With hindsight, Cable's deficit reduction plan looks better than Osborne's

Osborne's Plan A required the Chancellor to be lucky - and this Chancellor has not been lucky.

This year I am conducting a little experiment. I have two sealed envelopes in my office drawer. In one is a set of economic predictions made by astrologers at the start of the year; in the other a set of similar predictions made by ordinary journalists with no economic background. At the end of the year I intend to compare such random guessing with heavyweight economic soothsayers such as the Office of Budget Responsibility, the Bank of England, OECD, IFS and any economic think tank bold enough to make medium-term economic predictions on the nation's growth, employment, inflation, and so forth.

My money frankly is on the astrologers. The recent record of medium-term economic forecasting is lamentable - even if we ignore the unpredicted banking crash. What success we have seen amounts to little more than the suggestion that things will move in the direction they seem to be moving.

Now, I do not know if George Osborne trusted too much the entrail examining of economic experts, some of whom are now saying that he shouldn't have done exactly what they hitherto urged him to do. Nor can we be as sure as Ed Balls that the government went "too far, too fast" - particularly as Ed never got as far as telling anyone "how far or how fast" a government should go.

What we all can agree on, though, is that things are not going to plan. Yes, jobs are being created in the private sector, unemployment is not moving upwards, the deficit is down, our export markets are engaging with the emerging economies, inflation is low and our credit good.

However, friend and foe alike acknowledge that the plan hinges on economic growth and there's little positive news yet on that.

I write this as someone who has voted in Parliament for every bit of the Chancellor's strategy and bought into its broad objectives. Government MPs cannot meaningfully adopt an a la carte approach to Budgets. I did not know if it would achieve all its major objectives but I certainly did not know it would not. I do not claim to know how crucial events in the EU have been in derailing that strategy.

What I entirely reasonably claim is that George's plan conceived before the 2010 election and implemented after it was bolder and potentially riskier than that advocated by Vince Cable and the Lib Dem Treasury team. Retrospectively and with all benefits of hindsight, slowing a little the pace of deficit of reduction to better protect economically-useful capital expenditure as suggested by Vince looks as though it might have been a better bet.

It is not that Plan A could not have worked or that the sage of Twickenham was necessarily right. It required though a number of other things to go right or not go badly wrong - for the Chancellor to be lucky - and this Chancellor has not been lucky.

It probably did not help that in act of misguided hubris the Regional Development Agencies were given their marching orders from day one - particularly as the replacement Local Enterprise Partnerships have struggled either to find their feet or get real money flowing through the system. RDAs stood in need of reform but the incoming government's penchant for "radical restructuring" has led in more than one area to a lot of time being wasted doing just that.

One cannot help thinking that much of this is a poisonous consequence of the tribalism that bedevils British politics whereby incoming governments are expected to behave like the Taliban blowing up Buddhas. One hoped that coalition could offset this tendency.

That’s why the reasoned tone as much as much as the substance of Alistair Darling's intervention last week matters. Frankly positioned as George Osborne is between supply-side zealots who see manic deregulation as a cure-all and irritating post match analysis from the Lib Dem benches, anything that makes non-partisan discussion and decision-making easier must be welcome.

For regardless of what party we belong to or what sector of the economy we work in, it is becoming painfully clear that facile and easy solutions to our economic plight are not available and for better or worse - we are all in this together.

John Pugh is the Lib Dem MP for Southport

George Osborne hasn't had any luck. Photograph: Getty Images

John Pugh is the Lib Dem MP for Southport.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.