The myth that George Osborne has held firm on his deficit reduction plan persists. When I was on Question Time last month, Alan Duncan said that Osborne may have changed some policies but he had not budged an inch from the deficit reduction programme. This was not a porkie; he genuinely believes this to be true. And even in today’s FT, economics editor Chris Giles describes the government’s strategy as ‘maxing out on stimulus measures, short of relaxing deficit reduction.’ In fact, Osborne tore up his deficit reduction plan ages ago, but to minimum press comment.
The single largest decision Osborne has taken since his first Budget was to tear up his plan to abolish the narrow (and notoriously elastic) definition of the deficit – the so-called structural deficit over four years. He’s now doing it over six years. It is the job of politicians to try to spin a line: in Osborne’s case, that his commitment to deficit reduction is rock solid. But it’s the job of everyone else (including the dismal opposition) to expose his ruse. In the Autumn Statement of 2011 he had a choice between more cuts, or more debt. He chose more debt, and to tear up his deficit reduction plan. The below is the result.
Osborne does have a firm, iron commitment: to spending cuts averaging just 0.9 per cent a year in total, and 2.8 per cent a year for government departments. Like Brown, Osborne’s reaction to economic trouble is to borrow more. He may well be right to do so, but he ought to be honest about it. This matters, because it’s not his money. Every penny of money his government borrows has to be repaid by ordinary people. Even Brown produced a different debt series, net of the implications of the bank bailouts. But when Osborne nationalized the Post Office pension scheme, he counted all the postmen’s savings while not counting the liabilities – and adjusted all the debt figures for this point.
It’s strange how government has tightened the law to prosecute, even imprison company directors who mislead investors with language. But Nick Clegg can claim that his government is wiping the slate of debt clean, with utter impunity.
Osborne’s latest trick is to say that he has reduced the deficit by a quarter in just two years. The chancellor will know full well that, when he says ‘deficit,’ most voters will think he’s talking about debt because the vast majority don’t know the difference. And there’s no reason why they should: this language is only used in government accounting. This is not acceptable. Osborne ought to be shocked at the opinion polls showing that only about a tenth of the public understand that he’s massively increasing the debt, and that most people think he’s reducing it. An honest chancellor would be appalled that the people whose money (and future money) he’s spending don’t know what he’s doing with the debt.
The press is not without blame here. There is a temptation, to which I have succumbed too often, to adopt Westminster jargon. Unless the average reader or listener appreciates the difference between &”deficit” and &”debt”, the language should not be used and alternatives found instead. It’s not that hard. Everyone understands the concept of debt; everyone understands it going up.
Instead of ‘abolishing the deficit’, we should say (as the American press does) ‘balancing the books’. Rather than talk about the deficit falling, we should talk about debt rising at a slower rate. The BBC ought to be the custodians of this, with its role as a public service broadcaster. But the BBC has adopted a Balls-lite narrative of harsh, radical cuts – and won’t back down from it. But I still live in hope of the following John Humphrys interjection:
‘Hang on, minister, when you say the deficit has been reduced by a quarter – that’s true in a technical sense, it’s also exactly what Alistair Darling proposed to do so let’s not pretend this is some great change by the bold Tories. But it is also true that you have increased the national debt by a quarter. In just two years! Don’t quibble, Chancellor, I have the figures in front of me, they’re released every month. When you came into power, in June 2010, net debt stood at £804 billion. As of April, it was £1 trillion. And under your plans, it will soar £1.4 trillion by the next election. Why, Chancellor, do you never ever mention this? Because it’s not your money, is it. You’re spending other people’s money, and saddling other people with debt. Doesn’t it behoove you to speak in the clearest possible terms about the debt you are leaving us all with?’