My fantasy chancellor would announce a new path for fiscal policy

Autumn Statement wishlist.

Thinking ahead to the Autumn Statement, you can imagine a Balls/Cable alternative reality where the chancellor is a social democrat and Keynesian. Or you can consider what gentle nudging of the tiller the present incumbent might plausibly countenance.

The first option is a lot less gloomy.  With the economy and the public finances now totally at sea, my fantasy chancellor will announce a new path for fiscal policy. There would be a short-term stimulus, starting with a cut to employers’ national insurance and a massive public investment programme. Capital spending which guarantees a future revenue stream, such as house-building, would be ignored when it comes to plans for the national debt, meaning the government could promise a million new homes over five years.

There would still need to be very painful fiscal consolidation over the medium-term, but not on George Osborne’s terms. His plans assume that almost all the burden should be borne by spending cuts not tax rises, and his fiscal rules force him to squeeze the deficit faster and deeper than is likely to be needed for long-term sustainability. The result is a plan to permanently shrink the size of the state as a share of GDP.

A centre-left government would declare that its aim was to return public spending to its long-term trend not to ‘overshoot’. That would mean taking a bit longer to cut the deficit and raising more taxes, especially from wealth and land. There would still be very difficult and controversial decisions because even a decade of flat spending would mean many individual cuts. A Fabian Society commission has just launched to consider how the tricky trade-offs could be made.

But what of the real Mr Osborne? His reputation depends on him rejecting almost everything I have said. He knows however the Liberal Democrats will demand he finds more ways to tax high-earners, even if it is simply by adding a few bands to the council tax. He could also accelerate the capitalisation of his two putative public investment banks. On specific spending cuts, he should desist from a fresh assault on his ‘undeserving’ shirkers, for although the focus groups tell him it’s good politics, over time he reinforces the ‘nasty party’ image the Tories must shed to win centre-ground votes. Perhaps, on cuts, Osborne should simply pause and take stock; after all, does he really need to set a budget for April 2015 this week?

Andrew Harrop is the General Secretary of Fabian Society

The government could promise a million new homes over five years. Photograph: Getty Images

Andrew Harrop is general secretary of the Fabian Society.

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If Seumas Milne leaves Jeremy Corbyn, he'll do it on his own terms

The Corbynista comms chief has been keeping a diary. 

It’s been a departure long rumoured: Seumas Milne to leave post as Jeremy Corbyn’s director of communications and strategy to return to the Guardian.

With his loan deal set to expire on 20 October, speculation is mounting that he will quit the leader’s office. 

Although Milne is a key part of the set-up – at times of crisis, Corbyn likes to surround himself with long-time associates, of whom Milne is one – he has enemies within the inner circle as well. As I wrote at the start of the coup, there is a feeling among Corbyn’s allies in the trade unions and Momentum that the leader’s offfice “fucked the first year and had to be rescued”, with Milne taking much of the blame. 

Senior figures in Momentum are keen for him to be replaced, while the TSSA, whose general secretary, Manuel Cortes, is one of Corbyn’s most reliable allies, is said to be keen for their man Sam Tarry to take post in the leader’s office on a semi-permanent basis. (Tarry won the respect of many generally hostile journalists when he served as campaign chief on the Corbyn re-election bid.) There have already been personnel changes at the behest of Corbyn-allied trade unions, with a designated speechwriter being brought in.

But Milne has seen off the attempt to remove him, with one source saying his critics had been “outplayed, again” and that any new hires will be designed to bolster, rather than replace Milne as comms chief. 

Milne, however, has found the last year a trial. I am reliably informed that he has been keeping a diary and is keen for the full story of the year to come out. With his place secure, he could leave “with his head held high”, rather than being forced out by his enemies and made a scapegoat for failures elsewhere, as friends fear he has been. The contents of the diary would also allow him to return in triumph to The Guardian rather than slinking back. 

So whether he decides to remain in the Corbyn camp or walk away, the Milne effect on Team Corbyn is set to endure.

 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.