Osborne's rhetorical shift

The Chancellor insists that "flexibility" is built into his plan.

George Osborne conceded little ground to his critics on the Today programme this morning, but there was a notable shift in his rhetoric. To those who have demanded that he produce a "plan B", the Chancellor replied that "flexibility" was already built into his economic strategy.

There is flexibility built into the plan that I announced a year ago... We're talking about the structural deficit, so in other words we allow the automatic stabilisers to operate, which means that the economy can move up and down with the cycle, the government spending can move up and down with the cycle.

It's a point that Osborne could have made at any time over the past year - the government can eliminate the structural deficit (the part of the deficit that remains when the economy returns to growth) even if the overall deficit, owing to higher spending on unemployment benefits (the "automatic stabilisers"), is higher-than-expected. But it's telling that he chose to make it now. Of course, should economic growth continue to disappoint, there's every possibility that Osborne will miss his flagship pledge to eliminate the structural deficit by the end of this Parliament. As I've noted before, anaemic growth means a slower pace of deficit reduction.

Osborne also came close to admitting that the success of his strategy depends on loose monetary policy (interest rates and the exchange rate) compensating for tight fiscal policy (spending cuts and tax rises). He noted: "We of course have an independent monetary policy committee and tighter fiscal policy gives the monetary policy committee greater freedom to operate monetary policy."

Despite the growing clamour for interest rate rises from some quarters, it's clear that the Chancellor both hopes and expects rates to remain at record lows. But how will ministers respond if the Bank of England raises rates prematurely? What is their plan B? That question, sadly, was not put to Osborne today.

As an aside, it's worth noting that Osborne berated the BBC for its allegedly negative coverage of the economy. It's a complaint that almost any politician could make (the truth is that bad news makes for better copy) but Osborne is on less than solid ground here. An economy that was growing at an annual rate of 4 per cent when Labour left office has not grown for the past six months. If the BBC has focused on reporting bad news, it's partly because there really hasn't been much good news. But it's also unwise for the man who repeatedly talked down the British economy in opposition (erroneously describing it as "bankrupt"), to complain of others doing the same.

George Eaton is political editor of the New Statesman.

Photo: André Spicer
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“It’s scary to do it again”: the five-year-old fined £150 for running a lemonade stand

Enforcement officers penalised a child selling home-made lemonade in the street. Her father tells the full story. 

It was a lively Saturday afternoon in east London’s Mile End. Groups of people streamed through residential streets on their way to a music festival in the local park; booming bass could be heard from the surrounding houses.

One five-year-old girl who lived in the area had an idea. She had been to her school’s summer fête recently and looked longingly at the stalls. She loved the idea of setting up her own stall, and today was a good day for it.

“She eventually came round to the idea of selling lemonade,” her father André Spicer tells me. So he and his daughter went to their local shop to buy some lemons. They mixed a few jugs of lemonade, the girl made a fetching A4 sign with some lemons drawn on it – 50p for a small cup, £1 for a large – and they carried a table from home to the end of their road. 

“People suddenly started coming up and buying stuff, pretty quickly, and they were very happy,” Spicer recalls. “People looked overjoyed at this cute little girl on the side of the road – community feel and all that sort of stuff.”

But the heart-warming scene was soon interrupted. After about half an hour of what Spicer describes as “brisk” trade – his daughter’s recipe secret was some mint and a little bit of cucumber, for a “bit of a British touch” – four enforcement officers came striding up to the stand.

Three were in uniform, and one was in plain clothes. One uniformed officer turned the camera on his vest on, and began reciting a legal script at the weeping five-year-old.

“You’re trading without a licence, pursuant to x, y, z act and blah dah dah dah, really going through a script,” Spicer tells me, saying they showed no compassion for his daughter. “This is my job, I’m doing it and that’s it, basically.”

The girl burst into tears the moment they arrived.

“Officials have some degree of intimidation. I’m a grown adult, so I wasn’t super intimidated, but I was a bit shocked,” says Spicer. “But my daughter was intimidated. She started crying straight away.”

As they continued to recite their legalese, her father picked her up to try to comfort her – but that didn’t stop the officers giving her stall a £150 fine and handing them a penalty notice. “TRADING WITHOUT LICENCE,” it screamed.


Picture: André Spicer

“She was crying and repeating, ‘I’ve done a bad thing’,” says Spicer. “As we walked home, I had to try and convince her that it wasn’t her, it wasn’t her fault. It wasn’t her who had done something bad.”

She cried all the way home, and it wasn’t until she watched her favourite film, Brave, that she calmed down. It was then that Spicer suggested next time they would “do it all correctly”, get a permit, and set up another stand.

“No, I don’t want to, it’s a bit scary to do it again,” she replied. Her father hopes that “she’ll be able to get over it”, and that her enterprising spirit will return.

The Council has since apologised and cancelled the fine, and called on its officials to “show common sense and to use their powers sensibly”.

But Spicer felt “there’s a bigger principle here”, and wrote a piece for the Telegraph arguing that children in modern Britain are too restricted.

He would “absolutely” encourage his daughter to set up another stall, and “I’d encourage other people to go and do it as well. It’s a great way to spend a bit of time with the kids in the holidays, and they might learn something.”

A fitting reminder of the great life lesson: when life gives you a fixed penalty notice, make lemonade.

Anoosh Chakelian is senior writer at the New Statesman.