Contrary to what you may have read on Iain Dale’s diary, I have not lost my economic marbles. Indeed, it is Mr Dale who shows a clear lack of economic understanding.
“I did a short turn on Sky News yesterday alongside Will Straw of Left Foot Forward. Incredibly, he seemed to be advocating that far from cutting public expenditure, we should be borrowing and spending more. He reckoned there was some sort of ‘slush fund’ available to pump money into various sectors because unemployment hadn’t reached the heights many people thought it might. So just because the government hadn’t spent money on unemployment benefit, it could now spend this money on other, as yet undefined, things.
“And there you have the difference between the left and the right. If it were me, I’d use the money to reduce borrowing, whereas Will would spend, spend, spend. And we all know where that gets us.”
Yes, we do, Iain. The economic stimulus of autumn 2008 – opposed by the Tories – has dampened the worst impact of the recession, particularly on the labour market. And yet, the British economy “remains very depressed” according to the National Institute of Economic and Social Research.
And far from Dale’s claim, I was at pains to suggest that there wasn’t a “slush fund” (Martin Stanford’s words) and that any additional economic stimulus should be spent on essential investments. The point here is not to borrow further but to ensure that money not spent on unemployment benefits is used for investment – a point on which I was happy to co-sign a letter in today’s Guardian organised by Colin Burgon MP. For the record, here’s what I said on Sky:
Straw: And of course because the impact of the recession has been less severe on unemployment than previous recessions, there is some money that’s been saved and that can be used for really important projects like infrastructure investments and so on, particularly in green industries.
Sandford: So there’s a slush fund essentially to try and woo the voters?
Straw: No I don’t think we should see it as a slush fund to woo the voters. I think economic times are much, much, much too serious for that. If this money emerges, it should be used for investment purposes for the good of the country.
As for Dale he appears to be in cloud cuckoo-land on a number of fronts. On Sky he said:
“I’ve never expected massive cuts in the first year. So I think it’s a convenient scare tactic for Labour to say that there will be massive cuts which will lead to unemployment and all the rest of it. But I think it’s a false argument.
“I think the more interesting argument is whether this is going to be Gordon Brown’s budget or is it going to be Alistair Darling’s? Because I think Alistair Darling actually understands the seriousness of the situation. He himself has predicted a deficit of £178 billion this year. But we see from tax revenues which are plummeting that it could be much more than that. So any govermment which comes after May 6th will have to make clear what their plans for cutting the deficit are going to be.
Three questions for Iain Dale (I won’t hold my breath):
1. Why do you think cuts in 2010-11 are necessary when they are opposed by the 67 economists who wrote to the Financial Times, the Confederation of British Industry, the Institute for Fiscal Studies, and the IMF?
2. Why is it a Labour scare tactic to fear the pace of cuts from an incoming Tory government when David Cameron has accused the Government of “moral cowardice” by failing to promise immediate public spending cuts?
3. Which economic report have you read which suggests that the deficit will be above £178 billion?
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33 Responses to “The economic consequences of Mr Dale”
Tim Ireland
RT @leftfootfwd: The economic consequences of Mr. Dale http://cli.gs/bpbWt @iaindale
Tim Ireland
RT @BevaniteEllie: I'd be shocked if @iaindale answered @wdjstraw 's 3 questions. Will he surprise us? http://tinyurl.com/yhdt3pr
Iain Dale
So essentially, you confirm what I alleged. You think money “saved” from not paying unemployment benefit should be spent on something as yet undefined, but it should be spent anyway. To answer your three questions…
1. 1. Why do you think cuts in 2010-11 are necessary when they are opposed by the 67 economists who wrote to the Financial Times, the Confederation of British Industry, the Institute for Fiscal Studies, and the IMF?
None of those bodies oppose cuts full stop. They just oppose what Nick Clegg refers to as “savage cuts”. Of course cuts should be made (as the 20 economists who wrote to The Times suggested) as soon as possible, which don’t endanger a recovery. Who could possibly object to that. What you are saying is that really, you don’t think any form of cuts are necessary. Ever. Which would at least be a consistent, if mad, position to adopt.
2. Why is it a Labour scare tactic to fear the pace of cuts from an incoming Tory government when David Cameron has accused the Government of “moral cowardice” by failing to promise immediate public spending cuts?
Accusing Tories of massive cuts is a favourite Labour scare tactic and always has been. The two assertions you make are not mutually exclusive. There will be some immediate cuts that can be made through waste which has already been identified, and quangos which can be abolished. But in practical terms, George Osborne wont see the books till May, wont have a budget until July and most of the spending plans for 2010-11 will be difficult to undo.
3. Which economic report have you read which suggests that the deficit will be above £178 billion?
I don’t need to read “economic reports”. Just look at this from The Times a couple of weeks ago.
http://business.timesonline.co.uk/tol/business/markets/article7032870.ece
I don’t often bet, but I’d happily bet you that the deficit will indeed exceed £178 billion this year.
Duncan Stott
It’s been a while since I’ve seen Tim Ireland and Iain Dale appearing on the same comments thread…
Andy
So you’re like every failed labour chancellor .. you advocate policies that end inevitably in running out other people’s money. Don’t believe me? Take any measure you like – GDP growth, unemployment, the FTSE, the deficit, debt -and compare these when labour govs of the past came to power against when they were booted out – you’re a total econcomic f**kwit like the party you support