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RSSWho is left defending George Osborne?
The economists have deserted him, and business leaders are nowhere to be heard.
By David Blanchflower Published 24 August 2012 12:58
So far, we have heard from 13 of the 20 economists who signed the now-infamous letter to George Osborne in the Sunday Times in February 2010, in which they argued that:
[The] government's goal should be to eliminate the structural current Budget deficit over the course of a parliament.
Eleven of the economists responded to the New Statesman's request for a comment, two and a half years on. Of those, nine admitted that the changed situation had caused them to change their minds; one, Albert Marcet of Spain, remained supportive of Osborne; and the eleventh, Oxford's John Vickers, declined to comment either way.
Since then, two further signatories have got in touch with the Daily Telegraph to confirm that they, too, remain supportive. But what of the other seven? Will they admit they got it wrong; stake their colours ever firmer to a dying idea; or take the cowards' way out? We are still waiting to hear from:
- Sir Howard Davies, then of the London School of Economics, now working for France's Science Po
- Meghnad Desai, formerly of the London School of Economics
- Andrew Turnbull, former Cabinet Secretary
- Orazio Attanasio of University College London
- John Muellbauer of Nuffield College, Oxford
- Thomas Sargent of New York University, joint winner of 2011 Nobel prize in economics
- Anne Sibert of Birkbeck College
The economists aren't the only letter writers who should be embarrassed of their record. What about the 35 businesspeople who signed, corralled by CCHQ, their own letter in October 2010, to the Telegraph, which began:
It has been suggested that the deficit reduction programme set out by George Osborne in his emergency Budget should be watered down and spread over more than one parliament. We believe that this would be a mistake.
This letter was signed by the 34 men and one woman in their personal capacities, but some of them have surely been hit hard by the collapse in confidence which has ensued in the last two years. Andy Bond, ASDA's former chairman, can't be too happy about the impact the weak economy has had on his old company's sales growth, for instance.
Of course, some are unlikely to recant no matter what the evidence. Party-funding transparency website Search the Money reveals that five of the 35 are donors to the Tories, with donations totalling over half a million pounds between them.
Will any of the business leaders recant? The full list, including positions in 2010, is below. The New Statesman awaits their response.
- Will Adderley, CEO, Dunelm Group
- Robert Bensoussan, Chairman, L.K. Bennett
- Andy Bond, Chairman, ASDA
- Ian Cheshire, Chief Executive, Kingfisher
- Gerald Corbett, Chairman, SSL International, moneysupermarket.com, Britvic
- Peter Cullum, Executive Chairman, Towergate
- Tej Dhillon, Chairman and CEO, Dhillon Group
- Philip Dilley, Chairman, Arup
- Charles Dunstone, Chairman, Carphone Warehouse Group, Chairman, TalkTalk Telecom Group
- Warren East, CEO, ARM Holdings
- Gordon Frazer, Managing Director, Microsoft UK
- Sir Christopher Gent, Non-Executive Chairman, GlaxoSmithKline
- Ben Gordon, Chief Executive, Mothercare
- Anthony Habgood, Chairman, Whitbread , Chairman, Reed Elsevier
- Aidan Heavey, Chief Executive, Tullow Oil
- Neil Johnson, Chairman, UMECO
- Nick Leslau, Chairman, Prestbury Group
- Ian Livingston, CEO, BT Group
- Ruby McGregor-Smith, CEO, MITIE Group
- Rick Medlock, CFO, Inmarsat; Non-Executive Director lovefilms.com, The Betting Group
- John Nelson, Chairman, Hammerson
- Stefano Pessina, Executive Chairman, Alliance Boots
- Nick Prest, Chairman, AVEVA
- Nick Robertson, CEO, ASOS
- Sir Stuart Rose, Chairman, Marks & Spencer
- Tim Steiner, CEO, Ocado
- Andrew Sukawaty, Chairman and CEO, Inmarsat
- Michael Turner, Executive Chairman, Fuller, Smith and Turner
- Moni Varma,Chairman,Veetee
- Paul Walker, Chief Executive, Sage
- Paul Walsh, Chief Executive, Diageo
- Robert Walters, CEO, Robert Walters
- Joseph Wan, Chief Executive, Harvey Nichols
- Bob Wigley, Chairman, Expansys, Stonehaven Associates, Yell Group
- Simon Wolfson, Chief Executive, Next
Read David Blanchflower's most recent column for the New Statesman, "Perhaps Iain Duncan Smith will accuse me of peeing on the data", here
David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire
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50 comments
How come a railway company close to David Cameron's family get awarded the West coast rail network, when they have just reneged ANOTHER RAIL NETWORK three years before contract to claim £850 million THEY WILL NOW NOT HAVE TO PAY BACK OR WOULD HAVE BECOME INSOLVENT AS A RAIL COMPANY.
