Osborne's missed opportunity to boost growth

The measures announced today will increase GDP by just £0.51 billion.

The Chancellor missed an opportunity to boost growth today with his Budget. Analysis by IPPR shows that an Alternative Budget could have increased the impact of GDP by a factor of five.

The Office of Budget Responsibility set out the fiscal multipliers of different forms of tax and spending changes in Table C8 of the 2010 Budget. Using these estimates it is possible to assess the impact of the Budget measures announced today that will take effect in 2013-14. Policy decisions for that year came to £1.71 billion.

The chart below shows that, taken as a whole, the measures announced by the Chancellor today to boost growth will increase GDP by just £0.51 billion. By contrast, alternative measures proposed by IPPR would increase GDP by £2.66 billion.

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IPPR's Alternative Budget would include a mixture of tax cuts and spending increases paid for through Osborne's new tax avoidance and stamp duty proposals as well as an additional "mansion tax" of 1 per cent on properties worth more than £2 million. Our Alternative Budget would have the same fiscal effect as Osborne's. IPPR's preferred tax cut is an Obama-style cut in payroll taxes. Our original proposal, set out by Eric Beinhocker in last week's Times (£), was for a 2p cut to employee National Insurance Contributions to be paid for over six years. But in order to ensure that all costs are paid this year, we set out here a 1p tax cut at a cost of £2.75 billion.

Our second priority is a jobs guarantee for young people out of work for more than one year. This would cost £400 million and help address the scarring effects that long-term unemployment can cause, particularly for young people. There are currently over 1,042,000 young people aged 16-24 out of work the second highest since comparable records began in 1992, and a rise of 67,600 in the last year. There are now 253,000 young people who have been unemployed for more than a year, an increase of 24,900 over the last year. Osborne's Budget did nothing to address this.

Our final priority is increased infrastructure spending. The OBR's analysis shows that the most effective way to boost growth is to increase infrastructure spending. But the Government is planning to cut its capital spending by 29 per cent between 2010/11 and 2014/15, largely following the path set out by Labour when it was in power. This was, perhaps, Labour's biggest fiscal policy mistake. Not only does infrastructure spending boost growth, it has the advantage of adding to the UK's productive capacity over the longer-term. The money raised from the various tax increases allows for a £2.9 billion boost to infrastructure spending.

As the chart above shows, these three measures combined would increase GDP by £2.66 billion, which is close to five times the stimulative impact of Osborne's Budget. The Chancellor claimed today that his Budget was "growth-friendly". But analysis from the OBR, which he established, shows that it is no such thing.

Will Straw is Associate Director at IPPR

Will Straw is Associate Director at IPPR.

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The politics of the kiss

From the classical period via the Kremlin to the Clintons: a brief history of political smooching.

Iowa and New Hampshire are behind us. Super Tuesday beckons. For fans of the competitive sport of baby-kissing, this is as good as it gets.

Meanwhile, closer to Britain, kissing’s in our very constitution. Jeremy Corbyn’s future, depending on his success, could involve taking a trip to the Palace to kiss hands as Prime Minister – and as a republican. Being sworn into the Privy Council in November, he even managed a peck on the royal paw, but reportedly stood fast and did not kneel.

Why is there so much snogging in politics? 

Ancient Romans and Persians established – dare we – a pecking order on meeting. This ritual would make it instantly clear if they were equals (full-on, mouthy kiss, the basium), separated by a slight gap (cheeky peck, an osculum), or vast unequals (foot-kissing accompanied by much grovelling). Even heads of state greeted people in this way.

And there was nothing more dramatic – and bizarre – than the socialist fraternal kiss. Kremlinologists would even measure its intensity, to see how close Communist leaders were. The rule was to do three alternate kisses on the cheek, aping the Ancien Régime’s Orthodox Easter greeting. When two leaders were especially chummy – like then Soviet leader Leonid Brezhnev and GDR head Erich Honecker at the 30th anniversary of the GDR in East Berlin in 1979 – the world would witness a big, sloppy lip-plant. Paris Match splashed Régis Bossu’s iconic black-and-white image of the socialist snog across a double-page spread. Le Baiser, they called it.

Nikita Khrushchev, Joseph Stalin’s successor, locked lips with USSR chairman Klim Voroshilov when returning from a US visit in 1959. In July 1937, Stalin planted a decidedly non-frigid one on Ivan Spirin, a polar explorer and state hero.

But Brezhnev was the true practitioner. The joke in Russia went that he described a Warsaw Pact comrade “as a politician, rubbish...but a good kisser!”

Aside from the steamy Kremlin, social kissing on the mouth declined with the Black Death.

The courtly handkuss (kiss on the hand) generally went the same way with the fall of the German and Russian monarchies in 1917-18, though hung on longer in Austria. 

But French president Jacques Chirac made it his trademark, playing to the gallery with French élégance. An Associated Press story from 1967 chronicles the sad plight of European diplomats who had chanced it in Washington. One congressional wife jumped back, claiming she had been bitten; another said a stone was missing from her ring. “Chivalry has its drawbacks,” the story observed.

But back to the babies. We see kissing-as-canvassing in William Hogarth’s 1755 series The Humours of an Election

And in a close-fought 1784 Westminster by-election, we read of 24 women out canvassing with kisses – including the Duchesses of Rutland, Argyll, Ancaster, and (somewhat infamously) Devonshire. 

Kissing voters’ wives – now probably frowned upon by CCHQ – was customary fare for the 18th-century candidate. It’s only in the following century that we see the desexualisation of the electioneering kiss, moving to babies as innocuous. 

In 1836, Charles Dickens has his character Pickwick go to witness a post-Reform Act by-election in Eatanswill. “He has patted the babies on the head,” says the candidate’s election agent, trembling with anxiety. Roar of applause. “He has kissed one of ‘em!” Second roar. “He's kissing ‘em all!” The crowd’s shouts are deafening. And the candidate Slumkey coasts home to Parliament.

US presidents Richard Nixon, Grover Cleveland and Benjamin Harrison forswore baby kissing, grasping for a higher-minded political plane. Bernie Sanders, too. 

But how are the rest of today's politicians doing, kiss-wise?

Barack Obama: After two terms, a kisser to be reckoned with. With adults. Apparently he doesn’t relish kissing babies, and has been called fatally ill-at-ease holding one. Full points for his lucky save with a reticent Aung San Suu Kyi in 2014, ending with a perfectly creditable side-hug and ear-kiss.

Pity Michelle, photographed rolling her eyes as Barack went in for the selfie with, say, Danish Prime Minister Helle Thorning-Schmidt in 2013. (For her part, Michelle fobbed off Silvio Berlusconi with a fully outstretched arm, taking no chances.)

David Cameron: Utterly denied by SamCam after his Tory conference speech in October 2015. Lord Grantham says in Downton he spent most of Eton avoiding the kisses of other boys; clearly, the Prime Minister didn’t get much practice while at school.

Angela Merkel: In her first meeting with Nicolas Sarkozy, out she came with a businesslike German handshake just as he ducked for the Gallic kiss. In a moment of British romantic awkwardness last May, during Cameron’s EU reform tour, we saw the Prime Minister lean in, short of closing the deal, as she pulled back and possibly searched for some new regulations to beat him away with.

Hillary Clinton: Is said to enjoy kissing babies. Is said not to enjoy kissing Bill, as in the 2008 Correspondents’ Dinner when she expertly ducked one from him.  And scored one from Obama instead. But maybe she ought to lay off the baby-kissing: a journal article in Political Psychology suggests voters are 15 per cent less likely to vote for women candidates when their adverts evoke female gender stereotypes.

Donald Trump: In August, his baby-kiss in Alabama went viral – the baby’s mother just a bit too keen, the baby’s confusion mingled with slight fear reflecting the views of many of us. “That baby is us,” wrote blogger Stassa Edwards.

It’s a long road from here to the US election in November. And Cameron can look forward to kissing up to Merkel and a hot summer of Italian, Dutch, and even French kisses too.

So this Valentine’s Day, spare a thought for the babies. And the bureaucrats.