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.

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Why Clive Lewis was furious when a Trident pledge went missing from his speech

The shadow defence secretary is carving out his own line on security. 

Clive Lewis’s first conference speech as shadow defence secretary has been overshadowed by a row over a last-minute change to his speech, when a section saying that he “would not seek to change” Labour’s policy on renewing Trident submarines disappeared.

Lewis took the stage expecting to make the announcement and was only notified of the change via a post-it note, having reportedly signed it of with the leader’s office in advance. 

Lewis was, I’m told, “fucking furious”, and according to Kevin Schofield over at PoliticsHome, is said to have “punched a wall” in anger at the change. The finger of blame is being pointed at Jeremy Corbyn’s press chief, Seumas Milne.

What’s going on? The important political context is the finely-balanced struggle for power on Labour’s ruling national executive committee, which has tilted away from Corbyn after conference passed a resolution to give the leaders of the Welsh and Scottish parties the right to appoint a representative each to the body. (Corbyn, as leader, has the right to appoint three.)  

One of Corbyn’s more resolvable headaches on the NEC is the GMB, who are increasingly willing to challenge  the Labour leader, and who represent many of the people employed making the submarines themselves. An added source of tension in all this is that the GMB and Unite compete with one another for members in the nuclear industry, and that being seen to be the louder defender of their workers’ interests has proved a good recruiting agent for the GMB in recent years. 

Strike a deal with the GMB over Trident, and it could make passing wider changes to the party rulebook through party conference significantly easier. (Not least because the GMB also accounts for a large chunk of the trade union delegates on the conference floor.) 

So what happened? My understanding is that Milne was not freelancing but acting on clear instruction. Although Team Corbyn are well aware a nuclear deal could ease the path for the wider project, they also know that trying to get Corbyn to strike a pose he doesn’t agree with is a self-defeating task. 

“Jeremy’s biggest strength,” a senior ally of his told me, “is that you absolutely cannot get him to say something he doesn’t believe, and without that, he wouldn’t be leader. But it can make it harder for him to be the leader.”

Corbyn is also of the generation – as are John McDonnell and Diane Abbott – for whom going soft on Trident was symptomatic of Neil Kinnock’s rightward turn. Going easy on this issue was always going be nothing doing. 

There are three big winners in all this. The first, of course, are Corbyn’s internal opponents, who will continue to feel the benefits of the GMB’s support. The second is Iain McNicol, formerly of the GMB. While he enjoys the protection of the GMB, there simply isn’t a majority on the NEC to be found to get rid of him. Corbyn’s inner circle have been increasingly certain they cannot remove McNicol and will insead have to go around him, but this confirms it.

But the third big winner is Lewis. In his praise for NATO – dubbing it a “socialist” organisation, a reference to the fact the Attlee government were its co-creators – and in his rebuffed attempt to park the nuclear issue, he is making himeslf the natural home for those in Labour who agree with Corbyn on the economics but fear that on security issues he is dead on arrival with the electorate.  That position probably accounts for at least 40 per cent of the party membership and around 100 MPs. 

If tomorrow’s Labour party belongs to a figure who has remained in the trenches with Corbyn – which, in my view, is why Emily Thornberry remains worth a bet too – then Clive Lewis has done his chances after 2020 no small amount of good. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.