Can a person of high morals explain this deal?
Think the author is missing the point slightly, after reading his article in NS. Now, I don't believe in alisdair darling's cynical thesis that the austerity is merely a mask for ideological conservatism ;the deficit needs to be reduced. No one is in any doubt about that. The pace of the cuts are what's crippling and is the sign of a Tory government attempting to stick to its electioneering strategy of cutting the deficit in one term. What is terrifying is that, when we entered DD recession, (I'd argue we never got out of the first one) it was revealed that just under 90% of cuts are still to be enacted. If the government continues to cut so deep and fast then growth will simply not happen. I've heard many people spectate that growth can come out of austerity, however this has simply not proven to be the case. A plan for jobs and full employement must be enacted alongside just pure austerity. I don't buy this rhetoric that farage and ukip have come out with, that 'regulation must be taken off the backs of businesses' etc. that is simply one of many platitudes associated with the right wing. The impetus provided by the government is vital. Labour's tax on banker bonuses and 'guaranteed' employment (slightly dubious) is very half baked, but is the kind of thing that needs to be enacted by the government. However what I find frustrating is everyone's talk of a 'plan b'. labour is as guilty of this as anyone else and mr blanchflower endorsed the phrase several times in his article. No one has specified any notion of a plan b. Does it mean a slower pace of cuts? Does it mean higher taxation? As of yet, no one has come up with a credible alternative. The author of this article mentioned an investment in infrastructure (nice and vague) but does not specify how this can effect jobs and growth. Bearing on mind the amount of money the current government is borrowing, 'plan b' must become specified, rather than just meaning dissatisfaction with the current governments austerity. I've said for a while, why not use the quantitative easing programme to help direct employment and growth, in terms of building houses? Instead of 'spending' 380 bn on bank lending, which hasn't seen much difference. Remember it is up to the banks discretion whether they lend, no one can force them to. However my point Is until economists like David blanchflower actually propose an alternative to austerity or a direct or indirect plan for jobs and growth, rather than do immature name and shame lists of other economists, then this whole debate becomes null and void.
Just watched Born Bankrupt on Sky News. It reminds me of the saying we don't inherit from our ancestors we borrow from our children.
It was very sobering, there is no one really willing to face reality and our unfunded government liabilities. Don't expect politicians of any party to admit and deal with the future liabilities as it will cost votes but the day of reckoning will come sooner than we think.
Does that mean Dave Cameron will not inherit the £350 billion tax free benfit as an offshore company his father left in the Windies?
Sky News, the television arm of the Tory Party. Sky news is a loss making organisation, whose sole aim is the broadcast properganda for the right.
Jeff Randall, being a wally brain, interviewed former Canadian Prime Minister Paul Martin over a year ago, and criticised " egg-head " economists, who were predicting a recession in the UK.
Well that line of attack worked.
Proper what?
Pay restraint in the public sector in this parliament would have been necessary whoever was in government. But my economic mistakes mean more difficult decisions on tax, spending and pay. It is now inevitable that public sector pay restraint will have to continue for longer, but it should be done in a fair way. I hope you will agree and act to guarantee a fairer way forward.
Yours,
Ed Balls MP
Oh David
Do you remember pencilling: "I now have every expectation that within a few days the UK will lose its AAA credit rating.". 25 July 2012. Do you still hold the same view?
We might lose the AAA but the rating agencies will want to see a clearer view of the 2012 Q4/ 2013 Q1 data and the impact of the pending US down turn to decide on the underlying trend on the UKs capacity to service its massive debts.
Do you remember predicting that the UK would catch up with the US economy, growth wise, in a few months , I still giggle at that howler.
