Is Osborne borrowing more or less?

The Chancellor is set to borrow more than Gordon Brown planned.

Is George Osborne borrowing more or less? You won't find a simple answer in today's papers. The Guardian reports that "Britain will borrow £21.5bn less than previously forecast" but the FT warns that "the black hole in UK public finances has increased by almost £30bn." Elsewhere, Reuters reports that the Office for Budget Responsibility's forecasts are expected to show a "borrowing overshoot of at least 86 billion pounds over four years." Who's right? The answer is that they all are.

In his autumn statement, at 12:30pm, Osborne will announce that Britain's record low bond yields have saved the taxpayer £21.5bn, the so-called "safe haven dividend". Money that would have been spent on financing the national debt can now be spent on enterprise schemes, free childcare, business tax breaks and so on.

But unfortunately for the Chancellor, that's not the end of story. Owing to lower growth and higher unemployment (which leads to a larger welfare bill), public sector net borrowing is expected to be around £86bn higher (the Reuters figure) than forecast at the time of the Budget in March. Even before today, Osborne was forecast to borrow £46bn more than expected. When the OBR publishes its latest forecasts today, that figure could rise to an enormous £132bn (£46bn + £86bn), taking Osborne's total borrowing over that planned by Alistair Darling. The Brown government was forecast to borrow £127bn in 2011-12 and £106bn in 2012-13. Osborne is expected to borrow £129bn ths year (up from £122bn) and £117bn next year (up from £101bn). Labour's smart attack line is that while the Chancellor is borrowing to meet the cost of high unemployment, it would have borrowed to fund growth.

Then there's the structural deficit, the "black hole" the FT refers to. The structural deficit - the part of the deficit that remains even after growth returns - is now forecast to be £30bn bigger. This is because the output gap - the difference between actual and potential growth - is smaller than previously thought. In other words, the economy is capable of less growth than initially forecast. This can't be blamed on Osborne's policies and, worryingly for messrs Balls and Miliband, has implications for Labour's own deficit reduction plan. It also means that the Chancellor is almost certain to miss his self-imposed target of eliminating the structural deficit before the next election. However, he is still likely to meet his formal fiscal mandate - to eliminate the structural deficit over a rolling five-year period. For example, from today, he has until 2016-17 to eliminate the deficit, from next year, he'll have until 2017-18. But meeting this target means extending austerity into the next parliament. A structural deficit can only be eliminated by spending cuts and tax rises, so Osborne will go into the next election warning of further pain to come.

The Chancellor's pledge to eliminate the structural deficit in one parliament was based on a political timetable, not an economic one. By 2015, Osborne envisaged that the Tories would be able to boast that they had cleaned up "the mess" left by Labour - a powerful political narrative - and offer cuts in personal taxation. But, as the grim figures above show, this is now a distant dream.

George Eaton is political editor of the New Statesman.

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Labour can be populist and English without copying Donald Trump

There's nothing deplorable about discussing the common interests of the people.

As Labour’s new populism gears up for Copeland and Stoke-on-Trent, it will be tested on voters who are, by a significant measure, more likely to see themselves as English. In the 2011 census, both constituencies scored "English" identity nearly 10 per cent higher than the English average and still 5 per cent higher than England outside of London.

It’s no surprise that both Ukip and the Tories have polled well in these places. In the 2015 general election there was strong correlation between feeling "English", or feeling "more English than British", and voting Ukip and Conservative. Indeed, amongst the "English not British" Ukip took about a third of the votes across England, and the Tories a fifth. Labour lagged below 15 per cent.

Labour’s problems may be getting worse. A recent YouGov poll, commissioned by the Centre for English Identity and Politics at Winchester University, showed "Englishness" gaining at the expense of "Britishness" in the year of Brexit. At the extremes, "English not British" rose by 5 per cent (from 14 per cent to 19 per cent), with ‘British not English’ falling by a similar amount. If past relationships hold, these voters will become harder for Labour to reach.

Although most people in England would favour an English Parliament, or English MPs alone voting on English issues, these have not yet become the political demands of an explicit nationalism as we might find in Wales, Scotland or Catalonia. Indeed, there’s no actual evidence of a direct link between feeling English and the way people vote. It well be that the underlying factors that make someone feel English are also those that incline them, overwhelmingly, to vote Brexit or to support Ukip.

We may identify the drivers of English identity - the declining power of the idea of Britain, the assertiveness of devolution, rapid migration and the EU - but we know little about the idea of England than lies behind these polls. There’s almost certainly more than one: the England of Stoke Central imaginations may not be identical to the Twickenham RFU car park on international day.

One of the most persistent and perceptive observers of alienated working class voters sheds some light on why these voters are turning towards their English roots. According to The Guardian’s John Harris:

"When a lot of people said ‘I’m English’, they often meant something like, ‘I’m not middle class, and I don’t want to be…. I’m also white, and coupled with the fact that I’m working class, I feel that somehow that puts me at the bottom of the heap, not least in the context of immigration. But I am who I am, and I’m not apologising for it.'" People who said "I’m English" seemed to be saying, 'I’m from somewhere' in a ways that politicians and the media did not."

Given Labour’s history in seats where support is ebbing away, it’s reasonable to think that the party’s target must be the voters who Martin Baxter of Electoral Calculus describes as "left-wing nationalists". In this definition, "left-wing" attitudes tend to be be anti-capitalist, hostile to business, generous on benefits, support the welfare state and redistributive taxation. "Nationalist" attitudes are seen as isolationist, against immigration, disliking EU freedom of movement, thinking British means "born here" and that Britons should be put first.

For many in Labour, those nationalist attitudes might bring "a basket of deplorables" to mind.  In recent days both the Corbyn left, and centrist MPs like Alison McGovern and Wes Streeting, have warned against meeting these voters’ concerns. Progressive Labour populists must also calm those fears. But Labour will be doomed as a party of government it it can’t reach these voters (even if it does hang on in the forthcoming by-elections). The obstacles are formidable, but with the right language and framing, Labour may find an appeal that could cut through without alienating the party's more liberal support.

Just acknowledging that England, and the English, exist would be a start. The reaction to Birmingham mayoral candidate Sion Simon’s appeal to England in a campaign tweet simply emphasised how much of Labour prefers to say Britain, even when they mean England. We don’t need a swirl of St George crosses at every event; we just need to use the word in normal everyday conversation. At least we would sound like we live in the same country.

The defiant cry to be recognised and heard should trigger another Labour instinct. The demand that the nation should be run in the common interests of the people runs deep through radical history. Jeremy Corbyn reached for this with his talk of "elites rigging the system". But no ordinary English conversation ever talks about elites. Instead of "mini-me Trumpism", English Labour populism needs careful framing in the language of day-to-day talk. Labour's target should be not be the wealthy per se, but those powerful people whose behaviour undermines the national interest and by doing so undermines the rest of us.

This language of national interest, both conservatively patriotic and politically radical, meets the mood of the moment. The select committee challenges to Amazon, Google, Philip Green and Mike Ashley struck a chord precisely because they revealed something deeply true and unpleasant about this land. We can defend the national interest without invoking a racist response. Why are our railways sold to other governments, and our companies sold abroad for quick profit? Why should it be easier for a foreign gangster to buy a house in Surrey, and hide their ownership overseas, than for an English family to get their own home?

By asking what any change means to the people of England, we might bridge the divide on immigration. If the impact of migration is exacerbated by the pressure on housing and service, let Labour make it clear that the rate of immigration should not exceed the pace we can build homes for those already here, as well as any newcomers. The government must be able to expand services to meet additional needs. If every policy should work in the interests of the people of England, migration which improves our services, creates jobs and grows the economy is to be welcomed. It is hard to see a genuine liberal objection to posing the migration challenge in that way. With the exception of refugees, immigration policy cannot be designed to benefit the migrant more than the resident.

Let the test of every policy be whether it works in the interests of the people of England, or works only for a few. That’s a simple test that would appeal to widely shared values. It could be the foundation of a genuine Labour populism that speaks to England.

 

John Denham was a Labour MP from 1992 to 2015, and a Secretary of State 2007 to 2010. He is Director of the Centre for English Identity and Politics at Winchester University