Leader: George Osborne may end up inheriting the wind

By refusing to contemplate any major changes to fiscal policy, Mr Osborne hopes to make a political virtue of his obstinacy.

According to George Osborne’s original plan, the £11.5bn of cuts he announced in the Spending Review on Wednesday 26 June should not have been necessary. When he published his deficitreduction programme in 2010, the Chancellor assured voters that austerity would not stretch beyond 2015. “We have already asked the British people for what is needed,” he declared in the 2011 Budget, “and we do not need to ask for more.” However, because of the near absence of growth since the election that resulted in the creation of a coalition government, the axeman is still swinging his blade. Mr Osborne is expected not to meet his chosen target of eliminating the so-called structural deficit until 2018. It is likely that Britain will experience a full decade of austerity before relief is in sight.

The results of Mr Osborne’s strategy were both predictable and predicted. As early as October 2009, when he was being lauded by much of the British press as the country’s potential economic saviour, the New Statesman warned that “the only economic plan he seems to have is for attempting to balance the books. He does not have a plan for growth. He has a plan for a lack of growth.” But Mr Osborne caricatured his opponents as “deficit deniers” and dismissed calls for a “plan B”, led by our economics editor, David Blanchflower, as Keynesian dogma. Despite the return of growth, the economy remains 2.6 percentage points below its pre-recession peak; this is the slowest recovery since the 1870s.

The Chancellor’s decision to hold the review nearly two years before the end of the current spending period had more to do with politics than economics. By announcing spending limits for the first year after the next election, the Conservatives’ chief political strategist sought to draw the battle lines in his party’s favour. He knew that if Labour accepted his plans it would be accused of ideological surrender and that if it rejected them it would be accused of fiscal recklessness.

As apprentices of Gordon Brown, who similarly used the baseline as a weapon of political war, Ed Miliband and Ed Balls were well prepared for this trap. Their response was to accept Mr Osborne’s current spending limits, while leaving open the possibility of greater capital investment. For political and economic reasons, it was the right decision. While the public remains sceptical of the Keynesian case for higher borrowing, polls show that it recognises the benefits of investing in areas such as housebuilding that boost output in the short and long run, generate employment and aid deficit reduction. Because of its independent monetary policy and above-average debt maturity, Britain can afford to borrow for growth without fear of a dangerous rise in bond yields. The risks of inaction, in the forms of permanently lower growth and higher unemployment, far outweigh the risks of action.

In his NSessay in March, the Business Secretary, Vince Cable, urged Mr Osborne to borrow to invest, rightly noting that this would not “undermine the central objective of reducing the structural deficit” (a measure that excludes capital spending) and could even assist it “by reviving growth”. The Chancellor’s response fell far short of what was required. By choosing to fund capital spending increases through cuts elsewhere, rather than borrowing, and by delaying the greater part of the investment until after 2015, he has denied the economy the stimulus it desperately needs.

For political purposes, the Chancellor has postponed most of the remaining cuts until after the next general election. Based on current projections, according to the Resolution Foundation, £26bn of further reductions will be needed between 2016 and 2018 to eliminate the structural deficit, a figure that would require the next government to accelerate the cuts by nearly 50 per cent. Should the current ring fences around Health, International Development and Education remain, some departments will have had their budgets more than halved by 2018, with a 55 per cent cut to Communities and Local Government and a 64 per cent cut to the Foreign Office, as well as a 46 per cent cut to the Home Office and a 38 per cent cut to Defence. Alternatively, the present pace of cuts could be maintained but only through an additional £10bn of welfare cuts or tax rises.

At the last election, the Conservatives and Labour engaged in a mutual conspiracy of silence. David Cameron told voters that he had “no plans” to raise VAT, that he “wouldn’t means-test” child benefit and that he would send away any cabinet minister who proposed “front-line reductions” to services. While pledging to halve the deficit over four years, Gordon Brown could rarely bring himself even to mention the word “cuts”.

If the next government is to win the legitimacy required to justify further sacrifices, this grand deception must not be repeated. The Labour Party should not avoid making the case for a significant increase in taxes on static assets, such as property and land, and on environmental “bads”, to help create a more resilient tax base. A crackdown on tax avoidance by corporations and individuals is essential.

By refusing to contemplate any major changes to fiscal policy, Mr Osborne hopes to make a political virtue of his obstinacy.His message of fiscal discipline may well prove enough to carry the Conservatives to a narrow victory – but he may end up inheriting the wind.

George Osborne. Photograph: Getty Images

This article first appeared in the 01 July 2013 issue of the New Statesman, Brazil erupts

Photo: Getty
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The Prevent strategy needs a rethink, not a rebrand

A bad policy by any other name is still a bad policy.

Yesterday the Home Affairs Select Committee published its report on radicalization in the UK. While the focus of the coverage has been on its claim that social media companies like Facebook, Twitter and YouTube are “consciously failing” to combat the promotion of terrorism and extremism, it also reported on Prevent. The report rightly engages with criticism of Prevent, acknowledging how it has affected the Muslim community and calling for it to become more transparent:

“The concerns about Prevent amongst the communities most affected by it must be addressed. Otherwise it will continue to be viewed with suspicion by many, and by some as “toxic”… The government must be more transparent about what it is doing on the Prevent strategy, including by publicising its engagement activities, and providing updates on outcomes, through an easily accessible online portal.”

While this acknowledgement is good news, it is hard to see how real change will occur. As I have written previously, as Prevent has become more entrenched in British society, it has also become more secretive. For example, in August 2013, I lodged FOI requests to designated Prevent priority areas, asking for the most up-to-date Prevent funding information, including what projects received funding and details of any project engaging specifically with far-right extremism. I lodged almost identical requests between 2008 and 2009, all of which were successful. All but one of the 2013 requests were denied.

This denial is significant. Before the 2011 review, the Prevent strategy distributed money to help local authorities fight violent extremism and in doing so identified priority areas based solely on demographics. Any local authority with a Muslim population of at least five per cent was automatically given Prevent funding. The 2011 review pledged to end this. It further promised to expand Prevent to include far-right extremism and stop its use in community cohesion projects. Through these FOI requests I was trying to find out whether or not the 2011 pledges had been met. But with the blanket denial of information, I was left in the dark.

It is telling that the report’s concerns with Prevent are not new and have in fact been highlighted in several reports by the same Home Affairs Select Committee, as well as numerous reports by NGOs. But nothing has changed. In fact, the only change proposed by the report is to give Prevent a new name: Engage. But the problem was never the name. Prevent relies on the premise that terrorism and extremism are inherently connected with Islam, and until this is changed, it will continue to be at best counter-productive, and at worst, deeply discriminatory.

In his evidence to the committee, David Anderson, the independent ombudsman of terrorism legislation, has called for an independent review of the Prevent strategy. This would be a start. However, more is required. What is needed is a radical new approach to counter-terrorism and counter-extremism, one that targets all forms of extremism and that does not stigmatise or stereotype those affected.

Such an approach has been pioneered in the Danish town of Aarhus. Faced with increased numbers of youngsters leaving Aarhus for Syria, police officers made it clear that those who had travelled to Syria were welcome to come home, where they would receive help with going back to school, finding a place to live and whatever else was necessary for them to find their way back to Danish society.  Known as the ‘Aarhus model’, this approach focuses on inclusion, mentorship and non-criminalisation. It is the opposite of Prevent, which has from its very start framed British Muslims as a particularly deviant suspect community.

We need to change the narrative of counter-terrorism in the UK, but a narrative is not changed by a new title. Just as a rose by any other name would smell as sweet, a bad policy by any other name is still a bad policy. While the Home Affairs Select Committee concern about Prevent is welcomed, real action is needed. This will involve actually engaging with the Muslim community, listening to their concerns and not dismissing them as misunderstandings. It will require serious investigation of the damages caused by new Prevent statutory duty, something which the report does acknowledge as a concern.  Finally, real action on Prevent in particular, but extremism in general, will require developing a wide-ranging counter-extremism strategy that directly engages with far-right extremism. This has been notably absent from today’s report, even though far-right extremism is on the rise. After all, far-right extremists make up half of all counter-radicalization referrals in Yorkshire, and 30 per cent of the caseload in the east Midlands.

It will also require changing the way we think about those who are radicalized. The Aarhus model proves that such a change is possible. Radicalization is indeed a real problem, one imagines it will be even more so considering the country’s flagship counter-radicalization strategy remains problematic and ineffective. In the end, Prevent may be renamed a thousand times, but unless real effort is put in actually changing the strategy, it will remain toxic. 

Dr Maria Norris works at London School of Economics and Political Science. She tweets as @MariaWNorris.