A CHANGE of Osbourne may sound crazy, but something radical has to change if the UK is to grow again, writes Pete Martin
I’M SITTING in the lobby of the Ace Hotel on 29th and Broadway in New York, having listened to the Budget on the Radio 4 iPhone app. Hipsters are huddled over laptops, talking volubly to each other about Google and Adobe and the shortage of tech talent.
Last night, even with skyscraper prices at the bar, the place was jumping. The hotel restaurant was rammed too, and its Stumptown coffee shop queued out with moneyed folk having a good time.
Whisper it people: recessions are for the poor.
Other than the amount of money sloshing about here, what also re-frames your viewpoint is how little interest Americans take in the fate of the UK. The New York Times has been devoting more space to the troubles of the Cypriot economy – which affects Wall Street’s bond-mongers – than our own Chancellor’s travails.
Indeed, when I asked staff in our New York office if they knew who George Osborne was, most guessed he must be related to Ozzy Osbourne, reality TV star and former singer in 1970s heavy metal band Black Sabbath. (Seriously.) That may seem ridiculous – but it is just possible that the addiction-damaged Ozzy might actually make a better job of running the UK economy than George.
In 1981, Ozzy infamously bit the head off a dove in front of CBS music executives during a meeting. Yesterday, George had the equally unpalatable task of biting off more economic bad news in front of a rowdy Commons. But, in fact, the Budget was such a feat of showmanship you might even be tempted to swallow Osborne’s patter.
The appeal to those who “work hard and want to get on” to create an “aspiration nation” ran through the speech like a stuck record. It’s an old-fashioned Tory tune, turning up the volume on traditional British values – a noise intended to mask the government’s continuing antipathy to the unwaged and the poorest in our society.
It marked the first loud, if carefully stage-managed, “Kerrang” of the next election campaign. Predictably, the Chancellor blamed the state of the nation on the former Labour administration. This dark political art drew howls of feedback from the opposition benches, but the song remained the same.
What Osborne would love to sing about is how well his Plan A for austerity is working. But he can’t. The “plan” is ideologically driven rather than economically sound, and the consequences have been dire. There have been real shrieks of pain from those too busy struggling to get by to join the “aspiration nation”.
As an American buddy observed at the bar last night: when your neighbour loses his job, it’s a recession; when you lose yours it’s a depression. UK unemployment is rising and the government’s spin on job creation just doesn’t ring true.
The coalition’s suppression of demand and unintentional gloom-mongering have shattered the confidence both business and consumers need to make sensible, necessary spending plans for the future and re-build the economy.
George Osborne must be a very astute political operator. Roundly booed at the Paralympics, he is surely the most unpopular and inept Chancellor anyone can remember. He has presided over the “omnishambles” which saw Britain’s international credit rating downgraded and the country facing the possibility of a triple-dip recession. Yet though his grip on economics may be weak, he still seems to have the key to Number 11 firmly in his grasp.
Yesterday’s Budget ’fessed up to the gloomy 0.6% growth figure for this year, with jam tomorrow promised. But the Office for Budget Responsibility has been throwing out flawed forecasts so often now that it is difficult put any faith in their crystal-ball gazing abilities.
The constant downgrading of their sugared-over predictions reveal the bitter failure of Osborne’s efforts. In truth, it would be highly irresponsible to accept any monetary or fiscal policy based on such wild inaccuracy.
Osborne said he wanted to level with people and pleads for us to “hold on to the right track”. The trouble is that there are plenty of economists – such as Jonathan Portes of the National Institute of Economic and Social Research – who have consistently argued that Osborne was always on the wrong track.
Plan A would not just pan out badly – the Chancellor’s “facts” were also out of whack. Osborne argues that there is no other option, or that things would have been worse had the government acted otherwise. With a compliant popular press, Middle England may buy into the aspiration nation idea, but even Osborne can’t explain away all the ways in which he has been wrong.
Even if it were short of real answers, the Budget plainly had some crowd-pleasing numbers, especially in the housing market. But a penny off a pint of beer is a risible attempt to play to the gallery. Compared to the seriousness of unemployment rising to more than 2.5 million, the gesture is both flat and tasteless.
There’s some welcome relief for the working poor in raising the tax threshold, but that does nothing to address the serious inequalities in our society. It’s not just a question of social justice, with real costs in terms of crime, violence, mental ill-health and life expectancy. The concentration of wealth also sucks economic activity out of the market. Put simply, the poor spend more efficiently than the rich.
What the UK really needs is a radical change of strategy – with a far bigger fund for infrastructure investment than the Chancellor allows. At just £3 billion, it’s a serious missed opportunity, but don’t expect to see any new ideas from George. Like Ozzy’s headless dove, this Budget could be described as a cruel joke. Worse still, it’s a plan that just won’t fly.