Coffee House

George Osborne is the king of ‘black holes’. So why does he attack Labour?

22 September 2013

22 September 2013

Labour plans have a £27 billion black hole,’ says the Sunday Times, quoting  analysis from George Osborne’s Treasury.  If true, that’s BUtoyjACQAEaN82.jpg-largethe first piece of good economic news we’ll have heard from Labour. Osborne’s black holes have been way, way bigger – well over £100 billion so far. In his excellent new book about journalese, Robert Hutton offers this definition of black hole:

‘A point in space so dense it creates a gravitational field so strong that not even light can escape. Or, in newspapers, a gap. Especially in finance, where it typically refers to any funding shortfall over £1 million.’

Parties love casting a slide rule over each other’s policies, declaring that they don’t add up and use phrases like ‘black hole’. But that was back in the days of balanced budgets.  George Osborne is not so keen on them now. He has torn up his plan to abolish the deficit, and offers no date by which he’d balance the books. His published plans run to 2017/18 and even then, he proposes a deficit – sorry, a black hole, of £43 billion. So if Labour could reduce it to £27 billion, it’d be a marked improvement.

Yes, Osborne inherited black holes. But crucially, in office, he decided to make them bigger. The below graph shows what he has done:-

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Screen Shot 2013-09-22 at 11.06.57

The Conservatives are in a rather weak position, given that the government is still borrowing like drunken Keynesians –  each day creating black holes big enough to swallow a Klingon army. It’s tempting to try this attack line anyway, though,  because so few people actually realise what Osborne is doing. Polls show that between 6 per cent and 12 per cent of us realise that he is pushing up the national debt. Perhaps this is because ministers (and the Chancellor himself) keep telling us how they are ‘paying down’ or ‘dealing with’ the debt. Here’s the Prime Minister, earlier this year:

UK debt

The Conservatives have become intensely relaxed about multi-billion pound black holes, while taking sternly about how dangerous they are. What I suspect this dossier means is that the black hole would be even darker under Labour, but the Tories want to give the impression that there would be no such instability with them. If only this were so. The choice in 2015 will be a depressing one: would you like your black hole red, blue or yellow?

The Tory attack on Labour today is on the premise that such black holes are destabilising. ‘It’s exactly the kind of something-for-nothing economics that got us into the mess in the first place,’ says Sajid Javid, the estimable Treasury minister. He’s quite right. But I’d prefer that Treasury officials spent more time worrying about their black hole, and less time worrying about Labour’s.


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  • Hexhamgeezer

    ‘The choice in 2015 will be a depressing one: would you like your black hole red, blue or yellow?’

    Which is why in 2015, the only honest position for daveednick is to fight 2015 on a unified coalition ticket. All 3 together driving debt even higher and no-one to blame but themselves.

  • Shinsei1967

    Oh come on Mr Fraser this is silly even by your eccentric understanding of deficits & debt. The Labour £27bn black hole is on top of the existing deficit (c £100bn+).

    • Mynydd

      Labour’s £27bn black hole is the amount it will spend above and beyond it’s income. The government’s £100bn black hole is the amount it will spend above and beyond it’s income. Me I would prefer to be £27 rather than £100 in debt.

  • HookesLaw

    Repeating your rubbish Mr Nelson does not make it any less rubbish. Indeed you come across as petulant and infantile in your desperate attempts to justify your crass misconceptions and disinformation.

  • Tom Tom

    You miss they key factor in a “Black Hole” that light cannot escape because gravitational mass is so high that it becomes denser and denser. Those trapped in the black hole can see light from the surrounding galaxy but cannot emit any of their own. That is the truth of the situation Britain finds itself in and why Debt Monetization here is way ahead of the USA and why it is necessary to have a depressed economy to facilitate foreigners buying UK assets such as houses and businesses…….it is just like Greece

    • dalai guevara

      Finally the realisation of the truth
      Britain is the Greece of Northern Europe.
      Now enjoy your Sunday lunch.

  • http://owsblog.blogspot.com Span Ows

    Mynydd are you reading? Yet ANOTHER Fraser anti Osborne article you seem to have missed.

    See my reply to you here:

    http://blogs.spectator.co.uk/coffeehouse/2013/09/damian-mcbride-and-todays-downing-street-spin-operation/

  • Ben Kelly

    It doesn’t matter anymore, it has been decided that we will recover and normal service will resume. The next bust will diminish us even further, the next one will cripple us, from then on the decline of Britain will no longer be down a slope of despair but a plunge over a cliff and into an abyss, economically and societally. Good night Britain, there will be no encore.

  • HY

    “Parties love casting a slide rule over each other’s policies”

    This reference is a tad antique for a young lad like yourself, Fraser.
    Did they ever have slide rules at Bash St. Academy in Cornwall/Scotland?
    Did you ever learn to use one? Properly? Honest?
    More to the point, did Alex Salmond?

    Q. Is it progressive to be pro anti logs?

    • The Red Bladder

      Could be a sine of the times?

      • Noa

        Aren’t you going off at a tangent?

        • The Red Bladder

          Rather acute that, I thought!

    • Tom Tom

      Political parties are noted for innumeracy together with journos. The level of financial numeracy in the Whitehall-Westminster Nexus is cripplingly negligible and they are simply verbal spigots

      • Hexhamgeezer

        I can’t help feeling you’ve left something out of the equation.

  • Count Dooku

    You know what the Tories meant by this argument Fraser and you’re purposefully misrepresenting and giving ammo to the left.
    You come across as a Wet who is all for the big welfare, warfare and regulation state but then moan about how much the govt spends without offering what to cut.

    • HookesLaw

      ‘you’re purposefully misrepresenting ‘ – I could not agree more. Yet another discraceful article from Nelson.

    • Mike Barnes

      “purposefully misrepresenting”

      Statistics with their liberal bias again.

      How can you misrepresent the fact Osborne has failed by his own standards and missed all of his own targets?

      It’s a bit like the time Osborne said he’d be judged on keeping the AAA credit rating. Weird how we never hear about that anymore isn’t it?

      • Count Dooku

        The “black hole” the Tories are referring to isn’t the current deficit. It’s the extra spending commitments and tax cuts not matched by labour with cuts or tax rises.
        Surely even a child can see that? And it’s interesting that Fraser did not include the deficits from 2007-2010.

  • paulus

    Its quite simple : we are not paying it back. economic activity will take care of it.

    • AnotherDaveB

      The debt is currently increasing.

    • Noa

      Can you call default an ‘economic activity?
      Most of the UK’s assets have already been sold abroad and the inward wealth and tax revenues they generated have gone with them.
      With the tax base in near terminal decline the continued debauching of the currency is the only option, until creditors cry foul, stop lending and demand repayment of capital as well as interest. And the annual interest we already repay is £40 billion, greater than the Defence budget.

      • Tom Tom

        Very, very good posting !

  • AnotherDaveB

    I don’t see how the Conservatives expect to get through an election campaign without the facts of their financial stewardship coming up.

    The purpose of this coalition was supposed to be dealing with the budget deficit. That was why it was formed. It was the main issue in the 2010 election campaign.

    In 2015 the Conservatives are going to campaign for re-election with a record of failure. A record of ignoring the problem. A record to be ashamed of.

    • Hello

      Osborne’s pledge was to eliminate the structural deficit. If the economic trends continue then I would hazard a guess that it will be pretty much fulfilled by the next election.

      • OldSlaughter

        Yup, despite our biggest export market crashing.

        • Hello

          What part of “structural” don’t you understand?

      • AnotherDaveB

        Then you would lose your bet.

      • Tom Tom

        Really ? Frankly i could not care less…..I had expected May 2010 to bring improvement not Brown II

        • HookesLaw

          It has not brought Brown II and pretending it has does not say much for your intellectual qualities.

          • Tom Tom

            Certainly it has – a devaluation, QE, ZIRP, rising food and energy prices plus green levies; punitive SDLT, rampant speculation by favoured financial interest groups……hard to see any difference

            • the viceroy’s gin

              Yes. Not hard to see why Call Me Dave’s head is headed for a spike.

            • HookesLaw

              This govt inherited an economic crisis. Its dealing with it.
              Your inability to recognise the real world makes your comments and opinions meaningless.

      • HookesLaw

        Correct and of course what our finances need is to see govt spending regularly and constantly restrained and justified. Do you trust labour for that?

        • Tom Tom

          Labour did an excellent job 1997-2001

          • the viceroy’s gin

            Let’s not get carried away. They did an acceptable job. Excellent would have required them to reverse the massive spending increases from 1990-1997. They didn’t. They held the line and stopped the bleeding, but that can’t be termed “excellent”.

          • HookesLaw

            Following tory policies. Thereafter they let spending rip beyond the ability of the economy to pay.

