New Times,
New Thinking.

  1. Business
  2. Economics
17 March 2016

The biggest trick in George Osborne’s 2016 Budget

There’s a hole in your Budget, dear Chancellor, dear Chancellor.

By Media Mole

It was pretty obvious when George Osborne promised last year to be running a surplus by 2020 that he was setting himself up to fail. He had the same ambition last parliament, and completely failed to eliminate the deficit.

But, deploying some rather clumsy sleight of hand (sleight of ham-fist?), the Chancellor has shuffled things around to ensure it won’t be impossible to meet his target by the end of this parliament. It has been called a “magic trick” by The Times and “a conjuror’s trick. And not a very good one at that” by the Guardian.

Needless to say, no one’s fallen for it. Here’s how he did it:

The Chancellor’s headache is that the economy is doing worse than was forecast four months ago, a windfall of £27bn identified for him by the OBR last November has actually turned out to be a £56bn black hole, and that he is tied to his own fiscal rule of running a surplus by 2020.

The deficit is currently in excess of £70bn. He couldn’t admit to parliament that he was definitely going to miss his target. So instead, he has a plan for £4bn of uncosted departmental cuts – to buy him time, in the hope that future growth will help him out and he can row back on this extra austerity if he needs to.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.

This is creative accountancy – as explained by the Guardian:

“Osborne has brought forward capital spending into the years before 2019-20. He has announced additional spending cuts for the final year of the parliament. He has deferred changes to corporation tax worth £6bn until that year. And he has increased public sector pension contributions by £2bn.”

He has essentially shuffled spending out of 2019-20, and shuffled extra savings into it.

And ta-dah! You get a £10bn surplus in 2020.

The OBR director Robert Chote rather pointedly stated that the Chancellor is “on course to achieve the letter of the mandate”.

Less smoke and mirrors, more forest fire and shards of broken glass.

Content from our partners
Peatlands are nature's unsung climate warriors
How the apprenticeship levy helps small businesses to transform their workforce
How to reform the apprenticeship levy