What Peter Oborne doesn’t get

Maybe Oborne didn’t notice that the whole basis for the Chancellor’s economic strategy – stemming from work by Carmen Reinhart and Kenneth Rogoff – has been shown to be ruined by spreadsheet errors.

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‘‘Economics in the end trumps politics,” said Peter Oborne on Newsnight in his infamous 2011 “that idiot in Brussels” interview. At the time, Jeremy Paxman accused him of being gratuitously offensive – and it seems to be his modus operandi. The mouthy buffoon (MB) was similarly offensive again the other day in a delusional Telegraph column, “The left talks gibberish while David Cameron racks up successes”, in which he argued that after three years the Tory-Lib Dem coalition’s daring reforms are “starting to pay dividends”. No mention, naturally, of the 50-odd U-turns such as the pasty tax, the joint strike fighter and minimum alcohol pricing.
The MB accused me of being a “cod-Keynesian”, which is rather surprising, given that I’ve never expressed any view whatsoever about the fishing industry.
Let’s plaice his comments in context. The MB apparently spoke with Tony Travers, who, he argued, is from the “respectable” part of the London School of Economics, even though he is not a member of the permanent faculty. I am wondering whether he thinks my distinguished friends Tim Besley, John Van Reenen, the Nobel laureate Christopher Pissarides, Nick Stern and John Hills are from the “respectable” bit. Or Richard Layard, or David Metcalf?
Let’s go through a couple of other bits of nonsense. First: “. . . the government’s audacious and thoughtful strategy for economic and social reform is holding up very well”. You could have fooled me. Unemployment is 2.5 million and still rising – the last six monthly observations were 7.8 per cent, 8.1 per cent, 8.0 per cent, 7.4 per cent, 8.0 per cent and 8.0 per cent, and the employment rate is falling. Youth unemployment is still around a million, long-term unemployment is rising and real wages continue to fall. “Thoughtful” the strategy is not. Indeed, it is hard to find a single economist who supports it.
Maybe Oborne didn’t notice that the whole basis for the Chancellor’s economic strategy – stemming from work by Carmen Reinhart and Kenneth Rogoff – has been shown to be ruined by spreadsheet errors. Recall that in 2010 the Chancellor argued in his Mais Lecture that: “The latest research suggests that once debt reaches more than about 90 per cent of GDP, the risks of a large negative impact on long-term growth become highly significant.” We now know it doesn’t.
The underlying picture for the public finances is one of stalled progress in deficit reduction. As the independent consultancy Capital Economics notes, “stripping out various temporary factors, the fiscal position remains fragile”.
Then there’s this from Oborne: “Economic growth, though weak, has not been entirely extinguished in a weak international environment. Anyone who predicted such an outcome three years ago would have been labelled mad.”
In his Budget statement of 22 June 2010 the Chancellor said as follows: “Growth in the UK economy for the coming five years is estimated to be: 1.2 per cent this year and 2.3 per cent next year; then 2.8 per cent in 2012 followed by 2.9 per cent in 2013.” We got 1.7 per cent, then 1.1 per cent and 0.2 per cent and perhaps 1 per cent for 2013. Great success – growth was a quarter of what was predicted by the coalition.
Oborne is right about one thing: economics in the end trumps politics. Given the worst lack of recovery in a century, the only sensible conclusion is that Cameron has established a track record of economic failure. No dividends.
David Blanchflower is the New Statesman’s economics editor 
George Osborne. Photograph: Getty Images

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

This article first appeared in the 29 July 2013 issue of the New Statesman, Summer Double Issue

Photo: Getty Images
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The future of policing is still at risk even after George Osborne's U-Turn

The police have avoided the worst, but crime is changing and they cannot stand still. 

We will have to wait for the unofficial briefings and the ministerial memoirs to understand what role the tragic events in Paris had on the Chancellor’s decision to sustain the police budget in cash terms and increase it overall by the end of the parliament.  Higher projected tax revenues gave the Chancellor a surprising degree of fiscal flexibility, but the atrocities in Paris certainly pushed questions of policing and security to the top of the political agenda. For a police service expecting anything from a 20 to a 30 per cent cut in funding, fears reinforced by the apparent hard line the Chancellor took over the weekend, this reprieve is an almighty relief.  

So, what was announced?  The overall police budget will be protected in real terms (£900 million more in cash terms) up to 2019/20 with the following important caveats.  First, central government grant to forces will be reduced in cash terms by 2019/20, but forces will be able to bid into a new transformation fund designed to finance moves such as greater collaboration between forces.  In other words there is a cash frozen budget (given important assumptions about council tax) eaten away by inflation and therefore requiring further efficiencies and service redesign.

Second, the flat cash budget for forces assumes increases in the police element of the council tax. Here, there is an interesting new flexibility for Police and Crime Commissioners.  One interpretation is that instead of precept increases being capped at 2%, they will be capped at £12 million, although we need further detail to be certain.  This may mean that forces which currently raise relatively small cash amounts from their precept will be able to raise considerably more if Police and Crime Commissioners have the courage to put up taxes.  

With those caveats, however, this is clearly a much better deal for policing than most commentators (myself included) predicted.  There will be less pressure to reduce officer numbers. Neighbourhood policing, previously under real threat, is likely to remain an important component of the policing model in England and Wales.  This is good news.

However, the police service should not use this financial reprieve as an excuse to duck important reforms.  The reforms that the police have already planned should continue, with any savings reinvested in an improved and more effective service.

It would be a retrograde step for candidates in the 2016 PCC elections to start pledging (as I am certain many will) to ‘protect officer numbers’.  We still need to rebalance the police workforce.   We need more staff with the kind of digital skills required to tackle cybercrime.  We need more crime analysts to help deploy police resources more effectively.  Blanket commitments to maintain officer numbers will get in the way of important reforms.

The argument for inter-force collaboration and, indeed, force mergers does not go away. The new top sliced transformation fund is designed in part to facilitate collaboration, but the fact remains that a 43 force structure no longer makes sense in operational or financial terms.

The police still have to adapt to a changing world. Falling levels of traditional crime and the explosion in online crime, particularly fraud and hacking, means we need an entirely different kind of police service.  Many of the pressures the police experience from non-crime demand will not go away. Big cuts to local government funding and the wider criminal justice system mean we need to reorganise the public service frontline to deal with problems such as high reoffending rates, child safeguarding and rising levels of mental illness.

Before yesterday I thought policing faced an existential moment and I stand by that. While the service has now secured significant financial breathing space, it still needs to adapt to an increasingly complex world. 

Rick Muir is director of the Police Foundation