‘We are on course, the plan is working’, siad Osborne in his Autumn Statement (replacing the pre-budget report). This chutzpah was based on the latest OBR report forecasting growth of 1.8% this year compared with the 1.2% figure given previously. What he didn’t say is that any extra growth this year, because of the lag in fiscal policy, cannot be due to any Tory policies since May, but rather must reflect the previous stimulus package set in place by Alistair Darling. Nor was this the only legerdemain in a speech full of false boasts.
He also didn’t repeat the other OBR predictions which do of course reflect Tory policy since May. These were that growth in 2011 is now expected to be 2.1%, down from 2.3%, and in 2012 now 2.6%, down from 2.8%. The OBR noted, but Osborne glided over this too, that growth will be “at a slower pace than in the recoveries of the 1970s, the 1980s and the 1990s”.
On jobs he gave a similarly false impression. He hooted that public sector employment is now forecast to fall only by 330,000, not the 490,000 originally stated. What he didn’t say was that 130,000 of this is accounted for by his decision to take even more out of welfare spending and slightly less out of departmental budgets. This is not a net improvement, but rather a deepening of economic pain for the most vulnerable in order to ease it slightly elsewhere.
Then there’s those mythical private sector jobs he didn’t touch on. He’s committing himself to 2 million jobs being created by the private sector by 2015 when in the Tory years of economic recovery 1993-9 it only generated 300,000 jobs. His claim is just a fairy story: unemployment in 2015 at nearly 2 million will still be higher than pre-recession.
One bit of good news which, surprisingly at first sight, Osborne didn’t mention is the OBR estimate that by 2015 the Government will have a budget surplus of £6bn. He didn’t draw on this because it would reveal that the budget is not as tight as he likes to make out. We are told that the rise in tuition fees, for example, was ‘unavoidable’. It wasn’t, especially since the UK spends less on higher education as a proportion of GDP than any other G7 country – 0.7%, when France, Canada and Sweden spend nearly twice as much.
Mervyn King was right. Osborne may not undertand economics very well, but he’s a past master at trying to turn it to party advantage.