Borrowing up by £5bn this year and £7bn next year. Deficit reduction targets missed. Debt rising next year to 81.1% as a share of national income.
It’s not a great score sheet, is it? Yet if you tuned in to George Osborne’s big speech today, you’d be easily fooled for thinking the much-fabled “long-term economic plan” is in rude health. The Chancellor hailed Britain’s economic growth, while ignoring disappointing tax revenues, caused by the squeeze on living standards and the zero-hours economy.
Having the fastest growing economy in the G7 sounds mightily impressive, but when ordinary people are finding themselves £1,600 a year worse off, and with inequality rising, it looks a toothless veneer concealing much deeper ills.
It must be said that today’s statement is not without positives, and indeed some measures should be welcomed. Sweeping changes to stamp duty will mean only the highest value residential houses will pay more, and this will no doubt be held up to challenge Labour’s Mansion Tax. Further still, introducing a government-backed student loan system for postgraduate degrees is a major step in the right direction. Prior to this, master’s degrees (commanding tuition fees often in excess of £12,000) have been only for the privileged few. Yet from 2016-17 onwards, up to 40,000 students will be able to benefit.
Yet other announcements smack of too little, too late. The first, a 25% tax on multinational technology firms (such as Google) who have been accused of avoiding UK corporation tax by shifting their taxable profits abroad, has been advocated by those on the Left for years. Secondly, the big cut in the ability of banks to offset their huge past losses against future taxable profits is like placing a retrospective picket fence in front of the stable, with the bolted horse long gone.
Further still, the main, headline-grabbing funding announcements that were released to the media in the run-up were largely just re-announcements of previous commitments. With the £2bn announcement for the NHS looking less impressive when you learn that £750 million of the total will be drawn from internal health departmental savings – effectively reassigning money away from administration and onto the much-championed “NHS front line”.
Furthermore, as new data shows we are heading to our warmest year on record, our myopic Chancellor has cut taxes for North Sea oil and gas, with precious little regard for the scientific calls to end our dependence on fossil fuels.
Mr Osborne spoke about a future budget surplus in 2018-19 with the brashness of a clairvoyant. However, his own admission that net borrowing will reach a colossal £91.3bn for 2014 – more than double the forecast amount made in 2010 when he became Chancellor – hardly fills me with confidence in his powers of prediction.
The Conservatives will enter May 2015 proclaiming their competence in managing the economy, with Labour framed as profligate and irresponsible in comparison. After today, evidence for this remains thin on the ground.