The myth of Tory economic competence
Posted on November 23, 2015
The Liberal Democrats brought not only moderation but economic competence. Since taking sole charge of the Treasury, George Osborne’s approval ratings have plunged from positive territory to minus seventeen
This article was first published in the Huffington Post.
George Osborne has confused accounting with economics.
In his obsession with making the numbers add up to deliver his promised budget surplus by the end of this parliament, Osborne has become focused solely on cutting costs. For someone with a reputation for being a master political strategist, he seems to have forgotten that, while accounting is just about making the numbers add up, economics is inextricably intertwined with politics. Economics is about delivering the responsibilities of the state, encouraging sustainable economic growth and doing so without bankrupting the nation. The chancellor is doing none of this.
Instead, he is just taking the knife to expenditure seemingly indiscriminately and leaving all political judgement and all his other responsibilities to the British people behind. As a result, he tried to sneak cuts to tax credits through an ill thought out statutory instrument. He failed. Having already cut police staffing by 40,000, he is intent on going further and reducing police forces to survive by focusing on raising revenues through fining motorists rather than doing their job of fighting crime. He will fail. He is planning to put even more stress on the NHS by slashing junior doctors’ salaries and causing a crisis in the supply of nurses by abandoning the funding of training bursaries. He will fail. How many other things can he dream up in his Autumn Statement this week to compound his failures?
It seems that his idea of political strategy is reduced to pushing forward his crass and ill thought out fiscal charter – a move that has the potential to embarrass the Labour Party as its only merit. He seems to have learnt nothing from the Eurozone crisis that showed that embedding arbitrary fiscal rules that don’t allow the flexibility needed to deal with unexpected events always ends in tears.
In 2008, Lehman Brothers was allowed to fail because George W Bush and his Treasury Secretary Hank Poulson were so blinded to common sense by their extreme free market ideology that they refused to rescue the bank. As a result they ushered in the biggest global financial collapse ever seen. Osborne seems similarly so blinded by his extreme cost-cutting ideology that he will drive UK economic prospects into the ground. Everyone who has worked in business knows that cost cutting, while sometimes necessary, has to have a finite life and is not the route to sustainable growth.
Received wisdom is that being in coalition injected moderation into what would otherwise have been an extreme Tory government. In April this year, just before the election, the Chancellor’s net approval rating was in positive territory. Today, not yet seven months after he was handed sole control of the Treasury, Osborne’s net approval rating has plunged to minus seventeen. It seems that the Liberal Democrats did not just inject moderation, they also brought competence. Shorn if his Lib Dem colleagues, Osborne has descended into ideologically driven incompetence.