Osborne called out for holding "two Budgets" a year

The Autumn Statement was never meant to become a "second Budget" but Osborne has made it one. And the Treasury Select Committee is right to say so.

It's easy now to forget that George Osborne scrapped the pre-Budget report (introduced by Gordon Brown in 1997) in the belief that major decisions on tax and spending should be reserved for the Budget itself. The new slimmed-down Autumn Statement was designed to include little more than the OBR's latest forecasts on growth, borrowing and jobs. But confronted by the failure of his economic plan, Osborne has turned it into a second Budget in all but name. His most recent statement, for instance, included a freeze in fuel duty, an increase in the personal allowance to £9,440, a cut in corporation tax, a reduction in the tax-free pension allowance and the abolition of national pay bargaining for teachers.

So it's good to see the Treasury Select Committee calling the Chancellor out on his U-turn. In its report on the 2012 Autumn Statement, the committeee, which is chaired by Conservative MP Andew Tyrie, notes:

The OBR is required by statute to issue two economic and fiscal forecasts a year. The Chancellor’s own Autumn Statement, however, has now grown to be virtually a second Budget. There are good reasons for having a single substantial annual review of  the fiscal and economic state of the country, not least to enable the subsequent  presentation to Parliament of proposed tax measures and of Estimates of expenditure.  The Treasury should  re-establish the annual Budget as the main  focus of fiscal and economic policy making.

Tyrie said: "The autumn statement is not, nor should it be, a second budget. In recent years it has come to read like one.

"The case for two budgets is weak. An additional one can create uncertainty and carries an economic cost. Only in an emergency would it be likely to carry long-term benefit. The primacy of the budget as the main focus of fiscal and economic policy making should be re-established."

OBR forecasts "biased to over-optimism"

Another concern raised by the committee is that the OBR's forecasts so far have been "biased to over-optimism". It states: "This would not be a cause for concern but for the fact that the OBR’s forecasts have implications for decisions on public policy. This is because the fiscal mandate is defined with direct reference to a forecast, and because the OBR’s is at present the only official forecast against which the fiscal mandate can be measured."

Osborne reliant on "uncertain" 4G and Swiss tax windfalls

MPs also criticise Osborne for placing so much reliance on the anticipated windfall from the sale of the 4G  mobile spectrum and Swiss tax repatriation to meet his borrowing forecasts. 

The sums expected from the sale of the 4G spectrum and Swiss tax repatriation represent the majority of the additional receipts the Treasury intends to offset against the tax reductions and investment announced in the Autumn Statement for 2012–13 and 2013–14. Both are subject to uncertainty. In the case of the tax repatriation from Switzerland, the proceeds may not meet expectations if assumptions about the potential tax liabilities and expected behaviour of those affected prove not to be valid. 
As I noted at the time of the last Autumn Statement, it was only Osborne's inclusion of the expected £3.5bn receipts from the 4G auction that allowed him to claim that borrowing would fall this year, rather than rise (the boast that famously threw Ed Balls). If we strip out the £3.5bn, the forecast deficit for this year is £123bn, £1.4bn higher than last year.
And with borrowing currently £7.2bn (7.3 per cent) higher than at the same point last year, it's no surprise that Osborne was so keen to bag the 4G receipts early.
George Osborne poses for photographers outside 11 Downing Street before presenting his annual budget to Parliament on March 21, 2012. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Can Trident be hacked?

A former defence secretary has warned that Trident is vulnerable to cyber attacks. Is it?

What if, in the event of a destructive nuclear war, the prime minister goes to press the red button and it just doesn't work? 

This was the question raised by Des Browne, a former defence secretary, in an interview witht the Guardian this week. His argument, based on a report from the defence science board of the US Department of Defense, is that the UK's Trident nuclear weapons could be vulnerable to cyberattacks, and therefore rendered useless if hacked. 

Browne called for an "end-to-end" assessment of the system's cybersecurity: 

 The government ... have an obligation to assure parliament that all of the systems of the nuclear deterrent have been assessed end-to-end against cyber attacks to understand possible weak spots and that those weak spots are protected against a high-tier cyber threat. If they are unable to do that then there is no guarantee that we will have a reliable deterrent or the prime minister will be able to use this system when he needs to reach for it.

Is he right? Should we really be worried about Trident's potential cyber weaknesses?

Tangled webs 

The first, crucial thing to note is that Trident is not connected to the "internet" we use every day. Sure, it's connected to the main Ministry of Defence network, but this operates totally independently of the network that you visit Facebook through. In cyber-security terms, this means the network is "air-gapped" - it's isolated from other systems that could be less secure. 

In our minds, Trident is old and needs replacing (the submarines began patrolling in the 1990s), but any strike would be ordered and co-ordinated from Northwood, a military bunker 100m underground which would use the same modern networks as the rest of the MoD. Trident is basically as secure as the rest of the MoD. 

What the MoD said

I asked the Ministry of Defence for a statement on Trident's security, and while it obviously can't offer much information about how it all actually works, a spokesperson confirmed that the system is air-gapped and added: 

We wouldn't comment on the detail of our security arrangements for the nuclear deterrent but we can and do safeguard it from all threats including cyber.

What security experts said

Security experts agree that an air-gapped system tends to be more secure than one connected to the internet. Sean Sullivan, a security adviser at F-secure, told Infosecurity magazine that while some hackers have been able to "jump" air-gaps using code, this would cause "interference" at most and a major attack of this kind is still "a long way off". 

Franklin Miller, a former White House defence policy offer, told the Guardian that the original report cited by Browne was actually formulated in response to suggestions that some US defence networks should be connected to the internet. In that case, it actually represents an argument in favour of the type of air-gapped system used by the MoD. 

So... can it be hacked?

The answer is really that any system could be hacked, but a specialised, independent defence network is very, very unlikely to be. If a successful hack did happen, it would likely affect all aspects of defence, not just Trident. That doesn't mean that every effort shouldn't be made to make sure the MoD is using the most secure system possible, but it also means that scaremongering in the context of other, unrelated cybersecurity scares is a little unjustified. 

Barbara Speed is a technology and digital culture writer at the New Statesman and a staff writer at CityMetric.