Five reasons why George Osborne is wrong

George Osborne’s declaration that his economic policy is “working” will have come as something of a shock to millions of families up and down the country.

George Osborne’s declaration that his economic policy is “working” will have come as something of a shock to millions of families up and down the country.

Here are five reasons why George Osborne is wrong:

1)      Plan A has not brought the growth he promised

As Will Straw points out, Osborne promised growth of 6.9% over 3 years, but instead there has only been a miniscule 1.8%. Osborne is setting the bar incredibly low for what counts as an economic victory.

2)      His government is worst in recorded history for living standards

As LFF editor James Bloodworth wrote last month, this government has seen 36 months of falling wages, which is more than under any Prime Minister on record. Prices have risen faster than wages in all but one month under this government.

3)      Osborne won’t meet his deficit reduction plan

In 2010 Osborne declared that he would eliminate the structural deficit and make sure that debt is falling as a proportion of GDP. He won’t achieve either target in this parliament.

4)      Long-term unemployment is highest since 1996

There are 915, 000 people in the UK who have been unemployed for longer than a year. This is 32, 000 more than last year. 474, 000 people have been out of work for more than two years.

5)      The rise of foodbanks

The Coalition has presided over a staggering rise in the number of people using food banks. The number of people using food banks has jumped from 128, 697 in 2011-12 to 346,992 in 2012-13.

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11 Responses to “Five reasons why George Osborne is wrong”

  1. Hatstand

    1. The reality is that the UK had/has an incredibly high annual deficit that would have made the national debt unsustainably high in a very short time. In order to continue borrowing at low rates, the coalition needed a convincing plan to reduce the deficit. More profligate spending, Brown/Balls style, would have resulted in very increased borrowing costs and then enforced austerity anyway. As it turned out, Osborne’s ‘austerity’ was pretty feeble and not really much different to that proposed by Balls. The growth was all that could be obtained in the circumstances. Any clown can generate growth by spending money but that is not responsible for the reasons I’ve mentioned.

    2. Living standards dropping are really the trade off for keeping unemployment relatively low. They will rise again as the economy grows again. I would certainly prefer to earn less money (I earn less now than I did in 2006) than be out of work.

    3. Well, do you really imagine that Balls would do any better? He lost any economic credibility a long time ago. It’s a pity they don’t have Alastair Darling in the job.

    4. Again, the best solution for this is a growing economy.

    5. So what? Food banks are common in other countries, such as France.

  2. Bill Cruickshank

    As a life long socialist, I am no apologist for the Tories. However, Labour had thirteen years to turn the UK economy around, thirteen years to prioritise social justice, it failed miserably. What Labour did achieve was a catastrophic, illegal war and a bankers bonanza which almost bankrupted Britain. There are many reasons for voting YES to Scottish independence next year: Creating a socially just Scotland, which will be free from nuclear weapons and illegal, imperialist wars, are just three of them.

  3. Jake Church

    Disgraceful comment about foodbanks, till you have to use one because of this disgusting uncaring greedy, govt’s attack on the poor, disabled and unemployed whilst heaping tax breaks on the rich and mega companies then you have no right, try it mate, go on sign on and see the reality of this i did not think you would!!!!!!!!!!!!!!!!!!!!!!!!

  4. Hatstand

    I have signed on in the past. It’s not pleasant and nor are food banks.
    Are you saying that the reduction in the higher rate tax (to a level higher than during the previous government) is indirectly causing increased use of food banks? If so, I think you need a lie down.
    Labour would have had to make cuts as well and in the same places. We were/are in an economic corner.

  5. henrytinsley

    But there was no justification for dropping the 50% tax rate when everyone else was being squeezed. A nasty bit of class warfare.

  6. Hatstand

    I don’t think the motivation was just to reward their friends through hatred of poor people. 45% is a reasonably sensible top rate tax that is still on the highish side by international comparison. The original hike by Labour from 40 to 50% was purely political and they knew it wouldn’t raise any money. If the point is to get the country growing again, this tax cut was sensible. If the aim is just to make annoyingly rich people poorer then fine. But it wouldn’t help in any way at all.

  7. mactheanti

    Labour actually reduced the national debt. It was 45% in 1997 and in 2008 just before the GLOBAL financial crisis and recession began Labour had reduced it to 32%.

  8. Bill Cruickshank

    “Now, after decades of relative peace and prosperity, our national debt is sky-rocketing once more. In 1997 Public Sector Net Debt stood at £352 billion. From there it took only 12 years to double, and the Government forecasts it will double again by 2014. Let’s hope we don’t need to finance a major defensive war any time soon.”

    Taken from No-nonsense Economics

    Somebody’s telling porkies?

  9. henrytinsley

    I really don’t see why 45% is so wonderful for the economy, and 50% was hardly an outrage by international standards,. It’s hardly a secret that Tory donors were pressing for a reduction in the top rate and this the lowest the government felt they could get away with.

  10. Hatstand

    All the records I can find show the debt increasing strongly from 2003, once Labour abandoned any pretence at prudence. They borrowed a lot during a boom so although the overall debt was still reasonably containable, it was going up fast. A bit like paying off your mortgage then borrowing £10k a month for living it up. It’s ok for a while but if you get used to that level of spending it becomes very difficult very quickly. Brown/Balls prudence!!

  11. Hatstand

    May be they were but 50% was unsustainable so they wanted to get the politics out of the way early. Brown should be ashamed of himself for laying the trick in the first place. He knew it was damaging but only Brown mattered in his world.

    Just out of interest, the higher the tax rate, the less each increase achieves. If you tax at 20% and say increase it to 25%, you raise 25% more money. The amount the tax payer receives goes from 80% to 75%. This is a decrease of 6.25% of take home pay, i.e. he receives that much less. If the tax rate is already fairly high, say 40% and you increase it to 50%, the state receives 25% more but the tax payer loses 20% of his take home pay – a very big drop. And of course the higher up you go, the less productive and more damaging the tax rise becomes.

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