Public sector borrowing on course to overshoot OBR projections by £11bn

ONS reports a stronger January than last year, but the trend remains poor.

The ONS has released the public sector finances for January 2013, showing that the government ran a surplus of £11.4bn in the month, £5bn higher than in January 2012.

But as Nida Ali, economic advisor to the Ernst & Young ITEM Club, comments, the good news is largely a mirage:

Today’s figures demonstrate the problems caused by all of the statistical fudges of the past couple of years – the various transfers from the Bank of England, Northern Rock and Bradford & Bingley make it virtually impossible to decipher the underlying trend.

Although January’s headline number looks encouraging, it appears that the state of the public finances is worse than the government and the OBR had hoped for. Stripping out the one-off factors, net borrowing in the financial year-to-date is £7.5bn higher than last year. With just two months of data pending and last year’s deficit having been revised down, there is virtually no chance of borrowing being lower on a like-for-like basis in 2012/13 than in 2011/12.

Furthermore, the ONS has put a ceiling of £9.1bn on the amount of cash that can be transferred from the Central Bank to the government in 2012/13. Given that this also includes the payment from the Special Liquidity Scheme, it means that the reduction in borrowing caused by the transfers from the Bank of England’s Asset Purchase Facility will be £5bn less than the OBR had forecast.

However, even accounting for this setback and the lower than expected 4G proceeds, the government was still on course to miss the OBR’s 2012/13 borrowing forecast by a distance. Assuming that borrowing in the final two months of the financial year is the same as it was last year, the government is on course to overshoot the OBR’s 2012/13 forecast of £80.5bn by almost £11bn.

An £11bn overshoot even of the OBR's already depreciated forecast will be bad news indeed for the Chancellor. But the deficit is, at least, on course to be lower than it was last year; and January itself was strong, as the chart below shows:

Cumulative public sector net borrowing by month, excluding the temporary effects of financial interventions

Good news this month, then — but it only highlights how bad the news has been for the rest of the year.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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There is nothing progressive about making immigrants scapegoats

Labour's so-called "moderates" are going down a dangerous path.

This is what we know about the consequence of Brexit so far: bigots have been emboldened, and racist feelings that have long been lurking under the surface of British society are out in the open. But instead of prompting a crisis of conscience among the political elite, the EU result and its violent consequences has only exacerbated their shallow but dangerous understanding of immigration and public anger.

Chuka Umunna, Stephen Kinnock and Rachel Reeves are some of the Labour MPs who been talking irresponsibly about immigration. In recent weeks these “moderates” have been calling for Labour to support “managed migration” or lamented that the party hasn’t taken a “muscular” enough stance on the subject. Shocked by the referendum result they have accepted the myth that migration undercuts wages, despite the fact that research says the contrary; and claimed that immigration causes racism, ignoring the fact that people who have experienced the highest levels of migration are the least anxious about it.

As part of his analysis of immigration, Umunna said migrants must stop leading “parallel lives” and integrate into British society. Talk of integration is so often used to attack migrants but community cohesion isn’t a one-way street. If Polish people open shops in their communities, they’re accused of taking over; if they keep to themselves, perhaps in part because of abuse they get, they’re refusing to integrate. Meanwhile English language classes remain woefully underfunded and the migration impact fund met the government’s axe back in 2010.

But there’s an ill-informed logic that you have to give way on immigration to preserve “progressive policies”. People who think this miss the point: there is nothing progressive about pandering to anti-immigration sentiment and in the process helping lay the ground for xenohpobia. The referendum result and ensuing violence was not the outcome of ignoring peoples’ so called “legitimate concerns” it was the result of politicians and the media scapegoating and demonising immigrants over the past decade.

We already know conceding ground on immigration simply gives anti-migrant politicians ammunition. Brendan Cox, whose MP wife Jo was killed in her constituency, said: “Petrified by the rise of the populists they [mainstream politicians] try to neuter them by taking their ground and aping their rhetoric. Far from closing down the debates, these steps legitimise their views, reinforce their frames and pull the debate further to the extremes.”

Labour were complicit in creating ground for xenophobia to breed. The party’s craven submission to right-wing anti-immigration rhetoric is no new phenomenon; think Ed Miliband’s “controls on immigration” mugs at the last general election. Afraid of laying out the facts and losing votes to people who feared immigration, Labour fed - instead of countered - incendiary rhetoric.

We have seen the violent and ugly consequences of what happens when anti-migrant politics is not robustly opposed. The numbers of hate crimes have surged since the referendum; people from all over the world have had abuse hurled at them and Arkadiusz Jóźwik, a man from Poland, was murdered in Harlow. This violence was not born in a vacuum, nor was it solely the result of the Leave campaign’s virulently racist message. It was produced by a lethal concoction: anti-migrant politics and a poisonous right-wing media fused with public feelings of economic and social disenfranchisement. Instead of recognising successive how government’s policies had disadvantaged large swathes of people, politicians blamed immigrants. And so where prejudice already existed, they aggravated it.

It is in this climate of misinformation and scaremongering that people form their views. Most Briton want the number of immigrants in this country to be reduced. But then in 2014 Britons on average thought 24 per cent of the population were immigrants, which was nearly twice the real figure of 13 per cent. The imagined threat that migrants pose to this country only grows with every lie Labour repeat about immigration. Treading further into this ground as Umunna, Kinnock and Reeves have done is an entirely irresponsible decision.

“If you give ground to anti-immigrant politics” Diane Abbott said, “it will sweep away all of us.” The anti-immigration feeling some Labour MPs want to capitulate to isn’t just about immigrants from Europe; it’s also about race. Post-Brexit violence didn’t only affect people from EU states; British-born people of colour were told aggressively and repeatedly that they didn’t belong. This is because anti-immigration feeling at times acts as a proxy for a resurgent national identity tied to whiteness and visible minorities are seen as the enemy within. There’s an Islamophobic strain to this. TellMama, an organisation that records anti-Muslim incidents in the UK, found attacks on Muslims they spiked days following the Brexit result – and they were directly linked to Brexit. No matter how well people of colour integrate, they are told they never quite fit - talking irresponsibly about immigration only makes this worse. Ask Nadiya Hussain; she won Bake Off, a programme that couldn’t get more British, and still she experiences racist abuse.

It is impossible to form a progressive approach to immigration while reiterating lies about people from abroad. This is an approach Labour already tried and it doesn’t work: it only feeds the flames of prejudice. The truly brave approach would be to lay out the positive case for immigration because it’s patronising to assume the electorate are incapable of listening to reason if it’s framed in the right way. In a country where migrants and people of colour are told they don’t belong, there is nothing progressive about accepting myths about immigration.

Maya Goodfellow researches race and racism in Britain. She is a staff writer at LabourList.