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”
Bill Kristol-Balls
@ Andy
FTSE 100 May 1997 – 4621
FTSE 100 Today – 5617
I make that + 17.73% since Labour took office and substantially more if you’ve been a good boy and re-invested your dividends.
Not great performance but not disastrous considering the bursting of the tech and banking / property bubbles during that time.
Tim Ireland
“It’s been a while since I’ve seen Tim Ireland and Iain Dale appearing on the same comments thread…”
Only by way of an RT or two :o)
You’ll never see it happen for real for as long as Dale refuses to discuss [self-censored so I don’t unfairly prevent Iain Dale from returning to this thread].
Richard Blogger
Iain, hasn’t Osborne heard of ONS, or NAO? Or indeed, any of the public documents published by all of the government departments. Every time anyone asks about Osborne’s cuts you lot bring up these mythical “books”. If Osborne does not have a clue about the economy, why the hell does he want to be Chancellor?
Bill Quango MP
You know, what you are proposing was what Heath proposed in 1971.
It worked.
Right up to the point that it stopped working and spun the country into the worst financial crisis ever.
Up till now.
Grumpy Old Man
“Which economic report have you read which suggests that the deficit will be above £178 billion?”
How about adding the bill for PFI after it’s been de-enroned and bought onto the Treasury Books as Government debt?
@ Richard Blogger. Gordon didn’t have any economics qualification at all, unless you call an article on how to spend a night at a party drinking on other people’s money a demonstration of economic prowess.