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The Important Point George Osborne's Autumn Statement Didn't Admit

The Conservatives are the party of massive debt.

by Chris Goodfellow
03 December 2014, 4:00pm

George Osborne's just told the country his spending plans for the next year, but unfortunately there's no money left. After David Cameron and Ed Miliband had finished trading insults at Prime Minister's Questions, Osborne stepped up to the Dispatch Box to he give his Autumn Statement – the last set piece economic speech he'll give in Parliament before next year's election. If everything had gone to plan, today we would have seen him showboating and looking even more smug than usual, rubbing his success in Ed Balls's annoyed face. But he couldn't do that – not really. The problem is, he promised that the public finances would be fixed by now. They're not, so he is left groping down the back of the couch to try and buy something nice so that voters like him.

It wasn't supposed to be this way. In 2010, Osborne expected to have eliminated the deficit – the amount the government has to borrow to keep services running – by the end of this Parliament in a few months time. Instead, this year deficit is expected to be £93 billion (a few billion short of the ​entire education budget). It was supposed to be zero. That means whatever party gets in next year is going to have to implement yet more lovely austerity. We can all look forward to more cuts no matter who gets in.

The Autumn Statement was an attempt to tie up loose ends, but the Tories are likely to be left swinging from their own debt narrative come the election. Not that you'd know that from his speech. "I can report today that the economy is continuing to recover – and recovering faster than forecast. We set out our plan. And together with the British people, we held our nerve. We're putting Britain right," he blustered. The economy is growing, but despite harsh austerity, so is debt – so to suggest that the plan is working is bullshit.

The UK government now owes almost one and a half trillion pounds – equivalent to £54,900 per UK household, compared to £32,500 four years ago – and that's debt and interest payments we're just going to lump onto future generations. In fact, if you go to the library and dust of a copy of Brian Mitchell's British Historical Statistics, which tracks government debt right back to the turn to the turn of the 20th century, it's clear this government is the worst ever for public debt. In the 30 odd years Labour was in power over the last century it added around £470 billion to the public debt. In the last four years of coalition government alone, public debt increased by £603 billion.

The Osborne of 2010 woefully underestimated the weakness of the economy and the cuts he had planned. The policies of cutting spending to increase confidence and drive growth turned out to be the economic equivalent giving a sick child less medicine. What we've ended up with is the same levels of deficit reduction envisaged in Labour's 2010 election platforms – ones which the Conservatives labelled Conservatives as dangerously high at the time. As the Spectator's Fraser Nelson ​notes, "This leaves conservatives like me facing an awkward question: in all honesty, do we believe that Osborne has been that much better on debt than Labour would have been? When it comes to debt, did the general election actually make a difference?"

The difference it did make – aside from in some dry debates about the nature of public debt – is the policies it justified. The disabled people pushed out of their accommodation by the bedroom tax, the cuts to legal aid, cuts to local council services and so on – whenever people haven't been convinced that depriving the vulnerable of a safety net is really a government attempt to stop scroungers, Cameron and co been able to point to the sheer "necessity" of its long-term economic plan.

Of course, you can't go on endlessly cutting the services people rely on without generating some anger. That's why Osborne revealed his plan to spend an extra £2 billion on the NHS, an essential shoring-up job required to keep our beleaguered health care system in business: "Extra money available because we have a plan," said Osborne. And because £750 million of this isn't new money, but has been reallocated from the existing health budget.

If you love car travel, the sound of rubber on tarmac or climate change, you're in luck. Other measures include investing £15 billion in a new "roads revolution" over the next five years. Conveniently, two-thirds of the schemes being given the green light are in Tory and Lib Dem constituencies, according to the Telegraph's ​analysis. And of course this means more, stinking, noisy roads.

Then there's the change in stamp duty – a tax levied on houses that cost more than £125,000 (all of them, basically). This is a smart move. It's like a mansion tax but less controversial – that's because it's a tax on buying mansions instead of on owning them, increasing costs for the top two per cent and decreasing it for everyone else. Unless you're about to buy a penthouse with Sting as a neighbour, this will be a good thing.

So, today's statement wasn't all bad. But tinkering with NHS money and a wildly exciting new road building programme to gain votes is nowhere near where the Tories were hoping they would be at this stage. In 2010, George Osborne envisaged he'd be taking to the dispatch box today having steered us successfully through the austerity programme, reduced the deficit to near zero and have the economic clout to cut a few taxes just for the fun of it – leaving his party free to maraud into power next year on a campaign bus fuelled by their own fiscal competence.

It didn't happen. What's likely to happen now is that the Tories try to make the election about something other than the deficit and debt. That's probably bad luck for immigrants. UKIP seem to have little interest in talking about the deficit, instead concentrating creating a mystical scapegoat to our economic ills which can simultaneously be taking our jobs and languishing on benefits.

Labour, the Green Party and the Liberal Democrats need to make sure Osborne doesn't get away with his complete failure to meet his own economic targets and the Tories don't get another chance to mortgage the future of the country while savaging so many things he claims to be standing for.


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Autumn Statement 2014