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.

Getty Images.
Show Hide image

Jeremy Corbyn challenged by Labour MPs to sack Ken Livingstone from defence review

Former mayor of London criticised at PLP meeting over comments on 7 July bombings. 

After Jeremy Corbyn's decision to give Labour MPs a free vote over air strikes in Syria, tonight's Parliamentary Labour Party (PLP) meeting was less fractious than it could have been. But one grandee was still moved to declare that the "ferocity" of the attacks on the leader made it the most "uplifting" he had attended.

Margaret Beckett, the former foreign secretary, told the meeting: "We cannot unite the party if the leader's office is determined to divide us." Several MPs said afterwards that many of those who shared Corbyn's opposition to air strikes believed he had mishandled the process by appealing to MPs over the heads of the shadow cabinet and then to members. David Winnick declared that those who favoured military action faced a "shakedown" and deselection by Momentum activists. "It is completely unacceptable. They are a party within a party," he said of the Corbyn-aligned group. The "huge applause" for Hilary Benn, who favours intervention, far outweighed that for the leader, I'm told. 

There was also loud agreement when Jack Dromey condemned Ken Livingstone for blaming Tony Blair's invasion of Iraq for the 7 July 2005 bombings. Along with Angela Smith MP, Dromey demanded that Livingstone be sacked as the co-chair of Labour's defence review. Significantly, Benn said aftewards that he agreed with every word Dromey had said. Corbyn's office has previously said that it is up to the NEC, not the leader, whether the former London mayor holds the position. In reference to 7 July, an aide repeated Corbyn's statement that he preferred to "remember the brilliant words Ken used after 7/7". 

As on previous occasions, MPs complained that the leader failed to answer the questions that were put to him. A shadow minister told me that he "dodged" one on whether he believed the UK should end air strikes against Isis in Iraq. In reference to Syria, a Corbyn aide said afterwards that "There was significant support for the leader. There was a wide debate, with people speaking on both sides of the arguments." After David Cameron's decision to call a vote on air strikes for Wednesday, leaving only a day for debate, the number of Labour MPs backing intervention is likely to fall. One shadow minister told me that as few as 40-50 may back the government, though most expect the total to be closer to the original figure of 99. 

At the end of another remarkable day in Labour's history, a Corbyn aide concluded: "It was always going to be a bumpy ride when you have a leader who was elected by a large number outside parliament but whose support in the PLP is quite limited. There are a small number who find it hard to come to terms with that result."

George Eaton is political editor of the New Statesman.