Osborne's Paul Daniels strategy
Fraser Nelson 4:05pm
Is George Osborne the first British Chancellor to hide good news in the small print? I
ask this in my
News of the World column (£) today, and ask what he’s up to. Listening to Nick Clegg on Marr this morning, even he can’t quite say that the same forecasts that predict 500,000
public sector job losses also envisage three times as many jobs created in the private sector. Why so coy? I suspect because it would spoil the magic. That there is a deliberate gap between what
this government is saying and what it believes it is doing.
James Forsyth was the first to write (in his political column, now available to non-subscribers) about ‘Gordon Osborne’, using
Brownite tactics. But whereas Brown hid the bad stuff, Osborne is hiding the good stuff. Brown was a bad magician: Osborne is more like Paul Daniels (with Danny Alexander as his Debbie McGee). This
is what I suspect he's up to...
1. The pledge
As we all know, every magic trick has three stages: the pledge, the turn, and the prestige. The last few months have been about the pledge:
that the economy about to suffer terrible cuts. Osborne let the media get into a lather about the worst cuts since Cromwell. The media didn’t pick up on the 1.5m job creation forecasts, as we
pointed out on Coffee House. But, more importantly, the Treasury
didn’t point it out either. Almost all journalists will include a balancing quote – so the “500,000 jobs to go” line could have been put into perspective at any time.
So Osborne has long had a chance – a pretty good one – to steer the media narrative. He announced the severity of the cuts in the budget, but the figure (a small one) was buried,
Brown-style, in the small print. At any point, he could have said “Let’s get this into perspective. The cuts are real, and will hurt, but we’re shaving total government spending
by 3.7 percent over four years”. (Ended up being 3.3 percent, as Osborne borrowed a bit more). This figure would, at any point, have put perspective into what became an auction of media
hysteria. Will Hutton, who is economically literate, declared in his column last week that the
cuts were “fastest, deepest cuts in public spending ever mounted by a government in modern times.” It’s just garbage. But Hutton is well-connected: someone could have told him so.
If they wanted to.
It was in the June budget, not last week, that Osborne decided his fiscal consolidation would amount to 7.5 percent of GDP to 2015/16. At any point, they could have put this into international
perspective. Let’s take Hutton’s claim about it being the sharpest cut in modern times. In the Barometer column of this week’s Spectator – a treasure trove of useful
figures, and did I mention that you can subscribe from £12? – we put this into perspective.
2. The turn – the secret 3-1 ratio
So let’s go back to that figure that George Osborne didn’t mention: 1.5 million jobs should be created while 500,000 are shed. For every job lost shed by government, three will be
created by the economy. This 3-1 ratio is the single most important aspect of the recovery plan - but it’s mentioned nowhere. The 3-1 figure is known only by Treasury civil servants, and
– like all the best secrets – by readers of The Spectator. And yet this is the backbone of the recovery strategy.
Why so quiet? Because this is the Osborne/Alexander magic trick. They brace us for the worst. But when unemployment falls, it looks like magic. This is what Paul Daniels would call ‘the
turn’. And is it magic? Of course not. Here’s something else you won’t read in the papers: in the fiscal consolidation of the Major years some 700,000 jobs were lost in the public
sector (way more, note, than we’re discussing now). But two million more jobs were created in the private sector (see graph below). The 3-1 ratio worked in Britain last time, and
there’s every chance it will do again. But Osborne, I suspect, doesn’t want us to know about this strong likelihood. It would spoil his wee trick. Ruin the surprise.
3. The prestige – the 2015 election
Major did exactly the same trick. And did the electorate like it? As Paul Daniels would say: not a lot. He screamed out his tactics the whole way. “If it isn’t hurting, it isn’t
working," and banged on about the "green shoots of recovery" so often that it became a cliché. Osborne was a political adviser in those days, and watched in horror. If you
want applause, it has to be a magic trick. Major was talking his audience through every manoeuvre - and his reward was what, in his memoirs, he referred to as a “voteless recovery”. You
can bet Osborne doesn’t want that.
As an American political fan, Osborne will know that Reagan won in 1984 based on the expectations gap: between the outlook in 1980, and the rosiness then (his address announcing his intention to stand again, incidentally, is one of my favourite pieces of short political oratory). I suspect Osborne wants to
create a very big expectations gap. Hence his claim that, when he got to No11, things were worse than he thought. And hence his silence about what’s happening now. So the prestige will be
many more jobs – and rather than take a bow, David Cameron will call an election and Osborne will take a Tory majority. And send the lovely Danny McGee back to his Highland electorate to
explain where all those RAF bases have gone. Simples.
Now, tricks can go wrong. When Osborne was election co-ordinator, trying all his various clever tactics, and his magic trick was to make a 22-point opinion Tory poll lead vanish into thin air. He
can greatly enhance his tricks’ chances of success by articulating a growth strategy. His 50p tax and banker-bashing will serve to chase away the entrepreneurs who came to Britain under the
Major and Blair years: I genuinely believe he has not quantified the damage that this political posturing does.
But the cuts path is the right one, he has not flinched from it, and that 3-1 ratio should work out for him in the end. His whole trick collapses, of course, if those 1.5m new jobs are filled by
the economy sucking in even more overseas workers. But that’s another story.
Previous
rogerb
October 24th, 2010 4:36pm Report this commentThere is another factor which is probably in the budgets next year is the first of the uplift for baby boomers retirement.I believe this is 150,000 to 800,000 I am not sure how many will be in the public sector but you can probably assume the minimum is the national average.As demographics are one of the drivers perhaps some investigation?
Blacksmith
October 24th, 2010 4:46pm Report this comment600,000 people are due to reach retirement age in 2011.In 2012/13 there are also likely to be high numbers.Will this not free up the jobs market?
DavidDP
October 24th, 2010 4:48pm Report this comment"banker bashing"
These poor bankers are such delicate souls, aren't they? Too much criticism for almost bringing down global capitalism will make them stay home and cry. We must hug them and kiss them, and lavish money on them.
Kennybhoy
October 24th, 2010 5:15pm Report this commentThat picture is positively disturbing!
Simon Stephenson
October 24th, 2010 5:21pm Report this comment"His whole trick collapses, of course, if those 1.5m new jobs are filled by the economy sucking in even more overseas workers. But that’s another story."
And, with respect, your whole surmise of Osbornesque magicry is dependent entirely upon the hypothesis that the private-sector will create an additional 1.5 million jobs over the next four years. The reality is that this level of job-creation will only occur if there is a healthy recovery in the overall economy, which is something that can be hoped for, but not promised.
Maybe the coalition is trying to return to the more adult, pre-New Labour style of political announcement, wherein forecasts may be regarded as promises to deliver, in contrast to the cloud-cuckoo-land vote-grabbing falsenesses of the Blair/Brown era, which did so much to destroy the nation's faith in its political representatives.
Can modern politicians rise above the hubris of the age? Let's hope so.
Dave B
October 24th, 2010 5:22pm Report this commentI could do with hearing less 'banker bashing', and more praise for the UK's financial sector.
Stepney
October 24th, 2010 5:23pm Report this commentThe real magic would be if the current welfare dependents take the jobs rather than sitting on their ar*es watching 600,000 Poles arrive, gain employment and display a wonderful work ethic as they did a few years ago.
What a success that would be...votes in the bank Mr F, votes in the bank.
A Banker
October 24th, 2010 5:23pm Report this commentActually, it was you chaps not paying your mortgages, credit cards, etc.
No charge (probably!).
Lisa Ansell
October 24th, 2010 5:29pm Report this commentFraser, I would love to be 'bashed' the way the bankers have been.
Absolutely love it.
Instead, I have had all ability to pay my bills, no matter how hard I work, how long the hours I work- removed.
I will explain.
I have a child. When I am not there, she needs to be cared for. THere is a thing called childcare available, it costs about £100-170 per week. Which meant it was a bigger expense than my rent.
In order to work, and have approximately £300 per month less than I needed to live on(in my two up, two down mansion)- to remain employable until the day I am not paying childcare- the state topped up my salary with housing benefit and tax credits. THose tax credits meant that some of my childcare was paid. (for childcare in Tory terms= read 'couples penalty)
And the housing benefit meant that even thought my rent and my childcare was more than my salary- I still had £150 a week to live on. I wasn't doing a non job. I was a social worker, working in child protection.
Now, I won't get the help with my rent. The allowance for childcare has been cut. VAT has increased. Bus and rail fares will increase. Prices will increase.
In order to survive and work, constantly living at a deficit(you know what a deficit is right?)- I had to spend a great deal of time managing. I would choose which of my household bills I could afford to pay each month. Fully aware of the time limits I had on each. IE I knew that I could pay my gas once every two months, my council tax every month. THis kept me going- so that when I am no longer paying childcare I still have skills.
Now- those things are not available. In addition to which, the policies which did this, encouraged the big society to call me a scrounger. Tell me to keep my legs shut. Told me it was my own fault for choosing to have sex and create the child I love.
I apologise for choosing to have sex with my husband, while were married and in a dual income house. I apologise for leeching from society by choosing to borrow 12k to get a social work degree and work in a system that brought the country to its knees.(Oh that wasn't social work? What was it?).
I have a great deal of sympathy for those 'bashed bankers'- whose incomes are still rising at a faster rate than ever, and who will get bonuses this year of more money than I would have earned in a lifetime.
I cannot stand by and watch those poor vulnerable banker be bashed- while I am giving the luxury of a future for myself an dmy daughter, where working or not- we have no future. Sometimes you have to stand up for what you believe in, and the way those bankers have been bashed is criminal.
Arrears accumulate, but you manage. Except now- there is absolutely no way to sustain it.
I am not the only person who lives like this. Housing benefit claim lists are full of people who worked the way I did.
I know you hadn't noticed- but the conditions for claiming housing benefit never changed. The allowance you are allowed to live on, never changed. The only thing that changed was the cost of houses. And so the housing benefit bill rose
I am struggling to see where the good news that was hidden in the budget or the spending review was. Because as far as I can see
Tiberius
October 24th, 2010 5:30pm Report this commentSo that's why Philip Hammond didn't take issue on QT with all those Doubting Thomases over private sector growth!
A good piece, Fraser, until your usual lapse into melancholy in your penultimate paragraph. I don't remember the Tory lead reaching above 45%, so on how many occasions did that coincide with Labour being on 23%?
AlanL
October 24th, 2010 5:42pm Report this commentHmm. Banker bashing.
My understanding, from Radio 4's "More or Less", is that the total NET cost of bailing out the banks is under £3 billion. This is because the guarantees were never called upon, and the shares in the nationalised banks are almost worth the capital we put in.
As the shares rise, the taxpayer will soon go into profit.
To put this into context, £3bn is one week's worth of the current deficit. £3bn is less than banks pay annually in taxes.
So bash the bankers from an idealogical dogma, if you wish, but please do not believe it was because they cost the taxpayers vast sums.
Disclaimer: I am not a banker, or connected to any. I am, however, numerate.
perdix
October 24th, 2010 5:47pm Report this commentWas not 3-1 part of the published OBR report? And available for all, who cared, to see? Ozzie probably doesn't want to shout about this in case it doesn't happen.I think it will.
lisa ansell
October 24th, 2010 5:51pm Report this commenthttp://www.ifs.org.uk/bns/bn79.pdf Some slightly less misleading figures for you.
Susan
October 24th, 2010 6:06pm Report this commentBlimey. So it is true then..... Politics is all about playing games with the country and its citizens. Well how about this for 'and now for our next trick'. At the same time as reducing our defence capability undermining our troops in Afghanistan and the moral of the entire MOD, making students pay more for their university education forcing kids from less well off families to think twice before aspiring to get a degree, removing child benefit hitting single parent families but leaving the flash double income bread winners to continue to get money for old rope, slashing the welfare benefits of those most in need giving those at the bottom of society a political kick up the you know what, depriving charities of a financial lifeline helping to keep errant youngsters off the streets and out of prison AND removing local transport planning grants which underpin safer routes to school, crossing patrol wardens and other important road safety interventions, the amateur (political) magicians then say they are going to produce £34bn to spend on a new high speed rail line from London to Birmingham. HS2 has a business case that reads like it was written at 4pm on a Friday by a much stressed consultant under pressure by the then PM to give him something (anything!) in the hope that it might win a few votes ahead of the GE......HS2 that will devastate communities in its path, destroy areas of outstanding natural beauty, kill off the habitat of many protected species, destroy lives, blight homes, divide families, obliterate green and rural homesteads ending once and for all hundreds of years of farming and rural life as well as bulldoze through national heritage areas AND all this we are led to believe is in the national interests?.....
Now I am no politician (or a magician for the matter) but “that’s what I call magic”. They keep telling us that the high speed line is good for the economy, will bring jobs to deprived areas, will give the UK super fast trains the likes of which not seen anywhere else in Europe (keeping quiet that the UK already has the quickest journey times from towns and cities to its capital city than any other EU country) and which will make the UK the envy of the world!! Magical or fanciful? At the same time as this HS2 propaganda being peddled by rank and file transport ministers and those on the HS2 Ltd payroll and the companies rubbing their hands together over the liklihood of project mgt outsourcing....we are also asked to believe that HS2 has been well thought through, properly costed, fully environmentally researched and will bring a welcomed light at the end of a recession blighted tunnel to the entire country. Really?....
Well....if only those vocal lot in the Chilterns would get back in their environmental box adn stop threatening a Judicial Review. If only those campaign groups opposed to the line up in Warwickshire would stop putting out 'STOP HS2' signs on all the A roads in and around Birmingham and if only HS2 Ltd had done a thorough job of determining the right solution and a business case that would stand up to scrutiny in the first place - then we might have pulled something really clever out of the hat. Instead it looks more and more like a massive 'white elephant' with rail fares increasing at such a rate that the very deprived we thought might gain from HS2 will be priced off the track. We did not see that sting in the commuter tail coming on our Political board game of “Whose line is it anyway?” If only the jobs we promise HS2 will deliver could be prevented from being sucked out of the local economy and into the Capital (as has been proved by the University of Barcelona) and if only the speed of these super fast trains would not be restricted (engineers and construction workers all know there will be major restrictions imposed under HSE, Environmental lobby groups, rail track companies and the noise abatement society to name but a few) then maybe spending £34bn might be justified?
