Cameron isn’t telling the truth on the NHS any more than Osborne on the economy” »
The gap between Osborne’s swaggering rhetoric in his conference speech and the cold reality of the Tory public borrowing figures is almost unbridgeable. The key point, though you would never guess it from Osborne’s bluster, is that public borrowing under his stewardship is now rising, not falling. The ONS Public Sector Finances report for August 2014 show that the deficit (public sector net borrowing) from April-August this year was £45.4bn, an increase of £2.6bn compared with the same period for last year. This 6% rise in public borrowing so far in this financial year could push the deficit, which last year was £99bn, up to around £105bn this year. Moreover there are good grounds for expecting this trend of rising deficits to continue in future years. Read more “The fantasy of Osborne’s deficit cuts” »
The whole point of the austerity programme imposed by Osborne was supposed to be to reduce the budget deficit. The latest data on the deficit however shows a dramatic and disturbing turnabout. Instead of going down, it is now rising, and there are good reasons for expecting this trend to continue. Official data shows that Osborne was forced to borrow £11.6bn to fill the gap between revenues and spending, £700m more than a year ago. He had been forecast to borrow about 12% less this year than last, but in the event has had to borrow 6% more. This is a really sensational reversal of the government’s claim that it is on track with its (fantasied) ‘long-term economic plan’ and blows a big hole in the idea that austerity is the best way to reduce the deficit, let along able to do so at all.
In fact it reveals starkly how counter-productive austerity is in deficit reduction compared with public investment. When the bankers’ crash erupted in 2008-9, the budget deficit reached a peak of £159bn in 2009-10. Alasdair Darling as Labour Chancellor stimulated the economy with two expansionary budgets in 2009 and 2010. As a result the deficit fell the next year to £141bn and then again to £121bn the following year – a reduction of £38bn in 2 years. Then Osborne’s austerity programme kicked in, and the rate of deficit reduction halved in the next two years to £99bn last year. This year it now seems likely that the deficit will actually increase to some £105bn. Read more “Public borrowing under Osborne now going UP” »
The Office of National Statistics (ONS) report yesterday that the average earnings growth rate has now fallen by 0.2%, the first time it has fallen below zero since the crash in 2008-9, is devastating for UK economic prospects and for Osborne’s bombastic claims about the great UK economic surge. It is devastating because the only other three bases of demand are all seriously negative as well. Business investment is still 10% below pre-crash levels because investors have no confidence that the UK recovery will last, net exports (the excess of exports over imports) are disastrously negative by about £115bn this year, and government expenditure is being screwed down by Osborne’s counter-productive policy of trying to reduce the deficit by cuts rather than public investment in stimulating the economy. The fourth base for potential demand is household expenditure, and with average wages this year now nearly 2% below inflation, that source of demand will dry up completely. Of course Osborne will crow about the 1.5 million jobs allegedly created in the private sector since 2010, but with two-fifths of them taken up by self-employment where the average drop in incomes is now 14% below pre-crash levels and with the rest mainly low-paid, insecure jobs on zero hours contracts (wage slavery rather than jobs), there is certainly no increase in demand from that source either. Read more “Eurozone ‘recovery’ collapse gives Osborne excuse for his own failure as UK ‘recovery’ peters out.” »
Just when Osborne announces that the banking crisis is finally over (in fact it’s still coming to the boil – how does he manage to keep on coming up with these gags?), a new official inquiry into the banks is announced. Just 6 years late, you might think. But that’s the least problem. The real issue is that it’s an inquiry into the wrong things. It’s not going to look into the way Libor trading was rigged, nor into PPI mis-selling that has led to penalties for the banks of up to £20bn, nor into grotesquely inflated bank bonuses, nor into how the colossally costly taxpayer bailouts of the banks can be avoided in future, nor into whether in future those found responsible for worldwide financial crashes should be given a hefty jail sentence. No, this inquiry will be into current accounts held at banks and whether they and ATM cash machines should in future still be free or have to be paid for. In other words, this inquiry is not about holding the banks to account; it’s about making them more profitable. Read more “An inquiry into the banks at last. Great – or is it?” »