Why Osborne’s promise doesn’t add up

George Osborne is a fool and, worse, he seems to think we are too. I tried to

The Fool

 hold off blogging on this. I really did. I’ve done my real job just to avoid writing about it. But I’m having my post-lunch slump and my willpower has sapped away to nothing. So here we are.

The Conservatives have said since the financial crisis began that running up a deficit was a terrible thing to do. They would cut said deficit as quickly as possible. That was their Anti-Keynesian stance, and they stood firm, despite all economic evidence to the contrary.

The government have said they would halve the deficit over four years. Even that would be pretty amazing to do with existing forecasts. Still it’s not enough for the Tories. They’ve said they’d cut it quicker and sooner. They’ve also said they’d do this without raising taxes. And they’ve also not mentioned specific cuts to frontline services. So they’re going to pay off borrowing without increasing taxes or making any real cuts to public services.

Nobody with even a basic understanding of maths is fooled by this strategy. It’s a nonsense. The policies were mocked by, well, everyone really. As a result, Osborne has been hiding most of the time. But now the chancellors’ debates are upon us. Now the polls have narrowed. Now Darling is the darling of the media. So up pops George again and announces that a Conservative government would block the planned one per cent rise in National Insurance. This will be funded, they say, by spending cuts possible through identified increased efficiencies.

See the problem here? It’s a pretty bloody big one. If Osborne uses money saved from these spending cuts to pay for the blocking of the NIC increase, then that saved money isn’t available to pay down the deficit. They’ve guaranteed to reduce the deficit faster than Labour. That means it must be financed by further cuts to spending other than those already identified. That’ll be real cuts to services or welfare then. Or through increases in taxes which could cost the taxpayer – that’s you – more than the one per cent NIC they are promising to scrap!

Here’s what David Cameron has to say on the subject:

“To make a long list of efficiency savings in advance of an election; to add them up to produce a great big total; to turn that total into debt reduction, spending increases elsewhere and a tax cut…?  People didn’t believe it, for the very good reason that controlling public spending is not about a one-off efficiency drive, it’s about a whole new culture of government. There is a simple fact which political historians amongst you will know very well. The government ‘efficiency drive’ is one of the oldest tricks in the book. The trouble is, it’s nearly always just that – a trick.”

Not exactly a ringing endorsement there is it?

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