Of course that £34bn could easily double if not trebble if previous infrastructure projects are anything to go by.....but notwithstanding all that....the real magic about HS2 is that at the moment it will knock an eye watering @10 minutes off your journey time into London. Now that’s magic? If only those who got A levels in the bleeding obvious would not respond by saying for the sake of 10 minutes why not ‘get an earlier train’ or even more reasonably the growing number of professionals who are now saying ‘upgrade and invest in the existing train lines, rolling stock and deal once and for all with the capacity constraints that have plagued UK railways for decades’. You see the trick is (if you really want to turn this white elephant into a white rabbit) when the family credit card is maxed out and there is no more credit left you have to live within your means, cut your cloth and start to save for a rainy day. When families are short of money what do they do?....they ‘make do and mend’. They do not go out and buy brand new. So maybe the answer for HS2 is to make do and mend the ECML, the WCML, the Midlands Train Lines so that they can accommodate ‘higher’ speed trains, with more carriages, running on dedicated fast corridors along the existing track. No need to build new lines, dig up the green belt blighting communities who until now were minding their own business living in the peace and quiet of the countryside. No need to do that at all....simply use the existing asset more smartly, more efficiently and this will save the country billions of pounds that we forgot to tell you we don’t actually have so that’s one less trick HMT will not have to perform. Phew!
Coalition Government.......If you continue to mess around with the country playing tricks with those voters who are typically a blend of blue and yellow....the quiet majority....then I am afraid it will not be a game of magic you will be playing. It will be that well known family favourite of ‘Monopoly’ - “Do not pass Go, do not collect £200, go to the back benches where you came from you crazy bunch of gamesters”.
STOP PLAYING GAMES WITH OUR COUNTRY AND THE ENVIRONMENT. STOP HS2.
Thank you.
Susan (I prefer doing cross words – and HS2 in its present guise sure makes me cross!)
oldtimer
October 24th, 2010 6:46pm Report this commentAlternatively it might not be a case of waiting to pull the rabbit out of the hat but rather of hoping to incubate those eggs so that they will hatch the chickens he wants to count.
Caution should be his watchword. The national debt is still rising to astronomical levels. Has he cut enough? Taxes are much too high. Where are the incentives for the grafters that Mr Cameron now talks about?
TGF UKIP
October 24th, 2010 8:18pm Report this commentMore of your over-sophisticated, other-worldly London bollocks Fraser, so it's small wonder that Tiberius agrees with you.
For growth with increasing employment to come about, the appropriate conditions need to exist. They don't. Indeed, the course and policies your friends and masters have embarked on could not be more hostile to growth.
The private sector and especially the SMEs who are the driving and employment creating force, are run by people who respond far more to incentives than the kicks in the goolies and abuse they've been on the end of so far.
It's not just the 50% rate, which so obviously bothers you and your mates, it's also the 40% payers whose tax has been increased and who've been targeted as being "the rich". In short anyone in a position to contribute to "growth". The Bush tax cuts worked so massively because they were economically efficient by being targeted at the growth and wealth creators.
Not only income tax either, and not just SMEs, with your mate lumbering larger businesses with a massive £1bn carbon tax. At least Labour's scheme was to take from carbon creators and recycle to carbon savers but now the whole lot goes straight to the Treasury.
Nor did your lot do anything to help protect business from all the employee mischief and court cases that are going to be visited on them by Dave & Harriet's Equalities Act, which they chose not to amend but to implement in full with Dave applauding it and approving it on his recent Marr appearance.
The housing market is now in freefall with one of the most important selling times of the year coming to an end with national housebuilders reporting that sales have been even worse than they were in the corresponding period in 2008 and talking again of possible land bank write downs. Nor is housebuilding alone in feeling such a draught, retail sales in September were bad and the car market is now absolutely dire.
Far from employment booming in the private sector, Fraser, unemployment will soon be rocketing - just think for a moment how many jobs are reliant on buoyant building and related industries and businesses alone.
As for your comparison with the early nineties, I can think of nothing more fatuous. Not only were our export markets not in similar shit to ourselves as they are now, but a great deal more buoyant, and we also had then a banking system in far more robust health than we do now.
2011 has long been predicted to be a diificult year for borrowers with lenders needing to roll over so much of their own borrowing but just why the fuck should banks be in any hurry to lend anyway. Not only is the climate risky but as they are being subject to such consistent abuse and tax levying from this government why would they wish to be doing anything to oblige it. Much better for them that they just play hardball back, and bugger off out of London to Singapore or Hong Kong.
What should really be worrying you and your mates though, Fraser, is that rocketing unemployment is going to be accompanied not just by biting cuts but by rapidly flaking LibDem members, MPs and ministers.
I will enjoy reminding you of your 3 in 1 piece, though.
Verityred
October 24th, 2010 8:52pm Report this commentWhy do you bother TGF UKIP, why don't you just post your bitter hard right bilge right up your own rear door dear?
Fox in a box
October 24th, 2010 10:03pm Report this commentAll this just goes to show that Will Hutton is the Jodie Marsh of economics.
TrevorsDen
October 24th, 2010 11:49pm Report this commentStop pretending you know what you are talking about UKIP; and start using paragraphs Susan
Like this ...
Not this.
As for your rant. Where is the money coming from for your requests please? Where? And moaning at dual income couples does not make you any richer. Are you paying 40% tax? If not you are not affected by the child benefit changes.
Why are we in this mess? Because of dumb assed labour. Rant at them. Everyone is suffering from the cuts - how typical that you invent the worst possible scenario instead of trying to do more with less. In 4 years time spending will be back at 20087 levels -- were things so terrible then?
And you rant away at the nasty rail link - you poor thing. Maybe we should all fly. Get off your high horse and get on with your job - hopefully efficiently.
Do you really need a degree to do social work?
daniel maris
October 24th, 2010 11:57pm Report this commentFraser -
Your economic illiteracy is amazing.
That table of public sector cuts shows that nearly of them relate to countries cutting public expenditure while the world economy was in basically good health and growing strongly. We are in a very serious economic situation at present and it is not at all clear to me that this gamble will pay off.
I think the most likely result of this cuts exercise is :
1. Huge increase in unemployment.
2. A huge decrease in consumer confidence.
3. Taking 1 & 2 together, a sharp downturn in domestic demand leading to further unemployment.
4. A failure by our useless bonus-gorging private sector to increase exports.
Fatbloke on tour
October 25th, 2010 12:40am Report this commentTrevor aka "Fraser" -- the fastest spinner in the Nelson family even though my brother is a DJ.
Oh no your doing numbers again, when will you ever learn? That MOD subsidised education of yours gave you the accent and the ability to pass the port but it didn't and does not allow you talk about things economic with any level of credibility.
Consequently your meanderings through Sniffy's thought process are interesting in an amateur psychologist type of way but offer nothing to the stock of human knowledge on how Dave the Rave hopes to turn water into wine.
First up a point about a previous post and the talk about Dave the Rave's morals. First up regarding this at its most basic level, have to question how he has any at all if his nickname is "Scratchy" and the word "Thrush" has a more detailed meaning to him than the usual common European songbird? Also the fact that he needed a "Cleanliness and Discretion" Tribunal to sort out a few outstanding issues from his all action student days.
With a background like that I fear you do him a disservice by focusing comment on his character. The last couple of weeks suggest that he is not cut from the right timber, not up to making the big life and death decisions that come the way of the PM when he least expects them.
Consequently I fear that his and your confidence in his abilities might be misplaced, the spectre of the "Grocer" looms large in all this, right wing mentalist rhetoric foundering on the rock of economic reality. We have been here before and this time the economic circumstances are much more malign. And that brings me nicely back to your grasp of all things economic.
Fairy story is not even the half of it, wishful thinking at the expense of others by a bunch of right wing, upper middle class, dog boiling millionaires would be a good place to start.
Your thoughts on the Sniffy attempt at fiscal consolidation suggests that need a new source for your numbers, you really getting spoon fed some amount of crap.
Howe 81 = 8.2% -- You really are having a laugh.
Would this be the same GH who lasted until 83?
Some change over 2 years if it is.
You must be getting it mixed up with the GH / NL double act.
You know the economic expansion that all ended in tears with inflation, recession and national economic humiliation. UK, first in and last out, a UK of North Sea oil money wasted and a mirage of economic transformation. A UK blessed with a windfall to prime the pumps, an expansionary global backdrop to get things moving and finally a world of falling raw material prices to make things happen.
Consequently some example.
Back to the books then for either yourself or your little numbers person who is so bad they must be a plant.
nonny mouse
October 25th, 2010 1:34am Report this commentI have a different reading on Osbornes motives.
If there are good times coming then why do we need to cut at all? Why not just put off the pain and accept a bit more borrowing until the growth comes? The reason for the silence about future growth is to stop that argument from taking root because it would turn the public against accepting cuts.
That is what Labour would do, but it is wrong for the country. It would leave the country with too big a public sector and too small a private sector to pay for it. It would leave the country with a lower long term growth rate. It would leave the country paying too much tax, with no chance of bringing tax down at the end of the parliament.
Osborne did learn for previous Conservative chancellors. The British people will always vote for tax cuts over spending rises even if they don't express those views in the polls.
Labour only broke this winning formula in 1997 because they managed to fool the country into believing that they would follow Tory spending plans. They did for a few years, of course, which is when Gordon Browns reputation was born and why the debt was repaid during their first few years in office. After that the spending tap was opened and the build up to record deficits began.
