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 Director of Britain Stronger In Europe, the cross-party campaign to keep Britain in the European Union. 

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The Tinder dating app isn't just about sex – it's about friendship, too. And sex

The lines between sex, love and friendship are blurrier than ever, as I found out quickly while using the app.

The first time I met someone using Tinder, the free dating app that requires users to swipe left for “no” and right for “yes” before enabling new “matches” to chat, it was an unqualified success. I should probably qualify that. I was newly single after five years in a committed relationship and wasn’t looking for anything more than fun, friendship and, well, who knows. A few weeks earlier I had tried to give my number to a girl in a cinema café in Brixton. I wrote it on a postcard I’d been using as a bookmark. She said she had a boyfriend, but wanted to keep the postcard. I had no date and I lost my page.

My Tinder date was a master’s student from Valencia called Anna (her name wasn’t really Anna, of course, I’m not a sociopath). When I arrived at the appointed meeting place, she told me I was far more handsome IRL (“in real life”) than my pictures suggested. I was flattered and full of praise for the directness of continental Europeans but also thought sadly to myself: “If only the same could be said about you.”

Anna and I became friends, at least for a while. The date wasn’t a success in the traditional sense of leading us into a contract based on exclusivity, an accumulating cache of resentments and a mortgage, but it had put me back in the game (an appropriate metaphor – people speak regularly of “playing” with the app).

According to Sean Rad, the co-founder who launched Tinder in late 2012, the service was invented for people like me. “It was really a way to overcome my own problems,” he told the editor of Cosmopolitan at an event in London last month. “It was weird to me, to start a conversation [with a stranger]. Once I had an introduction I was fine, but it’s that first step. It’s difficult for a lot of people.” After just one outing, I’d learned two fundamental lessons about the world of online dating: pretty much everyone has at least one decent picture of themselves, and meeting women using a so-called hook-up app is seldom straightforwardly about sex.

Although sometimes it is. My second Tinder date took place in Vienna. I met Louisa (ditto, name) outside some notable church or other one evening while visiting on holiday (Tinder tourism being, in my view, a far more compelling way to get to know a place than a cumbersome Lonely Planet guide). We drank cocktails by the Danube and rambled across the city before making the romantic decision to stay awake all night, as she had to leave early the next day to go hiking with friends. It was just like the Richard Linklater movie Before Sunrise – something I said out loud more than a few times as the Aperol Spritzes took their toll.

When we met up in London a few months later, Louisa and I decided to skip the second part of Linklater’s beautiful triptych and fast-track our relationship straight to the third, Before Midnight, which takes place 18 years after the protagonists’ first meet in Vienna, and have begun to discover that they hate each others’ guts.

Which is one of the many hazards of the swiping life: unlike with older, web-based platforms such as Match.com or OkCupid, which require a substantial written profile, Tinder users know relatively little about their prospective mates. All that’s necessary is a Facebook account and a single photograph. University, occupation, a short bio and mutual Facebook “likes” are optional (my bio is made up entirely of emojis: the pizza slice, the dancing lady, the stack of books).

Worse still, you will see people you know on Tinder – that includes colleagues, neighbours and exes – and they will see you. Far more people swipe out of boredom or curiosity than are ever likely to want to meet up, in part because swiping is so brain-corrosively addictive.

While the company is cagey about its user data, we know that Tinder has been downloaded over 100 million times and has produced upwards of 11 billion matches – though the number of people who have made contact will be far lower. It may sound like a lot but the Tinder user-base remains stuck at around the 50 million mark: a self-selecting coterie of mainly urban, reasonably affluent, generally white men and women, mostly aged between 18 and 34.

A new generation of apps – such as Hey! Vina and Skout – is seeking to capitalise on Tinder’s reputation as a portal for sleaze, a charge Sean Rad was keen to deny at the London event. Tinder is working on a new iteration, Tinder Social, for groups of friends who want to hang out with other groups on a night out, rather than dating. This makes sense for a relatively fresh business determined to keep on growing: more people are in relationships than out of them, after all.

After two years of using Tinder, off and on, last weekend I deleted the app. I had been visiting a friend in Sweden, and took it pretty badly when a Tinder date invited me to a terrible nightclub, only to take a few looks at me and bolt without even bothering to fabricate an excuse. But on the plane back to London the next day, a strange thing happened. Before takeoff, the woman sitting beside me started crying. I assumed something bad had happened but she explained that she was terrified of flying. Almost as terrified, it turned out, as I am. We wound up holding hands through a horrific patch of mid-air turbulence, exchanged anecdotes to distract ourselves and even, when we were safely in sight of the ground, a kiss.

She’s in my phone, but as a contact on Facebook rather than an avatar on a dating app. I’ll probably never see her again but who knows. People connect in strange new ways all the time. The lines between sex, love and friendship are blurrier than ever, but you can be sure that if you look closely at the lines, you’ll almost certainly notice the pixels.

Philip Maughan is Assistant Editor at the New Statesman.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad