The key contradiction in the Tories’ deficit spin

Was there a Labour plan, or not?

Various half-truths, lies and myths about the deficit have been peddled by the Tories, the Liberal Democrats and their supporters in the press in recent months. Right-wing deficit hawks pretend that the deficit had already ballooned prior to the 2008 banking crash when, in fact, as Labour's new shadow chancellor, Alan Johnson, pointed out in the House of Commons yesterday, this country entered the financial crisis with the second-lowest Budget deficit in the G7.

They also claim that the Blair and Brown governments spent excessively and unwisely in the run-up to the crash, omitting to mention that Messrs Cameron and Osborne backed Labour's spending plans right up until November 2008. (See Jonathan Freedland's excellent column in yesterday's Guardian for further details and observations.)

But the biggest contradiction (lie?) at the heart of the Con-Dem spin strategy concerns their (mis)representation of the Labour Party position on deficit reduction.

In a round of interviews this morning, George Osborne claimed:

People keep saying, "Where's your plan B?" I've got a plan A – this country didn't have any plan at all a few months ago.

Yesterday, however, in his Spending Review in the Commons, he concluded:

I am pleased to tell the House it has been possible – and the average saving in departmental budgets will be lower than the previous government implied in its March Budget. Instead of cuts of 20 per cent there will be cuts of 19 per cent over four years.

So, let me get this straight. The Tories have been saying for months that Labour left the country in a mess, without a deficit reduction plan, that Labour frontbenchers are "deficit deniers", blah, blah, but then, yesterday, Osborne suddenly claims that Labour had planned for 20 per cuts in departmental spending and his 19 per cent cuts were therefore lower than those. But then, this morning, he reverts to form and starts droning on about the alleged absence of a deficit reduction plan until, God bless them, the Con-Dem coalition came to office in May.

This is as absurd as it is dishonest. They cannot claim, on the one hand, that they are making these draconian, swingeing and severe cuts because Labour didn't have the balls or the brains to do so, but then, on the other, claim that Labour's cuts would have been worse than theirs.

UPDATE

You can watch me debating the Spending Review with the Tory blogger Iain Dale and the Chatham House economist Vanessa Rossi on al-Jazeera's Inside Edition here.

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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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.