Contrarian impulses fuel Osborne pensions assault

Columnist

Monday 3 December 2012

There's a certain sort of internet commentator, and a few journalists, who make a point of referring to the Chancellor of the Exchequer as "Gideon", which happens to be his baptismal name.

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Andrew McKie

For some reason, they find this hilarious, though I can't see why.

I think Gideon is rather a good name, but if Mr Osborne dislikes it and prefers to be known as George, that's entirely a matter for him. It's juvenile to try to tease him by using a name he hasn't answered to since he was 13. But I mention it because of one odd parallel with Mr Osborne's biblical namesake.

Those of you who remember the end of chapter six of the Book Of Judges will recall that Gideon, having been asked to save the people of Israel from their (frankly habitual) backsliding into idol worship and the like, put God to the test. Why, when the Almighty had just singled them out and dictated direct instructions to them, so many Old Testament prophets felt the need to do this, I have no idea, but Gideon belonged to that tendency. So he asked God to ensure that a fleece he hung out the back door would be covered in dew, while the ground around it remained dry. God, being God, arranged this easily. The revealing bit is what happened next. Pointlessly and inexplicably, Gideon then asked God to do exactly the opposite – ie, make the ground wet and the fleece dry. Again, a piece of cake for God.I thought of this story because the Chancellor seems to have a similarly contrarian temperament. When he was in Opposition, he correctly criticised the Labour Government for its reckless level of borrowing, and in November 2008 declared: "The more you borrow as a government the more you have to sell that debt and the less attractive your currency seems." This caused a stir because his sensible warnings about the reckless incompetence of Gordon Brown's Government were thought to endanger the position of sterling (although, of course, to nothing like the degree that Mr Brown and Alistair Darling were already endangering it).So what are we to make of the fact that, in office, Mr Osborne has borrowed more money than Labour had planned to? Indeed, over the five years of this Government, the Chancellor is planning to borrow more money than Mr Brown did in the 13 years Labour was in office.And, as the autumn statement approaches, the hints which are being given of its central message are that Mr Osborne will announce, in effect, that none of this has worked. Over the past five years, the pound has fallen against almost every other currency in the world, the Bank of England has consistently failed to meet its inflation target of 2% – those two facts are, naturally, not unconnected – and literally billions of pounds of taxpayers' money has been spent on bailing out failing banks and quantitative easing. To what end?It is no use saying it is all "taking a little longer than expected". Of course it is, because public spending is still going up. Nor is there any point in complaining that it is almost all Mr Brown's fault (unarguable though that is as a statement of fact) when the economic policy of the current Government is almost exactly the same as his.Some of you may remember the howls of outrage from Conservatives when one of Mr Brown's first moves as Chancellor was to launch a raid on pensions. The removal of tax credits on share dividends which Mr Brown introduced in his first budget in 1997 was, by the time he became Prime Minister, estimated to have cost a minimum of £100 billion, and perhaps £150bn. The Tories correctly identified this as not only larcenous, but fundamentally misguided, because of the signal it sent to savers. Yet Mr Osborne's first move as Chancellor himself was to attack pension thresholds, and the suggestion in several of the weekend's papers is that he is preparing to do the same again, perhaps by reducing the amount on which tax relief is allowable from £50,000 to £40,000 or even £30,000.Though this will be painted as a tax raid on the wealthy, and the quid pro quo for refusing to adopt the Liberal Democrats' policy of a mansion tax, there is a danger that it will also hit those who are merely thrifty. But even if it does chiefly affect those who are better off than most of us, it is still an ill-conceived plan, because it is just the latest in a long list of Government assaults on those who do the one thing the Government says it wants everyone to do: take responsibility for themselves, make provision for their future, and not expect that the state – that is, taxpayers – to bail them out.Sadly, this comes as no surprise, because the entire financial policy of this country is based on the same proposition. We rewarded the incompetence and criminality of bankers who had constructed a giant Ponzi scheme based on sub-prime – that is, worthless – mortgages by bailing them out with public funds when the whole thing collapsed. This money they spent on their bonuses.But government, under Mr Brown and, as I say, even this supposedly Conservative Chancellor, was up to much the same thing. Their Ponzi scheme includes such lulus as National Insurance and a welfare state which enriches buy-to-let landlords with huge housing benefit payments, and makes it possible for some people to be better off on the dole than to be in full-time work earning the national average wage. Inflation is, of course, theft from savers, but so too is quantitative easing and artificially low interest rates.For years, we have been told that we have had "growth", when in fact what was being provided was ready access to credit. Now there is no growth, and the bill is due. And to pay it, the Chancellor plans to hammer the one group of people who have acted in a responsible fashion.The worst thing about all of this is that Mr Osborne found it easy enough to identify the problem correctly when he was in Opposition. Indeed, if you were to listen to what he says you might be under the impression that he is reducing borrowing, rigorously imposing cuts on the public sector, instituting that "bonfire of the quangos" he promised, and ensuring that it always pays to work and save. Unfortunately if, rather than listening, you instead examine what he is actually doing, it's easy enough to see who's being fleeced.

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Contrarian impulses fuel Osborne pensions assault

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