• Text size      
  • Send this article to a friend
  • Print this article

A tartan take on Osborne's fifty shades of austerity

SUCH was the hue and cry in the Commons during the Autumn Statement, the Speaker advised the more excitable MPs in the chamber to take up yoga.

The Chancellor, George Osborne, had already beaten them to it by adopting the Virasana "hero" pose, while Ed Balls, his Labour counterpart, went for the Adho Mukha Svanasana, otherwise known as the downward facing (attack) dog.

Would that the rest of us were as flexibly jointed as politicians massaging their records. Still, in trying to digest the Autumn Statement, and attempting to square it with the vision of Scotland's future presented less than a week ago by the Scottish Government, we will all need to be contortionists now.

So much of the Autumn Statement had been leaked (the increase in the state pension age, the married couples' tax allowance, the fall in energy bills, no fuel tax rise, etc), or announced beforehand in party conference speeches, that the event itself had all the freshness of a news broadcast from a year ago. For long stretches it was a distinctly "except for viewers in Scotland" affair. There were some obvious tartan baubles, such as the Barnett cash rise and the promise of a new physics centre at Edinburgh University, but the rest of it relied on Scots joining the dots. When they did so what emerged was a picture of Scotland should the country stay in the UK, and should the Coalition stay in power. This was the most political of chancellors setting out his stall and asking voters in Scotland to consider if they would really get a better deal under independence. A follow-up sales pitch can be expected next year in the Budget.

It was quite the stall he set out, too. The leaks, it is now clear, were not designed to bury the bad news about more austerity to come. They were instead a way of ensuring the Office for Budget Responsibility's sunnier growth forecasts would dominate coverage. The OBR, the UK's independent fiscal watchdog, published its economic and fiscal outlook as the Chancellor sat down. According to the OBR, GDP growth this year will be 1.4% (instead of the 0.6% predicted previously). It will be up again the following year, before taking a slight dip followed by a marginal increase. This allowed the Chancellor to trumpet the UK as growing faster than France, Germany and the USA. With growth and employment rising and borrowing coming down, the message was that this Chancellor was a man with a long term plan, and that plan was working.

That, anyway, was one way to look at it. On closer examination of the OBR's report, it was less a case of "the sun has got its hat on again" than "don't put the brolly away just yet". It judged, for example, that the "positive growth surprise" for this year was cyclical rather than structural. Overall, it presented a portrait of an economy where any growth was due to increased consumer confidence fuelled by low interest rates and a general perception of rising house prices. The solid foundations on which a sustainable recovery would be built - increased trade, investment, growth in real earnings and gains in productivity - were still not evident. Furthermore, the national debt will remain eye-wateringly huge (80% of GDP come 2015).

In short, the Chancellor was not so much fixing the roof while the sun was shining as refusing to look at the dirty great cracks in the economy's foundations. Still, Mr Osborne ploughed on regardless, for he had some other new fixtures and fittings to draw to the attention of buyers, such as the cap on welfare spending and the continuing cuts to Whitehall departmental budgets.

These were yet more examples of the 50 shades of austerity measures Mr Osborne has in his colour chart. It is a chart he has been going through for the past three years, since the Coalition Government came into being, and some might say all the colours amount to the same old whitewash covering up the lack of any coherent economic plan. What is not in doubt is that Mr Osborne has taken quite the shine to his reputation as the austerity Chancellor.

Will he still be polishing that reputation this time next year, when the General Election looms? Will not this iron chancellor be in the mood to bend a little then? The only reason tax cuts were not offered yesterday is because it would have been too obvious a bribe and premature to boot. It is not even certain tax cuts are on the way next year. Far more likely, given the tone of yesterday's statement, tax cuts, too, are part of the long term plan, a long term plan that will only come to fruition on the other side of a general election.

Where does this leave voters in Scotland? With a need for a sturdier bookshelf is the first answer. Already perched there for your reading pleasure or pain is the Scottish Government's White Paper on independence. This, you will recall, presented a vision of a Scotland with an economically liberal head and a socially concerned heart. A Scotland where there was no talk of welfare caps or tax allowances for married couples, and where the state pension age, far from being revised upwards, might go the opposite way.

But while the Autumn Statement was flattered by the slight glow from the OBR's assessment, Scotland's Future, in contrast, had been rained on in advance by the Institute for Fiscal Studies (IFS) report which predicted that an independent Scotland would have to raise taxes, cut spending, or both, to deal with a looming fiscal gap. If one went with the IFS's scenario, an independent Scotland, faced with falling North Sea oil revenues and an ageing population, would be even further up the creek and lacking a paddle than the rest of the UK.

The only clear connection between the Autumn Statement and Scotland's Future was that both predicted growth. The only way was up. Otherwise, these competing visions are as far apart as Land's End and John O'Groats. Instead of presenting voters with a clear choice, however, the waters are further muddied. Given two such contrasting outlooks, how could an independent Scotland keep the pound in a currency union with the rUK? Given Labour's spending commitments (or rather lack of commitments), would matters be radically different if there was a Labour government at Westminster instead of a Tory-LibDem coalition?

In all of yesterday's blizzards of figures and forecasts, there was one promise that could be taken to the bank with absolute confidence. It was this, straight from the mouth of the OBR: "Needless to say, there is huge uncertainty around all public finance projections, which increases over longer time horizons." The only quibble one could have with that is the "needless to say" part. When it comes to prospectuses from politicians, one should never forget that the biggest investment required is faith from the public.

Not that this should leave the authors of Scotland's Future complacent. Both it and the Autumn Statement were the products of authors wearing spectacles so rose-coloured they could have attracted greenfly. Realising this simply leaves Scottish voters facing yet more months of tying themselves in knots. Wonder what they call that position in yoga.

Contextual targeting label: 
Local government

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

198283