Danny Alexander undermines Cable with coalition spending plans up to 2021

After Cable criticised "the pace and scale of cuts" set out by George Osborne after 2015, Alexander releases new figures extending the Chancellor's plan until 2020-21.

Nearly a week after it was announced, Ed Balls's deficit plan is suddenly coming under attack. Yesterday it was the Times declaring that Labour plans to go on a £25bn "spending spree" (as I explained, there will be nothing resembling a "spree"), today it's Danny Alexander claiming that the opposition would borrow £166bn more than the coalition from 2015-16 to 2020-21. He says:

This Treasury analysis shows that Labour have learnt nothing from the past and can't be trusted by the British people on the economy.

Their new borrowing bombshell will pile another 166 Billion of extra borrowing onto the debt  mountain left by their catastrophic mismanagement  of the UK economy.

The Liberal Democrat plan to repair the economy is working with the right balance to get rid of the deficit, build a strong economy and deliver a fair society.

The difference in spending is based on Balls's decision to leave room to borrow to invest (in housing and other infrastructure projects) and to achieve a current budget surplus by the end of the next parliament, rather than to match George Osborne's pledge to achieve an absolute surplus. Here are the numbers released by Alexander (PSNB refers to Public Sector Net Borrowing and PSND to Public Sector Net Debt); the wonks among you can read the full Treasury analysis here

As you can see, Balls's decision not to seek to achieve a total surplus (which the coalition is forecast by the Treasury to achieve by 2019-20) means he is able to borrow significantly more than the coalition after 2015-16 and still meet his pledge to ensure the national debt is falling as a share of GDP by the end of the period (which simply requires the economy to grow faster than borrowing). 

But for several reasons, it's wise to treat these numbers with a large bucket of salt. For a start, Balls hasn't even decided whether Labour will borrow to invest and, if so, how great the difference with the coalition would be. As he told me in my recent interview with him, "In the speech I gave at Reuters in the summer, I said, and Ed and I both said, that’s a decision we should make much closer to the election when we’ve got more information about what the state of the economy is going to be. So we’ve been very clear, no more borrowing for day-to-day spending, but on the capital side that’s something that we’re going to continue to look at. I’m not going to rule it out, but I’m also not going to say now that it’s definitely the right thing to do."

In addition, as the last few years have demonstrated so well, economists struggle to predict what growth will be next year, let alone what it will be in six years' time. If the economy is motoring (and the forecasts conveniently omit the boost investment would give to growth), Labour could easily achieve a lower national debt share before 2020-21. If it's flatlining, it will struggle without making deeper spending cuts (and there will be cuts). We just don't know. As Chris Leslie, the shadow chief secretary to the Treasury, said: "These are made up numbers plucked out of the air by Danny Alexander."

But as Leslie went on to note, "[T]he most revealing thing in Danny Alexander’s press release is that he has announced, for the first time, coalition spending plans for 2019/20 and 2020/21. There are no spending plans or forecasts for those years in the Autumn Statement. Has Danny Alexander told his Lib Dem Cabinet colleagues that he has agreed another two years of spending plans with George Osborne?"

Alexander's decision to present a "coalition plan" right up until 2020-21 sets him at odds with Vince Cable, who noted in a lecture on Monday night: "There are different ways of finishing the job … not all require the pace and scale of cuts set out by the chancellor. And they could allow public spending to stabilise or grow in the next parliament, whilst still getting the debt burden down." 

Based on that, it seems that Cable would prefer to adopt the approach taken by Balls, leaving room to borrow to invest depending on the state of the economy, rather than Osborne's ideological fixation with a budget surplus. But with Alexander apparently happy to give the impression that the coalition is bound to Tory austerity into the next decade, one can only ask: what happened to the "differentiation strategy"?

George Osborne and Danny Alexander before the Autumn Statement last year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland