Agent Osborne goes rogue

Is the Chancellor an accelerationist sleeper-agent sworn to provoke a socialist revolution?

Nikolai strolled into the stuffy office where the older man stood waiting behind a desk which had stood in the same spot back in Stalin’s day. The older man – Colonel Rakhmetov – gestured him brusquely to a seat in front of him, sat down himself, looked up and said “Sit”.

The Colonel glared at him. “The plan for Agent Gideon began under Brezhnev. Do you have any idea of the resources required to place a mole at the heart of the British establishment, trained from birth to further the cause of Communism? So can you tell me what, precisely, is happening in that miserable backwater right now?”

Nikolai took a deep breath. He was new to this world of hidden communist sleepers, left in place as the KGB became the FSB and knew he had to tread carefully around an officer who had earned his pips back when the letters CCCP still struck such fear into the heart of capitalists that they’d made concessions to the working class.

“Sir, you are familiar with the works of Nikolai Chernyshevsky?”

The wrong thing to say. The Colonel ran nicotine-stained fingers through his hair, glared. “I am. The originator of the doctrine of ‘the worse, the better – that only through a continual worsening of the conditions of the proletariat can they be motivated to throw off their chains. Author of the original “What is to be done?” a work that so inspired Lenin that he named his own book after it. What of it?”

“Well agent Gideon has rather taken the doctrine to heart. Rather than gradually introduce Socialism, as per his original instructions, he’s trying to incite the British working class to revolution. Thus, although government debt interest accounts for only a shade over 3% of UK GDP, he’s inflicted growth-destroying fiscal tightening of more that amount on the country already, with more to come. And to ensure maximum damage, he’s taken the bulk of the money from public sector investment – which he’s halved.It’s killing two birds with one stone sir. You kill economic growth and you also reduce the ability of the country to grow in future.”

The Colonel’s brow wrinkled. He disapproved of initiative, which in his day had meant replacing a long retirement by the Black Sea with an early but short one by the White Sea.

“Yes so I heard. And the riots were surely promising, even if class-consciousness wasn’t entirely obvious in the raiding of sportswear retailers over government ministries and barracks. But now he’s run out of control. But wouldn’t it be more effective to just bankrupt the country by running up debt?”

“Not really sir. All the money in the UK is crying out for a home, so interest rates are extremely low. And the average maturity of the debt is 13 years, so it’s almost impossible to provoke a liquidity crisis – I think our other agents in the banking sector are much more promising in that respect. And without getting completely into the realms of fantasy, it’s quite hard for the government to get rid of a huge amount of extra borrowing without causing some economic growth. But the cuts are excellent for provoking discontent with the public at large.”

“Interesting. Sounds like things are going well. So why did you request this meeting?”

“Well sir, to be frank, it looks like Agent Gideon is going rogue. He’s overreaching, and it can only lead to his downfall. He’s been emphasising the privilege of the ruling plutocracy” – Nikolaj wondered if he should spit, decided against it – “by cutting taxes that only apply to the very elite, insisting on defending the privileges of the bankers who brought the country to its knees. Only someone with his training in Socialist theory would be quite so adept at underlining the injustice and contradictions of capitalism, and it’s only a matter of time before British Intelligence catch on.”

“Yes, I can see why this is an issue, and you were right to come to me-”

“Excuse me sir, but that’s not the worst of it. His latest scheme seems intent on provoking revolution this year, and I fear he’s overreaching. It’s called Help to Buy. Essentially it puts the government balance sheet – which he’s promised can’t be used for even essential infrastructure – to work to boost house prices without really increasing the number of houses being built. So the government can take losses, but all the benefit accrues to the homebuyer.”

“So he pushes up house prices in a country with already expensive prices, increases the risks to the banking sector, pushes more people into loans they can’t afford and spends money without creating any real benefits to society?”

“Yes sir. He did try to get it extended to buy-to-let landlords, but even the Treasury spotted that one. But it will make a nice subsidy for second homes for the rich.”

The Colonel frowned, but paused no more than a second. “We’ll risk it. This is the best chance we have to make England the vanguard of the new socialist revolution. You’re overruled. let Agent Gideon proceed.”

This piece originally appeared on Morski's blog, and is reposted here with permission.

A man resembling Agent Osborne, pictured with Josef Stalin, date unknown. Image: Getty Images/Alex Hern

Pawe? Morski is a fund manager who blogs at Some of it was true…

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR