Blow for Osborne as the deficit rises again

Borrowing so far this year is 10 per cent higher than in 2011.

Thanks to some dubious accounting, George Osborne was able to boast in his Autumn Statement that the deficit would be lower this year than last. But the actual figures (as opposed to the OBR's forecasts) show that it's still rising. Today's release from the Office for National Statistics reveals that borrowing was £17.5bn last month, £1.2bn higher than in November 2011. The deficit for the year to date is now £92.7bn, £8.3bn (9.9 per cent) higher than in the same period the previous year.

It was the anticipated £3.5bn windfall from the 4G spectrum auction that allowed Osborne to claim that the deficit would continue to fall in annual terms (it is 22.3 per cent lower than in 2009-10). Without that, the OBR's forecasts suggest that borrowing is set to come in at £123.8bn, £2.4bn higher than in 2011-12. So it's notable that the ONS release says that it "has yet to classify how the proceeds of the auction (or the initial deposits) should be treated under National Accounts rules and so how they will impact on the statistical measures in this bulletin." Should the ONS decide for any reason that the 4G receipts can't be counted toward deficit reduction, Osborne will be in trouble.

There was also bad news on growth as Q3 GDP was downgraded from 1 per cent to 0.9 per cent. This revision is statistically insignificant (the figures are constantly revised upwards and downwards) but it could be a prelude of worse things to come. There is a strong chance that the Q4 figures, which are released on 25 January, will show that the economy is shrinking again. The OBR has forecast a contraction of -0.1 per cent. Before the last growth figures were released, David Cameron memorably declared that "the good news will keep coming". He may soon have cause to reject those words.

Chancellor George Osborne leaves Number 11 Downing Street. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Nicola Sturgeon. Photo: Getty
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For the first time in decades, there is genuine dissent in Scottish Nationalist ranks

The First Minister is facing pressure to talk less about independence - and bring on new talent in her party.

She so recently seemed all-powerful, licensed to reign for as long as she chose, with the authority to pursue the return of our national sovereignty. We would then have the ability to strike our own deals on our own terms, a smaller, smarter, leaner nation freed from the stifling constraints of partnership with a much larger neighbour. There was, she repeatedly told us, nothing to be afraid of.

Now, suddenly, she is the victim of her own miscalculation: having misread the public mood, having raced too far ahead of moderate opinion, she finds herself at bay. The voters have delivered a public humiliation, while an opposition party until recently lampooned as unelectable is on the march. There is, suddenly, talk of her departure sooner rather than later.

Yes, this is a tough time to be Nicola Sturgeon…

Let’s not overstate it. The position of Scotland’s First Minister is considerably more secure than that of the UK’s Prime Minister. Theresa May wants out as soon as is feasible; Sturgeon, one suspects, will have to be dragged from Bute House. Sturgeon retains enough respect among the public and support among her colleagues to plough on for now. Nevertheless, things are not what they were before the general election and are unlikely ever to return to that happy state.

It’s all because of Scexit, of course. Sturgeon’s unseemly sprint for the indy finishing line left enough Scottish voters feeling… what? Mistreated, taken for granted, rushed, patronised, bullied… so much so that they effectively used June 8 to deliver a second No vote. With the idea of another referendum hanging around like a bad headache, the electorate decided to stage an intervention. In just two years, Sturgeon lost 40 per cent of her Westminster seats and displaced half a million votes. One could almost argue that, by comparison, Theresa May did relatively well.

For the first time in decades, there is genuine dissent in Nationalist ranks. Tommy Sheppard, a former Labour Party official who is now an influential left-wing SNP MP, published an article immediately after the general election calling on the First Minister to ‘park’ a second referendum until the Brexit negotiations are complete. There are others who believe the party should rediscover its talent for the long game: accept the public mood is unlikely to change much before the 2021 devolved elections, at which point, even if the Nats remain the single largest party, Holyrood might find itself with a unionist majority; concentrate on improving the public services, show what might be done with all the powers of an independent nation, and wait patiently until the numbers change.

There are others – not many, but some – who would go further. They believe that Sturgeon should take responsibility for the election result, and should be looking to hand over to a new generation before 2021. The old guard has had its shot and its time: a party with veterans such as Sturgeon, John Swinney and Mike Russell in the key jobs looks too much like it did 20 years ago. Even the new Westminster leader, Ian Blackford, has been on the scene for donkey’s. There are more who believe that the iron grip the First Minister and her husband, SNP chief executive Peter Murrell, have on the party is unhealthy – that Murrell should carry the can for the loss of 21 MPs, and that he certainly would have done so if he weren’t married to the boss.

The most likely outcome, given what we know about the First Minister’s nature, is that she will choose something like the Sheppard route: talk less about independence for the next 18 months, see what the Brexit deal looks like, keep an eye on the polls and if they seem favourable go for a referendum in autumn 2019. The question is, can a wearied and increasingly cynical public be won round by then? Will people be willing to pile risk upon risk?

As the hot takes about Jeremy Corbyn’s surprise election performance continue to flood in, there has been a lot of attention given to the role played by young Britons. The issues of intergenerational unfairness, prolonged austerity and hard Brexit, coupled with Corbyn’s optimistic campaigning style, saw a sharp rise in turnout among that demographic. Here, Scotland has been ahead of the curve. In the 2014 referendum, the Yes campaign and its can-do spirit of positivity inspired huge enthusiasm among younger Scots. Indeed, only a large and slightly panicked defensive response from over-65s saved the union.

That brush with calamity seems to have been close enough for many people: many of the seats taken from the Nats by the Scottish Tories at the general election were rural, well-to-do and relatively elderly. The modern electorate is a fickle thing, but it remains rational. The Corbynites, amid their plans for total world domination and their ongoing festival of revenge, might bear that in mind.

Chris Deerin is the New Statesman's contributing editor (Scotland). 

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