Osborne's economic strategy remains self-defeating

The Chancellor is wrong to fund £5bn of extra capital spending by squeezing public services.

George Osborne's decision to increase capital spending by £5bn (to be announced in tomorrow's Autumn Statement) is a belated admission that, in times of stagnation, the state must intervene to stimulate growth. The delusion that the coalition's spending cuts would increase consumer confidence and produce a self-sustaining private-sector-led recovery has been abandoned after Osborne's "expansionary fiscal contraction" turned out to be, well, contractionary. Whisper it, but Keynesianism is back. The £5bn will be spent on "shovel-ready projects", including 100 new free schools and academies, roads, and science and technology programmes.

But rather than taking advantage of the UK's historically low bond yields to borrow for growth (as the IMF and the CBI, among others, have urged the government to do), Osborne will fund the move by squeezing current spending even harder. All government departments, except health, education and international development, will be forced to reduce their budgets by an extra one per cent in 2013-14 and a further two per cent in 2014/15. By reducing demand and leading to thousands of extra job losses, the new cuts will limit the effectiveness of the £5bn stimulus, which, in itself, is inadequate. The FT's economics editor Chris Giles suggests that "on generous assumptions it might increase growth in one year by 0.1 per cent."

Though Osborne will claim otherwise tomorrow, this isn't what's needed to make a real difference at this stage.

George Osborne during a visit to the offices of HM Revenue & Customs. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Meet the man forcing the Government to reveal its plans for Brexit

Grahame Pigney hopes to "peel away" the secrecy of negotiations. 

Not so long ago, the UK Government was blissfully unaware of Grahame Pigney, a British man living in semi-retirement, in France. But then came Brexit. 

Pigney, who had been campaigning for Britain to stay in the EU, was devastated. But after a few days, he picked himself up and started monitoring the news. He was alarmed to discover the Government thought it could trigger Article 50 without the express permission of Parliament. 

He wasn’t alone. Gina Miller, an investor, was equally incensed and decided to take the Government to court. Pigney (pictured below) set up a crowdfunding campaign to support the case, The People’s Challenge. So far, the campaign has raised more than £100,000. 

This week, the campaign scored its first major victory, when a judge overruled the Government’s attempts to keep its legal defence secret. The case itself will be held in October. 

At a time when the minister for Brexit, David Davis, can only say it means “leaving the EU”, the defence sheds some light on the Government’s thinking. 

For example, it is clear that despite suggestions that Article 50 will be triggered in early 2017, the Government could be easily persuaded to shift the date: 

"The appropriate point at which to issue the notification under Article 50 is a matter of high, if not the highest, policy; a polycentric decision based upon a multitude of domestic and foreign policy and political concerns for which the expertise of Ministers and their officials are particularly well suited an the Courts ill-suited.”

It is also, despite Theresa May’s trips to Scotland, not a power that the Government is willing to share. In response to Pigney’s argument that triggering Article 50 without parliamentary approval impinges on Scotland’s separate body of law, it stated bluntly: “The conduct of foreign relations is a matter expressly reserved such that the devolved legislatures have no competence over it.”

Although Pigney is one of the millions of expats left in jeopardy by Brexit, he tells The Staggers he is not worried about his family. 

Instead, he says it is a matter of principle, because Parliament should be sovereign: “I am not a quitter.” 

While Davis argues he cannot reveal any information about Brexit negotiations without jeopardising them, Pigney thinks the Brexiteers simply “haven’t got anything”. 

A former union negotiator, he understands why Davis doesn’t want to reveal the details, but finds the idea of not even discussing the final goals is baffling: “When I was a union member, we wouldn’t tell them how everything was going but you did agree what the targets were that you were going for.”

He said: “The significance of what happened is we were able to peel away a layer of Government secrecy. One of the things that has characterised this Government is they want to keep everything secret.”