      • Mynydd

        Please look again at the graphs above, These clearly show a number of things;
        Mr Osborne has failed to meet his 2010 budget forecast for borrowing in all years So much so that for the year 2014-15 his forecast was about £30bn whereas the estimate now is for just over £100bn.
        In 2000 the National Debit was about £350bn, When Mr Cameron/Osborne took office the debit stood at £800bn a rise of £450bn in ten years. It now stands at £1200bn, a rise of £400bn in just three and a half years.
        When figures are available hazard a guess is meaningless.

        • HookesLaw

          It was the OBR forcast wasn’t it?
          Which bit of the changed economic circumstances do you want explained?
          Have you forgotten the Eurocrisis already?
          The govt inherited a deficit of 160 billion. So the debt was always going to go up, the trick is to cut it without destroying ther economy.
          By your own figures of course you demonstrate that the debt went up under Brown even when we had growrth. This shows what a massive structural deficit we had. Lets not confuse structural with cyclical shall we?

          • Mynydd

            The OBR was Mr Osborne’s baby and is the government’s official forecast.
            In his first budget Mr Osborne laid out his economic and deficit reduction plan. When there is a change of economic circumstance it is wise to adjust your plans and not carry on as if nothing has happened
            We have the pound not the Euro so the crisis in the Euro Zone only served as political cover for Mr Osborne’s failures
            These are not my figures, these are ONS and OBR figures. See the notes below the graphs. You should also note that the graphs show, Mr Cameron/Osborne will borrowing more in 5 years than Mr Blair/Brown borrowed in 13 years. I would also add; in a pre-scripted Party Political Broadcast Mr Cameron said, we are paying down the debt, the figures lay to rest that lie.

            • HookesLaw

              still ignoring the difference between structural and cyclical
              The deficit is coming down from the massive level inherited
              The forecasts were independent. They were revised with the onset of the Eurozone crisis.
              The original depression was also deeper than first realised. No one could be sure how the economy recover. All over Europe the recovery has been slow we are coming out so it relatively well. France followed Balls’ advice and are in a mess

        • Hello

          If growth is at 3-4% up to the election, and if tax receipts reflect that, then there should be close to 1.5-2% growth in receipts annually. With a 1% fiscal tightening happening annually that means circa 2.5-3% downwards pressure on the deficit annually. With close to two years of figures to go, that’s 5-6% by the election. There will also be other downward pressures on the deficit with the economy improving. All in all, it’s not inconceivable that the deficit could be reduced to around 3% come the election. That would be more than a 70% reduction over the parliament, which would be satisfactory.

          • Mynydd

            There’s a lot of ifs in there, I think 3-4% growth in 2013, 3-4% growth in 2014, 3-4% growth in 2015, is a bit of wishful thinking. Mr Cameron/Osborne committed themselves to a 100% reduction over the parliament, not 70% or any other figure one can come up with. 100% is 100% and any figure below this is a failure

          • HookesLaw

            Figures out today suggest a significant undershoot in the 2013-14 borrowing requirement

    • Ben Kelly

      It won’t be brought up because Labour has decided to stick with the attack on the supposed austerity and draconian cuts; this line resonates better with the uninformed public.

  • Radford_NG

    How to save 12 billion a year. Leave the EU;that is the UK net contribution for 2012…..(Source: Government `Pink Book 2013`;Table 9-2)

    • AnotherDaveB
    • Noa

      Curtailling foreign aid, £12 billion, stopping welfare payments and free medical treatment to non contributors, £50 billion… soon you are starting to talk serious money and paying off the Debt.

    • HookesLaw

      We would not save 12 billion as if we joined the single market like Norway we would be still paying in money to the EU structural funds and still obeying single market rules.

      However – you seem to be taking some bad advice when it comes to the EU budget which totals about 140 billion euros in total.
      This paper
      https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/221513/eu_finances_2012.pdf
      details the 2012 estimate of net payments at £6.9 billion

      • alabenn

        So 2012 is still an estimate, a bit like the estimate for the Olympics was 3.5 billion now over 9 and still not declared.
        Lets see who should we believe, the government or anyone else, sorry the anyone side have it.

        • Radford_NG

          This is not an estimate.They are from the `Pink Book 2013`which came out on 31st. July 2013 for the calendar year 2012.They are higher then figures from H.M.Treasury as not all transfers go via the Treasury;such as funds for overseas aid.

