How Osborne manipulated spending to claim the deficit is falling

The IFS warns that the £10.9bn underspend is not an "economically optimal allocation of spending".

One of the biggest surprises in George Osborne's Budget speech was his announcement that the deficit is forecast to fall this year (although excluding all "special factors" it's actually set to rise). With borrowing so far this year £5.3bn higher than in 2012, it seemed there was no escape for the Chancellor. 

For the first time since he entered the Treasury, he would be forced to announce that the deficit was expected to rise in annual terms and Ed Balls would have his revenge (Osborne memorably bamboozled the shadow chancellor in last year's Autumn Statement by banking the 4G auction receipts early).

But yesterday, against expectations, he was able to announce that the deficit was forecast to be £120.9bn this year (2012-13), £100m less than last year (2011-12). So how did he do it? The answers are becoming clearer today. First, Osborne is forcing government departments to underspend by a remarkable £10.9bn in the final months of this financial year (including a £2.2bn NHS underspend). While some of this underspend is permanent, the rest, as the OBR document noted (see p.93) has been moved forward into future years. Public spending, it appears, has been manipulated in order to allow Osborne to boast that the deficit has fallen again. 

At its traditional post-Budget briefing, the Institute for Fiscal Studies called the Chancellor out on his financial trickery. Noting that the £10.9bn was around double the average of the previous five years (see graph), IFS head Paul Johnson said

There is every indication that the numbers have been carefully managed with a close eye on the headline borrowing figures for this year. It is unlikely that this has led either to an economically optimal allocation of spending across years or to a good use of time by officials and ministers.
 
That the deficit is forecast to shrink by the minimum amount required for Osborne to claim that borrowing has fallen (£100m) is clear evidence that the underspend was motivated by political calculations, rather than economic ones.
 
As well as squeezing Whitehall spending, Osborne also saved money by, in the words of the OBR, delaying payments to some "international institutions" until next year. When I spoke to the Treasury press office, they cited the example of a £15m payment by the Department for International Development to Green Africa Power. The spokesman refused to confirm whether the institutions affected included the UN and the World Bank. Regardless, it is now clear that Osborne's creative accounting puts Gordon Brown to shame. 
Chancellor of the Exchequer George Osborne leaves number 11 Downing Street in central London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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If only I could wangle a job in the John Lewis menswear department I’d get to say, “Suits you, sir”

I’m afraid I am going to have to stick to writing.

So now that I have made the news public that I am even deeper in the soup than I was when I started this column, various people – in fact, a far greater number than I had dared hope would – have expressed their support. Most notable, as far as I can tell, was Philip Pullman’s. That was decent of him. But the good wishes of people less in the public eye are just as warming to the heart.

Meanwhile, the question is still nagging away at me: what are you going to do now? This was the question my mother’s sisters would always ask her when a show she was in closed, and my gig might have been running for almost as long as The Mousetrap but hitherto the parallels with entertainment had eluded me.

“That’s show business,” she said to me, and for some reason that, too, is a useful comment. (I once saw a picture of a fairly well-known writer for page and screen dressed up, for a fancy-dress party, as a hot dog. The caption ran: “What? And give up show business?”)

Anyway, the funds dwindle, although I am busy enough to find that time does not weigh too heavily on my hands. The problem is that this work has either already been paid for or else is some way off being paid for, if ever, and there is little fat in the bank account. So I am intrigued when word reaches me, via the Estranged Wife, that another family member, who perhaps would prefer not to be identified, suggests that I retrain as a member of the shopfloor staff in the menswear department of John Lewis.

At first I thought something had gone wrong with my hearing. But the E W continued. The person who had made the suggestion had gone on to say that I was fairly dapper, could talk posh, and had the bearing, when it suited me, of a gentleman.

I have now thought rather a lot about this idea and I must admit that it has enormous appeal. I can just see myself. “Not the checked jacket, sir. It does not become sir. May I suggest the heather-mixture with the faint red stripe?”

In the hallowed portals of Jean Louis (to be said in a French accent), as I have learned to call it, my silver locks would add an air of gravitas, instead of being a sign of superannuation, and an invitation to scorn. I would also get an enormous amount of amusement from saying “Walk this way” and “Suits you, sir”.

Then there are the considerable benefits of working for the John Lewis Partnership itself. There is the famed annual bonus; a pension; a discount after three months’ employment; paid holiday leave; et cetera, et cetera, not to mention the camaraderie of my fellow workers. I have worked too long alone, and spend too much time writing in bed, nude, surrounded by empty packets of Frazzles and Dinky Deckers. (For those who are unfamiliar with the latter, a Dinky Decker is a miniature version of a Double Decker, which comes in a bag, cunningly placed by the tills of Sainsbury’s Locals, which is usually priced at a very competitive £1.)

I do some research. I learn from an independent website that a retail sales assistant can expect to make £7.91 an hour on average. This is somewhat less than what is considered the living wage in London, but maybe this is accounted for in the John Lewis flagship store in Oxford Street. It is, though, a full 6p an hour more than the living wage in the rest of the land. Let the good times roll!

At which point a sudden panic assails me: what if employment at that store is only granted to those of long and proven service? God, they might send me out to Brent Cross or somewhere. I don’t think I could stand that. I remember when Brent Cross Shopping Centre opened and thought to myself, even as a child, that this was my idea of hell. (It still is, though my concept of hell has broadened to include Westfield in Shepherd’s Bush.)

But, alas, I fear this tempting change of career is not to be. For one thing, I am probably too old to train now. By the time I will have been taught to everyone’s satisfaction how to operate a till or measure an inside leg, I will be only a few months, if that, from retirement age, and I doubt that even so liberal an employer as John Lewis would be willing to invest in someone so close to the finish line.

Also, I have a nasty feeling that it’s not all heather-mixture suits with (or without) the faint red stripe these days. The public demands other, less tasteful apparel.

So I’m afraid I am going to have to stick to writing.

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

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