The Tory (and Labour) obsession with deficits and cuts

The new Office for Budget Responsibility (OBR) has published its forecast.

The row over cuts, deficits and economic growth continues. From the BBC:

The Office for Budget Responsibility (OBR) predicts the economy will expand 2.6 per cent in 2011, down from the 3 per cent to 3.5 per cent estimate given in Labour's last Budget.

The lower figure will likely increase the impetus of the coalition government to cut public spending, as lower growth means fewer tax revenues.

Yet the OBR also says the deficit and debt will not be as bad as forecast.

It predicts that the UK's public deficit will fall, down to 10.5 per cent of GDP in the 2010-11 financial year, from the 11.1 per cent estimated by Labour.

For overall net government debt -- the sum of all borrowing -- the OBR estimates this will decline to 62.2 per cent of GDP in 2010-11 from the previous estimate of 63.6 per cent.

As the BBC's Paul Mason notes on his blog (hat-tip: Left Foot Forward):

There is only a 0.3 per cent of GDP difference (maybe 5bn) between Darling's structural deficit forecast and Budd's. This means there is no prima-facie ammo in the Budd Report for a significant tightening in order to eliminate "the bulk of the structural deficit".

Yet the "deficit hysteria" that I highlighted in my NS column this week continues unabated:

We are entering, as promised, the age of austerity. And the nation's finest minds are tormented by deficit hysteria. From the corridors of Whitehall to the studios of the BBC, the debt delusion -- that Britain is bust, bankrupt, broke -- reigns supreme.

Across the spectrum, from right to left to wherever the Liberal Democrats might be these days, politicians and policymakers mouth the mantra of "Cuts, cuts, cuts". "Swingeing", one of the oddest words in the English language, seems to have become a permanent addition to the political and media lexicon.

Larry Elliott has a brilliant but depressing piece in the Guardian today ("The lunatics are back in charge of the economy and they want cuts, cuts, cuts"), in which he reminds us of how FDR made the mistake of heeding the advice of the "sound money" economists in his administration and cut spending in 1937, thereby tipping the fragile US economy back into recession.

He also refers the reader to a new study by the economist Charles Dumas, of Lombard Street Research:

Dumas notes: "If some countries deflate their economies in an attempt to cut their government deficits, other countries will have a larger deficit -- and even the deflating countries will be partially frustrated in their endeavours. Why? Because they will induce a renewed recession that will hammer tax revenue and enforce greater relief spending." The result, he warns, "will almost certainly be renewed European recession, quite possibly a prolonged depression".

Meanwhile, Ed Balls and Alastair Darling are locked in a public spat over Labour's fiscal record in office and the latter's refusal to rule out a rise in VAT in the run-up to the election. I'm with Balls on this one. And, in my humble view, the former chancellor of the Exchequer too easily accepted the narrow, debt-obsessed parameters of the deficit hawks inside the Treasury, and in the commentariat and the financial markets. Labour's pledge to halve the deficit in four years was unnecessary and arbitary (why not three? or five?), and meant that the party was -- still is -- unable to make a credible or coherent case for Keynesian counter-cyclical spending.

Then there are those New Labour figure who seem to fetishise deficit reduction, cuts and balanced budgets. Andrew Adonis, the former transport secretary and one of the cleverest ministers to serve under Tony Blair and Gordon Brown, wrote in yesterday's Sunday Times:

Credibility on deficit reduction after 2011 will be vital for Labour's new leader if he (or she) seriously aspires to become prime minister.

And John Rentoul, the Independent on Sunday's chief political commentator and self-confessed "ultra-Blairite", wrote in his paper yesterday:

The long campaign, with the winner to be announced at the start of the Labour conference in September, is good for the party. By the end of the process the candidates might have got down to the real issue, which is what Labour can say about the vast fiscal deficit with which it saddled the country.

The last bit of that last sentence reads almost as if Rentoul had lifted it wholesale from a Tory press release. It is nonsense, of course -- the bankers, not the Brown government, "saddled" the country with a "vast fiscal deficit".

Thankfully, the preferred Labour leadership candidate of both Adonis and Rentoul, the former foreign secretary David Miliband, is taking a more social-democratic approach, arguing at a packed Compass conference on Saturday that Labour has to make the case that "deficits are not immoral". The elder Miliband also hailed the columns -- in this magazine! -- of Professor David "Danny" Blanchflower, who has consistently and cogently argued against premature and dangerous cuts in public spending since he joined the New Statesman in September 2009.

In fact, here's Danny, writing in the Sunday Mirror yesterday, specifically on the subject of George "Slasher" Osborne's forthcoming emergency Budget and the associated "cuts":

"It will do terrible and probably irreversible damage to the British economy. I am now 100 per cent certain these actions will push us into double-dip recession."

I do hope Danny, Larry and I are wrong and, for the sake of this country, that the Osbornes and Rentouls are right. But the lessons of history, as Larry Elliott points out, don't bode well for the UK economy.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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Meet Anne Marie Waters - the Ukip politician too extreme for Nigel Farage

In January 2016, Waters launched Pegida UK with former EDL frontman Steven Yaxley-Lennon (aka Tommy Robinson). 

There are few people in British political life who can be attacked from the left by Nigel Farage. Yet that is where Anne Marie Waters has found herself. And by the end of September she could well be the new leader of Ukip, a party almost synonymous with its beer-swilling, chain-smoking former leader.

Waters’s political journey is a curious one. She started out on the political left, but like Oswald Mosley before her, has since veered dramatically to the right. That, however, is where the similarities end. Waters is Irish, agnostic, a lesbian and a self-proclaimed feminist.

But it is her politics – rather than who she is – that have caused a stir among Ukip’s old guard. Former leader Paul Nuttall has said that her views make him “uncomfortable” while Farage has claimed Ukip is “finished” if, under her leadership, it becomes an anti-Islam party.

In her rhetoric, Waters echoes groups such as the English Defence League (EDL) and Britain First. She has called Islam “evil” and her leadership manifesto claims that the religion has turned Britain into a “fearful and censorious society”. Waters wants the banning of the burqa, the closure of all sharia councils and a temporary freeze on all immigration.

She started life in Dublin before moving to Germany in her teens to work as an au pair. Waters also lived in the Netherlands before returning to Britain to study journalism at Nottingham Trent University, graduating in 2003. She subsequently gained a second degree in law. It was then, she says, that she first learnt about Islam, which she claims treats women “like absolute dirt”. Now 39, Waters is a full-time campaigner who lives in Essex with her two dogs and her partner who is an accountant.

Waters’s first spell of serious activism was with the campaign group One Law for All, a secularist organisation fronted by the Iranian feminist and human rights activist Maryam Namazie. Waters resigned in November 2013 after four years with the organisation. According to Namazie, Waters left due to political disagreements over whether the group should collaborate with members of far-right groups.

In April 2014, Waters founded Sharia Watch UK and, in January 2016, she launched Pegida UK with former EDL frontman Steven Yaxley-Lennon (aka Tommy Robinson). The group was established as a British chapter of the German-based organisation and was set up to counter what it called the “Islamisation of our countries”. By the summer of 2016, it had petered out.

Waters twice stood unsuccessfully to become a Labour parliamentary candidate. Today, she says she could not back Labour due to its “betrayal of women” and “betrayal of the country” over Islam. After joining Ukip in 2014, she first ran for political office in the Lambeth council election, where she finished in ninth place. At the 2015 general election, Waters stood as the party’s candidate in Lewisham East, finishing third with 9.1 per cent of the vote. She was chosen to stand again in the 2016 London Assembly elections but was deselected after her role in Pegida UK became public. Waters was also prevented from standing in Lewisham East at the 2017 general election after Ukip’s then-leader Nuttall publicly intervened.

The current favourite of the 11 candidates standing to succeed Nuttall is deputy leader Peter Whittle, with Waters in second. Some had hoped the party’s top brass would ban her from standing but last week its national executive approved her campaign.

Due to an expected low turnout, the leadership contest is unpredictable. Last November, Nuttall was elected with just 9,622 votes. More than 1,000 new members reportedly joined Ukip in a two-week period earlier this year, prompting fears of far-right entryism.

Mike Hookem MEP has resigned as Ukip’s deputy whip over Waters’ candidacy, saying he would not “turn a blind eye” to extremism. By contrast, chief whip, MEP Stuart Agnew, is a supporter and has likened her to Joan of Arc. Waters is also working closely on her campaign with Jack Buckby, a former BNP activist and one of the few candidates to run against Labour in the by-election for Jo Cox’s former seat of Batley and Spen. Robinson is another backer.

Peculiarly for someone running to be the leader of a party, Waters does not appear to relish public attention. “I’m not a limelight person,” she recently told the Times. “I don’t like being phoned all the time.”

The journalist Jamie Bartlett, who was invited to the initial launch of Pegida UK in Luton in 2015, said of Waters: “She failed to remember the date of the demo. Her head lolled, her words were slurred, and she appeared to almost fall asleep while Tommy [Robinson] was speaking. After 10 minutes it all ground to an uneasy halt.”

In an age when authenticity is everything, it would be a mistake to underestimate yet another unconventional politician. But perhaps British Muslims shouldn’t panic about Anne Marie Waters just yet.

James Bloodworth is editor of Left Foot Forward

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear