The shortfall from the sale of 4g broadband capacity means chancellor George Osborne will be under increasing pressure to make greater cuts.
A short term consequence of George Osborne’s failure to secure the expected money from the sale of 4G mobile spectrum – the sale raised £2.34 billion rather than the predicted £3.5 billion – will probably be greater government borrowing.
The treasury is now facing a £1.2 billion shortfall as a consequence of failing to secure the expected amount.
The prediction that the 4G sale would raise £3.5 billion was included in Osborne’s last Autumn statement to show that borrowing would not need to rise this financial year.
The fact that profit on the sale fell short by almost a third implies borrowing will now rise to make up for that shortfall.
Earlier this month, The Institute of Fiscal Studies (IFS) said the coalition had borrowed £64billion more than it had originally predicted in 2010. It also warned that whoever was in power after the 2015 election would need to find around £50billion to sustain public finances.
In this context, the extra billion that the chancellor will now need to find is relatively small fry.
It adds, however, to the growing sense that finances are spiraling dangerously out of control on Osborne’s watch.
Politically this is good for opposition parties, but it is worth remembering that within the coalition Osborne is under more pressure from the right than from the left.
As Left Foot Forward reported last week, the failure of austerity to bring with it a return to prosperity has had the perverse effect of emboldening the tory right, who are now putting pressure on the chancellor to make further swingeing cuts.
When the latest borrowing figures come out tomorrow it’s worth keeping an eye out for more short-termist, 4G-like attempts to distract from the trend towards increased borrowing.
Also keep an eye on Osborne’s critics on the tory right, who are salivating at the prospect of further cuts and are starting to get a hearing in the Conservative Party, ironically, due to the failure of a version of their own brand of economics.
31 Responses to “Osborne’s missing 4G billion increases pressure for cuts”
Newsbot9
Yes, keep claiming pork-barrel spending is Keynsian. You can’t cut throats fast enough can you.
Newsbot9
Yes. They don’t want the deficit to close, robertcp. It’s too useful.
FRANCIS GERALD ALLEN
And of course LB, you will guarantee that mobile phone companies will reduce prices/charges. You apologists for big business and the Torie’s forget that the mobile phone operators fought tooth and nail the attempts by Brussels to reduce crossborder charges for mobile phone calls, I believe it took years to get the reduction through the courts. So muchfor competition.
LB
I’m a fan of neither.
The advantage of the mobile business, is I can go elsewhere and switch. I can even stop using a mobile altogether. It’s my choice, and the mobile companies can lump it.
So look at your arguments. It took years to get it through the courts. Who runs the courts? The state.
Who didn’t implement the changes to charges quickly? Brussels, yet another branch of the state.
However, for the state, I’m screwed. Irespective of the service not only do I have to pay for it, I have no choice.
So when it comes to health care, I have to put up with the NHS, like most people. Even though the BMJ’s figures are that it kills 40,000 more than it should, each year.
When it comes to pensions, people are really going to be screwed. Again, for most people they have no choice. They have to rely on the state. How much does the state owe them? In the UK, 5,300 bn, hidden off the books. Why’s it off the books? Less than a 50% chance of having to pay out. It’s going to go Greek, and that screws people to an unbelievable extent.
Newsbot9
Yes yes, keep on bemoaning the lives saved, when you could kill them by not allowing treatment. And keep talking about how you’re not going to pay pensions. About how you, personally, are working to rip off British people, boasting about how you’re ripping us off.