          • HookesLaw

            Overseas aid is aid
            ie not spent on the EU it is our aid budget
            so the higher figure is a distortion

        • HookesLaw

          It is the budgeted figure and likely to be close
          Rather than speculate show the facts
          Net spending was closer to 7 billion not 12
          Various sources show that

          • alabenn

            I was speculating about the speculation you used, now you use
            It is the budgeted figure and likely to be close, still more speculation, even taking your answer Net spending was closer to 7 billion not 12, the last time I checked 7 is double 3.5.
            When figures are used concerning the EU the chances are they will be wrong and definitely would never be subject to an independent audit.

  • dalai guevara

    Socialist red graphs.
    The necessity to remove politicians depends entirely on how socialist they are. Socialist RED, as illustrated in this nice little drawing:
    http://upload.wikimedia.org/wikipedia/commons/e/e5/Cumulative_Current_Account_Balance_per_capita.png

    Of course you will note that it’s Australia, the US and the UK that are such socialist nations, socialising the losses. The rest are making money, lots of it! Those nations are highlighted in GREEN.

    • the viceroy’s gin

      Agreed. We should remove socialist nutters who are destroying countries and burying them in the spending and debt of their oppressive socialist governance.

      We should also remove socialist nutters who link to wiki in any form.

  • Noa

    “Polls show that between 6 per cent and 12 per cent of us realise that he is pushing up the national debt. Perhaps this is because ministers (and the Chancellor himself) keep telling us how they are “dealing with the debt”.
    A good politician will remember that he can never underestimate the stupidity of the public.
    In addition to creating the financial black hole under Gordon Brown, we should not forget that Labour created its educational equivalent with the aboition of grammar schools and the introduction of comprehensive schools.
    As a result a cynical George Osborne will continue to trade on the public’s shocking, abmysmal ignorance of finance and even simple arithmetic, as no doubt will his successor. They and their parties wil gain a short term advantage by doing so, leaving our children and grandchildren to repay the Debt.

    • gladiolys

      Margaret Thatcher, as Education Minister, closed more grammar schools than anyone else. Tell that to your children too.

      • Noa

        I’m aware of that. You can tell your children that only UKIP supports the reinstatement of grammar schools and equal opportunity for all.

        • Tom Tom

          Grammar Schools will never return – Comprehensive + Private Tutoring seems to be the preferred option by the Public School Elites

        • HookesLaw

          And secondary schools? What is UKIP’s policy on them?
          Vote for us, we will send your children to second class schools with second class teachers. Is that UKIP’spolicy?

          • Tom Tom

            Secondary Modern Schools did NOT have second-rate teachers and Comprehensives do NOT have better teachers

            • HookesLaw

              Tell that to voters. Tell that to parents whose children are ‘selected’ (or not) at 11.
              Tell that to teachers unions. Just try to ipose this policy and split off schools and grammar schools. See how people would react.
              This is a divisive policy aimed at an elite. Will this policy be emphasised at labour voters? Will tradional labour voters vote for this policy?
              All this policy is is yet another attempt to sweet talk tory voters with easy to please but ultimately unworkable policies. It shows that UKIP is an anti tory party whose effect is to return a labour govt.

          • AnotherDaveB

            Link below to UKIP’s education spokesman’s speech at their recent conference.

            http://www.bbc.co.uk/i/b03c9t7d/?t=17m26s

          • Noa

            So you are content with the present system.

        • gladiolys

          “the reinstatement of grammar schools and equal opportunity for all”. Well, there’s an oxymoron.

          • Noa

            Only when you breathe.

      • Colonel Mustard

        A misrepresentation. She didn’t. They were closed by the LEAs. The Labour party (Crosland) had made the closures mandatory as it was part of their ideological policy originated in Circular 10/65. When Thatcher took up her post she made the closures optional but by then most LEAs were too far advanced in their plans to practically draw back. More closed under her watch but that was not her fault and was down to Labour for initiating the policy in the first place.

        The Conservatives made their habitual mistake of going along with Labour policy rather than ruthlessly opposing it and reversing it when in power. Cameron has perpetuated that tradition. Tories think it is enough ‘to do the right thing’ and all will come right. They don’t fight and when they do they are lazy in combat and are constantly wrong-footed.

        Whatever, it was probably the single most destructive blow to good education and social mobility ever achieved and set the foundations for Blair’s ‘Education, Education, Education’ that drove the nails into the coffin.

        I suggest you tell your children the truth rather than perpetuating misrepresentations.

        • HookesLaw

          Do not be totally disingenuous. A labour minister introduces legislation to create comprehensives.
          A tory minister comes in and … does nothing. Thatcher was the govt! The govt can govern but did nothing.
          Thatcher was right to make it optional to make it a local decision.
          Now we have a govt which is concrened about creating good schools and is locally creating rthe opportunity for new good schools to happen.
          Where do we find UIKIP? Living in the past. No surprises there.
          Its OK to mouth off about grammar schools but where is the infrastructure beyond the grammar schools which were designed around a tripartite of technical and secondary schools to serve a bygone age.
          Where are UKIP’s policy for these and where are their costings and where is their explanation to parents who would have theiir children labelled failures at 11? They keep quiet about that and they self servingly seek to garner the vote of the selfish and well off elite.

          • Tom Tom

            Thatcher was a junior minister run by her Civil servants. it is known that Keith Joseph and Thatcher did NOT have control of their departments under Heath and were high spenders

            • HookesLaw

              So thatcher was incompetent?

          • Colonel Mustard

            Don’t be silly. My comment had nothing to do with UKIP policy on grammar schools. Thatcher did do something and I have explained why it had little effect. Nothing disingenuous about it, total or otherwise. But clearly the simple facts cannot penetrate that fat head of yours. Yes, abuse, Hookey, you dish it out a plenty so have some back.

            And your willingness to perpetuate a Labour inspired myth tells us everything we need to know about what kind of “conservative” you are. A socialist one, essentially, like your idol the Manchurian Candidate.

            • HookesLaw

              You continue to be laughable.
              Thatcher was the minister. The tories were the govt.
              they could have passed bills in parliament if they had wanted to. They did not. Facts. You can say they were right you can say they were wrong, but it remains that they could but did not.
              As for the rest of your diatribe is is baseless junk.

              • Colonel Mustard

                And you continue to look like a socialist. One wonders exactly whose side you are really on.

                You mean do something like hold a referendum for which a “cast iron” guarantee had been given even though an illegal treaty had been ratified? Cameron was the PM. The Tories were the government (sort of). They could have passed bills in parliament if they had wanted to. They did not. Facts.

                My “diatribes” are rooted in something a bit more sound than your abuse-laden responses. You know it really. That is why you get so irate. Fact.

                • HookesLaw

                  Calling me a socialist is an admission of defeat
                  Your cast iron guarantee jibe is a total fabrication
                  it formed no part of the 2010 Manifesto
                  The treaty ratified by Parliament (voted against by the Tories) and signed by Brown was not illegal (any more than WW2 was)
                  Again you admit to having no rational argument

    • thucydides

      You might consider the process unfinished.
      The Crossland Vision extends to complete abolition of private education.
      I have heard whisper that Public Schools may relocate to Eire but that’s fine since then only 0.3% rather than 11% will get the unfair advantage.

      • Noa

        It’s not strange that the new hereditary Labour elite will look to enact the final tranche of educational destruction. In implementing the universal equality of ignorance they will have successfully drawn up the drawbridge of privilege after themselves, whist leaving the uncomprehending masses to worship their false gods from afar.
        You would deprive the children of Labour’s leaders the opportunities they enjoyed themselves and they would not thank you for it.
        Like the Soviet nomenklatura who sent their children to select schools, change “Lenin High School” and “Secondary School Number One, Moscow” to “the London Oratory” and “William Ellis School” and that paragraph equally applies to Labour.
        http://blogs.telegraph.co.uk/n
        They were satisfied with smashing the Grammar Schools; that drawbridge that provided the able but poor with an escape route, and whose expansion would have created a truly equal and better society than the dystopian Fabian vision.

        • Tom Tom

          London Oratory ? Is that where Clegg children go ? Funny how Catholics get all the options and Anglicans few !

          • Noa

            What a curiously sectarian and unfounded observation.

      • Tom Tom

        Public schools will always survive now that they cater for foreigners

      • Mynydd

        No way will Public Schools relocate to Eire, when, they can convert themselves into Free Schools and, pocket a bucket full of the money being handed out by Mr Grove.

    • Tom Tom

      Grammar Schools…….where does Cameron stand on those ? To the left or right of Clegg ?

      • HookesLaw

        Ask Mrs Thatcher – count up the number of grammar schools closed under her stewardship.

        • Tom Tom

          I sent you as my emissary to Thatcher…..you know how to get your Ouija board up and running

  • kyalami

    We are cynically spending our children’s money. Serves us right if there is nothing left to pay for our old age homes.

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