If Labour can make a complete ash of the economy with a government treasure chest overflowing how the hell are they going to convince enough of us to trust them with the economy with an empty treasure chest? Labour can make as many spending commitments it wishes. Labour can promise more sweets and cakes tomorrow all it likes. But without a solid economic alternative to responsible government Labour remains unelectable.
It think your mean " hash" Red Pain. You really do seem to be in denial over the Tories borrowing and tax raising history, why is that.
Why is okay for the Tories to borrow and blow £350 billion in north sea oil revenues. Between 1980 and 1985, North Sea oil accounted for 15% of all government revenues.
Why don't you want to talk about the 1 million NHS waiting list Labour inherited?
It think your mean " hash" . I did... thank you for pointing out my typing error. "It think your mean" Mmm...? Is the Hobbit your favorite book. It's just an afterthought ....Gollum....
Now now Red Pain, if you can't rebut the facts, it is better not to participate.
Do you mean my " favourite" book. As a matter of fact, the Riddle of the Sands, is my favourite book, unlike you, I managed to move on from Topsy and Tim.
It's a riddle why anyone would trust the Labour party with the nations finances never mind with the economy. Ed Balls and Ed Miliband were the advises who created Labour's tripartite financial regulation system. Labour completely screwed up the economy from 1999 onwards. Manufacturing slumped, trade deficits and current account deficits got wider and public sector waste increased faster than the nations ability to keep apace with public sector spending. Labour's disastrous immigration policy saw 80% of all new jobs created go to newly arrived immigrants depriving millions of our young people their fist opportunity of paid employment. Labour added to the Public debt each and every year starting from 2000 when it was in the valleys and creating a huge mountain by 2010. Labour would do all these things again. Ed Balls is untrustworthy and is economic poison.
Thatcher screwed the economy in the eighties
I take it you didn't live through the 1970's..... now that was a grim time.
The only riddle I am familiar with is the one from Nik Kershaw. As oppose to a hole in the ground, there seems to be a whole in your head.
" Manufacturing slumped, trade deficits and current account deficits " Welcome to Osborne's magic. Can't you bring yourself to read the economic data that is out there?. The current trade deficit is at a 15 year high.
What's the matter Gollum can't you find your precious. Your useless Labour party that you unquestionably defend was a total disaster for the working class. Your warmongering Labour party has the blood of ten's of thousands on it's hands. The Nations finances are in a perilous state because of your financially incompetent Labour party. Yet you persist in defending the indefeasible. Crawl back into your cave Gollum..
Whose upset you friend? You and your crackpot views, strange how borrowing £264 billion can't be construed as perilous. You might hanker for the days of one million on the Nhs waiting list, I don't in particular.
Gollum your precious Labour party would be doing very much the same if still in government. The Labour party has yet to formulate any credible alternative to responsible government. Your precious Labour party have yet to formulate any credible ideas at all that doesn't involve borrowing even greater amounts of money.
Matt
Labour boosted north sea oil production when they took power in order to drain the wells as fast as possible to fund expansion of the state and invading the odd country. Do you know how much north sea oil money Labour spent (of course you do but are too ashamed to say how much)?
How did they boost production? Come on Inastew, lets see the evidence. I take it your not disputing the fact since 1999, the oil fields have been in decline. Do you understand the term " decline"
Matt
I found this document from the HMRC (.gov.uk) website which might be of interest which shows some facts to discuss: (the NS website is blocking weblinks ). "/stats/corporate_tax/table11-11.pdf"
Do you think the HMRC facts show that the last government used substantially more North Sea oil revenues then the government before? Where did your £350Bn come from? Did you make it up?
Making things up, like Gideon borrowing £100 billion in his first year of government? Or the Tories borrowing £100 billion circa 1979-1997?
I didn't make those up, but it didn't stop you Inastew.
Foxy,
No being a chicken and ducking the North Sea oil issue like a slippery snake. You have been going on and on about abuse of oil money for years.
The HMRC facts sheet shows Labour consumed more Oil revenue that the previous government. The HMRC data does not add up to anything like your £350Bn - why is that? Did Ed Balls infultrate HMRC as well as the Treasury and corrupt their figures too?
Where did your £350Bn come from? Was it a figure your friends told you to use? Or is it made up like State Fairy economic policies?
Sorry I forgot, you are a bit simple many apologies. The figure I quoted included the adjustment for inflation, you probably don't understand with being stupid, that £12.035 Billion in 1984/5 is worth more the £12.925 billion in 2008/9
Are you interested to know that between 1980 and 1985, North Sea Oil accounted for 15% of all government income?
I see Osborne is still borrowing, even with £8.786 Billion 2010/11 and £12.250 Billion 2011/12 from North Sea Oil. Remind me how that works, £20 Billion and he still managed to borrow in excess of £20o Billion?
Matt
So your £350Bn is a load of old nonsense. Glad we've sorted that out. Dont be so Labour spin making up misleading statistics to conceal the truth -- instead try winning arguments on merit.
Dont forget to adjust the 2010/11 and 2011/12 figure for inflation before comparing Tory and Labour. In your Labour mathspin that means Labour used £2.5 oil money whilst the Tories used £10,000Tn.
Whether you are Labour or Tory makes no difference to the fact that the last government boosted oil production -its a fact that they did, I remeber the extra activity in the oil industry it generated- because they were not sure how long they were going to be in power and they wanted to get it used in case they lost it. It was against the national interest because with oil prices rising they knew they could have waited and got a lot more money for the oil. At the same time they sold the gold at a ridiculously cheap price and borrowed £350Bn before 2008. They pumped all that money - oil, gold, debt - into the economy when it was already booming. "No more boom and bust". The truth is they knew exactly what they were doing to the UK economy but only cared about clinging to power. We had regular press briefings about how the money was being spent improving the NHS and schools -- put all that together and it does not add up to £100bn. The rest of the money was pumped into the economy to boost the feel good factor to win elections. Thatcher did exactly the same dropping interest rates to pump money into the economy before elections except Labour did it with borrowing.
Dont you think -- whether you are Labour or Tory -- the UK political system is broken?
" The growth of North Sea oil revenues is the most important fiscal development in the British economy in the 1980s "
Nice quote from the IFS.
Inastew, stop avoiding your howlers. It wasn't me who talked about Gideon borrowing £100 Billion in his first year, I mean you were only out by £5o Billion. And as for Major and Thatcher only borrowing £100 Billion as opposed the reality of £264 Billion, you really need to aim your blunderbuss away from your feet.
Matt
What nonsense are you on about? Are you talking about a post when I asked you how much the annual deficit was and asked whether it was £100Bn?
You have been full on with people for more than a year repeatedly asserting the Tories drank £350Bn of oil money. The £350Bn was a nonsense fabriacted number which is widely wrong at least compared to the facts published by HMRC that we agree with.
Matt, why did you make up the £350Bn when actually Labour used more oil money than the Tories? Is it because you were being honest? Do you think Asil Nadir told the truth? Do you think he made up his company's treasury forecasts?
I am talking about your nonsense, I am not surprised you dont want to defend your mistakes.
You boldly talked about Osborne only borrowing £100 Billion, yet when addressed with the facts, you told me it was a guess.
Your guesses are awful, surely you should be at the OBR, they are totally hopeless and used as cover for Osborne.
Didn't Sir Alan Budd rush out figures to give cover to Cameron and Osborne?
The £350 Billion isn't fabricated, far from it genius. As I have to keep explaining, the value of monies I have stated are in real terms.
Asil Nadir, prominent Tory donor, do you mean him?
Companies don't issue treasury forecasts, the Treasury used too, can't you get anything right.
Foxy
ave you been at the fermenting apples again as you are talking a load nonsense. The fact is you have been bleating on to lots of people for years about the Tory abus of North Sea oil and what do we find when we look at the HMRC facts sheets? You are have made it all up. Labour used ore oil revenue and -- it is known in the oil industry -- Labour turned the taps up to get the oil out as fast as possible in case they lost office. So much for acting in the interests of our kids.
If Osbourne is short of supporters he could always call on Angela Merkel, Mark Rutte and the ECB.
Looks like Gideon's day just got a bit darker. It looks like RBS are going to be hit with a big fine over the Libor scandal, and Osborne seems to be sitting on the term of the settlement.
Strange how Stephen Hester knew about the Libor scandal for years, but was more interested in getting a bonus.
Matt
Talking of bonus do you think Labour could have done as much as the coalition towards curbing board room pay? Also, could you help me out by reminding me under who's watch these happened:
- £600bn borrowing
- MPs expenses
- phone hacking/ bribing the police/ pyjama parties
- doubling of board room pay
- running down UK industry fastest since the 1970s
- poor regulation leading and libor fixing, collapse of the UK's banks
- no more boom and bust
- champaigne and canopes lifestyle for government MPs
- failing to deliver on affordable housing
- slipping back of NHS health care relative to other countries
- managing the proletariat and biggotgate
- not supporting Pearson to set up its university
- not supporting Ford
- photo opportunities with troops but not giving them the best equipment
- 2 aircraft carriers but no money for planes
- house prices rising excessively stopping people getting on the ladder
- opening up the North Sea oiltaps to consume it as fast as possible
- selling the gold
- growing the state out of control
- legacy of half of adults leaving school without maths and english GCSE (never mind the spin on the pass rate of people who sit the exams)
- warping treasury forecasts
- PFI/ PPI off the balancesheet concealing of debt
- government spin factory
- out of control magration flows
etc etc etc etc.
Even Thatcher could not compete with it!
Do you anticipate Balls and Miliband will follow in their predecessors footsteps? Will they complete an "O" turn on policy by dropping Plan A?
This is a wonderful list. Of course we must remember that all these things mean that under the "New" Labour years we saw a continuation of the implementation of neoliberal ideas initiated by the tories in 1979. Real Labour supporters have no need to apologies . Crazy right wing ideas always end up in the same mess. Instead of useless point scoring we need sober deliberation on the situation now .
Ludus57
Labour's murderous foreign wars. You can't compile a list of Labour's disastrous policy failures..... without listing that.
" opening up the North Sea oiltaps to consume it as fast as possible "
You really don't understand, do you Inastew. Since 1999, north sea oil production has declined, yes declined Inastew, There was no plateau, just year on year decline.
It is a shame you don't want to talk about the £350 Billion of North sea oil revenues circa 1979 to 1997 that bankrolled Thatcher and Major, we know it didn't go to pay down the National debt, because that increased by a whopping £264 billion over 17 years of conservative government.
Didn't Osborne give boardroom exes a tax cut, he doesn't want them to pay at a 50% rate
Matt
North sea oil production peaked under Labour. They took so much out the well pressures fell. But you knew that when you made the post above.
Why didnt Labour increase taxes to 50% when they were in power rather than leaving it to the last minute? Do you think it was out of politically biggotry even though they knew it would not be in the national interest?
Do you think the £600Bn borrowed and spent by Labour was invested to ensure UK industry proposered and our young people now have jobs? Or perhaps the money was waisted by a small greedy self-actualising elite bent on retaining power for themselves at the expense of the nation?
What about the other 20 items on the list (I stopped then but could find another 20)? Is your rebuttable equally as weak? Do you think Ed Balls should follow in Gordons shoes to match his achievements?
" The pressure fell" Come on Inastew, that a sad argument. Didn't they tell your bigotry just comes with one g?
How did Mrs T and John Major invest the £350 Billion of North Sea Oil reveunes, and the £50 Billion is state sell offs? The only national interest they left the country in was Debt interest, we are still paying that today.
"How did Mrs T and John Major invest the £350 Billion of North Sea Oil revenue"
They didnt - you made the number up.
A number which is not made up is the £600Bn that Labour borrowed. How did Ed Balls and Gordon spend the money?
The money was spent on the dole and proping up other areas of the economy. Come on Ind Pendent, do some serious research for once and find out what really happened rather than parade your empty prejudices. oh, and get a life as well!
Ludus 57
Great, that means the tax-payer gets to pay the fine - there must be a special sound-proof room in No 11 where they all go to have a laugh at our expense.
When you're in trouble you quickly learn who your friends are.
Royal Flash Harry
So much for deficit denying, the march of the makers, and a export led recovery.
I recall in one of my columns I suggested that all we were going to see was a march of the unemployed ex-makers....
Danny B
As usual Mervyn King gets away with his part in all this.
He was the one that persuaded Clegg that huge cuts were required to keep the City and the bond markets happy and so set the coalition off.
King is more to blame for this crisis than anyone else in the UK but no-one seems to go for him, Prof Blanch does occasionally but the rest of the media and the politicians ignore his part in all the errors.
You couldn't be more right Prof Blanchflower.
What about "march of the ex-Dagenham Fiesta Ford workers"?