Revealed: how Osborne manipulated the borrowing figures

Chancellor included 4G receipts and gilt interest payments to make it appear as if the deficit will fall this year.

Against expectations, George Osborne announced in his Autumn Statement that borrowing would fall, not rise, this year. The news cheered the Conservative backbenches and clearly surprised Ed Balls, who was jeered by Osborne and David Cameron as he mistakenly said the deficit was "not rising" (he meant to say it was rising). Borrowing so far this year is £5bn (7.4 per cent) higher than in the same period last year - it seemed there was no escape route for the Chancellor.

So how did he do it? Well, turn to p. 12 of the Office for Budget Responsibility document and it becomes clear that Osborne has performed an accounting trick worthy of Enron. First, he added the expected £3.5bn receipts from the 4G mobile spectrum auction - even though it's yet to take place. Second, he included the interest transferred to the Treasury from the Bank of England's Quantitative Easing programme (worth £11.5bn), despite the Institute for Fiscal Studies warning him that it would call into doubt his credibility. Were it not for these two measures, borrowing would be £15bn higher than stated by Osborne. If we add that £15bn to the £108bn figure provided by Osborne, then total forecast borrowing for this year becomes £123bn, £1.4bn higher than last year. Little wonder that the Chancellor was so keen to bag the 4G receipts early.

But while these fiscal somersaults might allow Osborne to claim he's reduced borrowing, what reputation he had for statistical transparency has been destroyed. In his speech to the Commons, the Chancellor boasted that "it is a measure of the constitutional achievement that it is taken for granted that our country’s forecast is now produced independently of the Treasury". That claims looks very questionable today.

George Osborne leaves the Treasury ahead of the Autumn Statement. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Labour will soon be forced to make clear its stance on Brexit

The Great Repeal Bill will force the party to make a choice on who has the final say on a deal withg Europe.

A Party Manifesto has many functions. But rarely is it called upon to paper over the cracks between a party and its supporters. But Labour’s was – between its Eurosceptic leadership and its pro-EU support base. Bad news for those who prefer their political parties to face at any given moment in only one direction. But a forthcoming parliamentary vote will force the party to make its position clear.

The piece of legislation that makes us members of the EU is the European Communities Act 1972. “Very soon” – says the House of Commons Library – we will see a Repeal Bill that will, according to the Queen’s Speech, “repeal the European Communities Act.” It will be repealed, says the White Paper for the Repeal Bill, “on the day we leave the EU.”

It will contain a clause stating that the bit of the bill that repeals the European Communities Act will come into force on a date of the Prime Minister's choosing. But MPs will have to choose whether to vote for that clause. And this is where Labour’s dilemma comes into play.

In her Lancaster House speech Theresa May said:

“I can confirm today that the Government will put the final deal that is agreed between the UK and the EU to a vote in both Houses of Parliament, before it comes into force.”

Later that day David Davis clarified May’s position, saying, of a vote against the final deal:

“The referendum last year set in motion a circumstance where the UK is going to leave the European Union, and it won’t change that.” 

So. The choice the Tories will give to Parliament is between accepting whatever deal is negotiated or leaving without a deal. Not a meaningful choice at all given that (as even Hammond now accepts): “No deal would be a very, very bad outcome for Britain.”

But what about Labour’s position? Labour’s Manifesto says:

“Labour recognises that leaving the EU with ‘no deal’ is the worst possible deal for Britain and that it would do damage to our economy and trade. We will reject ‘no deal’ as a viable option.”

So, it has taken that option off the table. But it also says:

“A Labour approach to Brexit also means legislating to guarantee that Parliament has a truly meaningful vote on the final Brexit deal (my emphasis).”

Most Brexit commentators would read that phrase – a meaningful vote – as drawing an implicit contrast with the meaningless vote offered by Theresa May at Lancaster House. They read it, in other words, as a vote between accepting the final deal or remaining in the EU.

But even were they wrong, the consequence of Labour taking “no deal” off the table is that there are only two options: leaving on the terms of the deal or remaining. Labour’s Manifesto explicitly guarantees that choice to Parliament. And guarantees it at a time when the final deal is known.

But here’s the thing. If Parliament chooses to allow Theresa May to repeal the European Communities Act when she wants, Parliament is depriving itself of a choice when the result of the deal is known. It is depriving itself of the vote Labour’s Manifesto promises. And not only that - by handing over to the Prime Minister the decision whether to repeal the European Communities Act, Parliament is voluntarily depriving itself of the power to supervise the Brexit negotiations. Theresa May will be able to repeat the Act whatever the outcome of those negotiations. She won’t be accountable to Parliament for the result of her negotiations – and so Parliament will have deprived itself of the ability to control them. A weakened Prime Minister, without a mandate, will have taken back control. But our elected Parliament will not.

If Labour wants to make good on its manifesto promise, if Labour wants to control the shape of Brexit, it must vote against that provision of the Repeal Bill.

That doesn’t put Labour in the position of ignoring the referendum vote. There will be ample time, from October next year when the final deal is known, for Labour to look at the Final Deal and have a meaningful vote on it.

But if Labour supports the Repeal Bill it will be breaching a clear manifesto promise.

Jolyon Maugham is a barrister who advised Ed Miliband on tax policy. He blogs at Waiting for Tax, and writes for the NS on tax and legal issues. 

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