Can you imagine Red Ed repeating the Blair/Brown trick of 1997? Can you imagine Balls going along with it?
Osborne knows the Conservative party election winning play book. He is following it to the letter. That is why I predict a Conservative win in 2015.
Tim R
October 25th, 2010 8:15am Report this commentI think you've missed the central reason for the difference between - 500,000 lost and 1,500,00 create.
It's called immigration. Have you heard of that Fraser?
We sack half a million UK nationals and re-employ 1,499,999 foreigners.
Not really something to boast about now, is it?
GDT
October 25th, 2010 9:08am Report this commentFraser, when I see such long winded replies as this blog entry has, it is obvious Labour HQ has it trolls in full swing.
Some of the emotive arguements put forward by the left are quite astounding.
I am a single earner, 3 children family. I don't like the fact I'm being asked to pay for Labour's economic incompetence.
But if the end result if a further 5 years of Labour in the political wilderness it is a price worth paying!
Simon Stephenson
October 25th, 2010 10:07am Report this commentFatbloke on tour : 12.40am
Is there a small part of your mind that contains the thought that the fiscal consolidation is being carried out because in the world in which we actually live it is essential? That 13 years of Labour spin and Brownite economics has so lowered the general public's perception of the competence of politicians that a refusal to curtail deficit spending will just lead to greater and greater uncertainty about the future, with an increasing desire to save rather than to spend? However bad the prognostication for the economy with deficit reduction, isn't the reality that the prognostication for the economy is even worse without it?
I'm not talking about people like you, Fatbloke, who are so wedded to the last 13 years that they are temperamentally incapable of giving credit to anything that questions the correctness of policy made during that time. But most people, even regular Labour voters, are not like you. They recognise that Mr Brown's economic policy contained elements of negligence, recklessness and imprudence, and was a significant contributor to the instability and fear of the future against which they see the need to protect themselves now.
Yam Yam
October 25th, 2010 10:50am Report this commentFor purposes of clarity, Fraser, does the '700,000 public sector jobs lost and two million private sector jobs created' figure that you quote take into account the transfer of jobs and employers involved in the Major government's privatisation programmes?
Fatbloke on tour
October 25th, 2010 11:03am Report this commentSS @ 10.07
Mistakes were made, 1997-2010.
However on balance GB got it right.
He sorted out the problems of 92-97, poor and declining quality civic infrastructure and a labour shortage in the public sector due to low wages and tight budgets.
Look at any synopsis of the headlines in the 2nd JM government, what problems we had and what the Tory papers were screaming for.
As an aside KC did a good job of poisoning the well as he refused to raise interest rates when it was economically necessary but politically hazardous.
The Ken and Eddie show was not the way to set interest rates.
96-97 = £27bill public sector deficit / 3.4% of GDP / Public sector investment very low, even the gross figure was less than the deficit.
KC was borrowing to pay for our current expenditure.
# BoE Independence = GB correct
# 97-99 Tory spending plans = Mixed!
GB played it a bit too tight.
# 3 year spending rounds = GB correct.
Use it or lose it is not the way to run anything.
# Above trend real terms increases to public spending = GB correct.
The public realm after 18 years of Tory bust, boom, bust, thrift was a disgrace to a modern civilised economy.
# Buying off the doctors = GB wrong.
With the help of their friends in Whitehall we were taken for fools by the upper middle class professional mafia in the public services.
# Public sector procurement = Mixed.
Somes areas good, some like Defence / Transport / Contractors were terrible.
# Economic stewardship = GB correct.
Just what happened to the global recession in 2001/02 in the UK?
Just how many economic shocks did the UK ride out with constant growth over the 11 years till 2008?
My guess is 8 majors ones at least.
If the Tories had still been in charge we would have caught a cold every time they happened.
# Tax complexity / tax collection = GB wrong.
HMRC were always 18-30 months behind the banks and their accountants.
Also he was too clever by half at times.
# Industrial policy = GB wrong.
He had little support from Whitehall, their long term adapt or die, your on your own, design and branding is the way forward although not accepted was allowed to prevail due to a lack of effort and intellect until Mandy got involved in the last 18 months.
# Banks grow big = GB mixed.
Up against a worldwide trend and a media that egged them on.
Main thing is that the UK modernised and developed under GB's watch.
Finally he saw that the party could not last forever and introduced a spending slowdown in 2006/07 I think.
1.7% real terms increase in an economy growing at 2.5%'ish pa.
Final year before the global "Credit Crunch" hit we had public sector numbers of the following:
Deficit = £38bill / 2.9% GDP.
Public sector investment = £50bill.
That is more than the deficit or depreciation.
Compare and contrast with KC's final year deficit figures:
Deficit = £27bill / 3.4% GDP.
Public sector investement less than the deficit or the depreciation figure.
For the record the Credit Cruch was the biggest financial shock to hit in 135 years.
Only timely intervention stopped it developing to its full extent.
The UK economy was hurt badly because of both the size of the banking sector and the mentalist quality of its leadership.
Thin balance sheets
Exposure to derivatives market.
Reliance on short term wholesale funding.
These are the reasons why we were hit hard.
In contrast the UK balance sheet was quite robust.
Low national debt levels going in, 2nd lowest in the G7 I think.
Long term debt plus a history of paying it back.
High share held by domestic institutions.
Consequently were and never will be Greece and we weren't and never will go bankrupt.
Reasons:
Floating exchange rate
North Sea Oil
Export performance behind the curve.
Import substitution.
Dynamic nature and ability of the English (upper) middle class to turn a trick at anything if required.
Cheap labour from Ireland and Poland.
Any issues with this then put up your alternative thoughts.
Fatbloke on tour
October 25th, 2010 11:14am Report this commentYY @ 1050
Stop beating a man when he is down.
Your question is too much for a man who, by way of his subsidised education cost the MOD the second CIWS on a T23 frigate.
Accent = Check
Manners = Check
Understanding = err maybe we can pass on that.
SF, dog boiler in chief at the BBC made the same mistake.
92-97 = Once in a lifetime spurt due to a low exchange rate and limited competition for screwdriver jobs in the EU.
Result?
Our industrial policy was selling plebs to all comers at $5 / DM8 / £3 per hour including NI costs.
Can we go back?
Do we want to go back?
Oh well at least the birth of Railtrack did something beneficial to the upper middle class, right wing, dog boiling mindset.
The question has to be along the lines of how many people worked for BR in 92 and how many people worked in it successor private sector organisations in 97?
Answers on a postcard to:
Trevor aka "Fraser"
Spinner in Chief
Clutching at Straws Publications
Dog Boiling Towers
Speccy Land
Fraser
October 25th, 2010 11:43am Report this commentWhat a great idea! kill consumer confidence ahead of the VAT rise. That's the best way of getting 1.5 million into work.
Then if things do eventually turn up have no way of identifiying the success with your approach.
The difference with the early nineties and now is that there was a colossal purging of the system back then. Asset prices were allowed to fall rather than being artificially inflated by the debasement of currency. Banks realised there losses. The inputs in now aren't equalling positive outputs. More QE just means higher asset values, not productivity.
Simon Stephenson
October 25th, 2010 12:10pm Report this commentFatbloke on tour : 11.03am
As I wrote earlier, you are incapable temperamentally of being critical of Labour's 13 years. Your arguments and assertions are predicated on the necessity of regarding Labour 1997-2010 as being "good". It's impossible to have a reasoned conversation about outcomes with someone who is only prepared to accept representations that are supportive of his fixed position - as I am sure you well know.
It's just not enough to proclaim that Labour largely got it right because it followed Labour prescriptions for policy. The point at issue is whether the Labour prescriptions were right in the first place. Were the benefits gained from the expansion of the public sector worth the total costs that this entailed? Had a more reasoned, and less intuitive, approach been taken, could we not have ended up with more benefit for the same cost? Or the same benefit at a lower cost?
Is it unreasonable to suggest that for all the good that Labour did, it could (and should) have done much, much better, and that it is a failure of our political system that we have experienced a period of government in which such mediocre intellects were allowed to prevail?
Fatbloke on tour
October 25th, 2010 1:19pm Report this commentSS @ 12.10
View as at 2010.
Please compare and contrast:
UK progress 79 - 97 vs
UK progress 97 - 2010
Maggie 1 recession = 3rd biggest post war global economic contraction.
UK = Worst in the Big 5 economies at that time.
Unemployment / economic misery shoots through the roof.
Beggars return to the streets of the UK, first time in how many years?
Maggie 2 / JM recession = Not in the Top 5 global economic contractions
UK = Patchy, south falls of a cliff / middle class has an economic nervous breakdown, north not much worse that what has gone before.
Unemployment up but it is re-possessions that go through the roof.
US has it worse than the UK after the fall-out from the Reagan economic mirage.
Although try and tell that in Essex.
Credit Crunch = Biggest economic event in 130 years, banking sector has a nervous breakdown of a more complete and systematic nature than the situation in 1929.
What happens?
We do the right thing and the state becomes first the lender of last resort and then the spender of last resort.
We struggle but AD had a plan to sort it out without riots on the streets.
Consequently who would have done better than TB / GB? What would they have done and how would it have been better than any previous attempt?
Maggie had North Sea oil, 13% of revenues at its peak.
JM had a low pound to thank for his recovery and the fact that it was our industrial poloicy to sell the plebs at £3 / DM 8 / $5 per hour (inc NI) to all and sundry.
TB / GB had to deal with a high pound from the off.
Maggie and JM caused the problems that TB / GB had to fix.
How would their political successors have managed any better?
Again any ideas, lets be having them.
TrevorsDen
October 25th, 2010 2:08pm Report this comment"However on balance GB got it right.
He sorted out the problems of 92-97"
WHAT!?
Brown inherited an economy which had been growing for 4 years with debt under control.
After 3 years he started to spend money without a clue as to where it as going to come from and year after year ran deficits.
Thats why we have a massive structural deficit (we have gone from having one of the best to one of the worst). He spent money the economy could not simply generate. Brown increased annual govt spending by £250 billion - perhaps you could suggest where he could have got the money from?
Oh - who totally failed to regulate our banks? Silly question, I apologise.
No I don't - you are an arse - and a nasty dirty one at that.
Simon Stephenson
October 25th, 2010 3:40pm Report this commentTrevorsDen : 2.08pm
There's really nothing to be gained from getting into an exchange with him, because he's not prepared to concede that Labour could/should have done things differently. His entire discussion strategy is about beating off disagreements and threats to the rigid positions he holds. There is no progress of knowledge or understanding, for either side, that can come from this type of discussion.
Better to find an area of discussion with someone whose ideas are not determined by magical thinking.
GDT
October 25th, 2010 4:02pm Report this commentFBoT. Copy and paster extraordinaire. Straight from the Labour handbook of BS.
Marcher Baron
October 25th, 2010 4:20pm Report this comment"[Osborne's] whole trick collapses, of course, if those 1.5m new jobs are filled by the economy sucking in even more overseas workers." Cue Dave making noises about relaxing the immigration cap!
London Calling
October 25th, 2010 6:01pm Report this commentNo Magic involved whatsoever…although the 1.5m estimate has been somewhat over bloated on the Pork Pies. David Cameron is to sign a trade document with India in December, allowing skilled migration into the UK. I fail to see any tricks here other than slight of hand …
On a separate issue, with regards to your Interview on Radio 4’s Any Question, you were not daft to bring up Union intimidation towards Head Teachers (if true) any intimidation is unacceptable, however I was more interested to hear Toby Young has proposed handing his Free School to private investors, thereby creating Free Academies Take 2…Is privatising Free Schools going to be the outcome of this botched Swedish style fancy?…we shall see…
Fatbloke on tour
October 26th, 2010 5:06pm Report this commentFailed Blogger @ 2.08
You cannot see the wood for the trees.
TB / GB sorted out the problems of the 92-97 parliament.
Please check any selection of the media reports of that time and the issues were all screaming out with little scope for argument.
JM celebrated getting the job of PM by handing out money he and the country didn't have. Consequently the re-building after Black Wednesday decimated the public sector / realm.
All the talk of 92-97 was NHS waiting lists, nurse shortages, teacher shortages and class sizes increasing. Then here was the crumbling schools and the annual flu crisis in the hospitals with corridors for wards.
Add in the Railtrack shambles, the "Treasury Raids" on the MOD and the road building programme coming to a sudden halt and it was 5 years of public squalor and very little private affluence.
Want to increase the size of the university sector = Change the names on the buildings, its all we can afford
Not to mention the housing re-possessions and the hatchet that was taken to council services.
Those were the issues of the 92-97 parliament and where did JM and KC end up?
Deficit of £27bill / 3.4% of GDP.
He was borrowing to pay the bills not invest.
***********
Compare and contrast with AD before the Credit Crunch hit:
Deficit of £38bill / 2.9% of GDP.
Public investment of £50bill approx.
That is more than the deficit and more than the public sector depreciation number.
***********
Regarding 92-97, it was certainly no golden age and to suggest that debt levels were low as some sort of triumph is to miss the reason behind it. The economic nervous breakdown suffered by the south of England middle class caused by a financial shock that made them temporarily terrified of debt and generated a transient surplus and the debt reduction you describe.
In certain parts of Essex houses only started to sell again in 99 as the negative equity worked its way out the system. That is the best part of 10 years lost due to the hubris of Maggie and NL, who started to believe their own propaganda / imbibe their own liquid waste products.
That collective financial depression was one of the reasons why so many took on debt when they realised TB / GB were serious about re-building the country.
If TB / GB are guilty of anything it is be unable to fully control the politics of growth / plenty. They repaired the public realm and brought some pride to the population regarding state of the country.
Please note that a lot of the negative feeling surrounding the Olympics is sour grapes from the Maggie lovers who cannot give any credit to TB for managing to win something she couldn't even come third in.
TB / GB have a lot to be proud of, some mistakes yes but overall they repaired the damage of the previous 18 years but without the windfall of North Sea Oil that Maggie squandered. Only the right wing, establishment with their dog boiling orthodox economic acolytes and their MOD subsidised, private school educated cheerleaders pushing a billionaire friendly agenda cannot see it because they do not want to see it.
As always how about some figures and less of the insults?
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