Simon Haskel on why Osborne’s autumn statement lacked a proper strategy for prosperity
Back in July we were told to expect severe cuts in public spending. Three months later a small improvement in tax income is forecast, during an October which official figures show to be the worst for public finances in six years. Never mind that this small rise is based on rising consumer credit rather than healthy growth, because multiply over five years and we are suddenly £27bn better off.
I remember this kind of creative accounting. It’s used by asset strippers and share promoters, of the type who contributed to the collapse of some of our then industrial giants like ICI and GEC; and which eventually led to the creation of the Investors Forum and the Financial Reporting Council. It is wrong, dangerous and short-termist.
I suspect that both the Chancellor and his Minister in the Lords know this, and have used it as an excuse to slow down austerity – to Labour’s speed. It has certainly provided the escape route Mr Osborne needed for his big u-turn on tax credits. But whether conjuring trick or just fantastic luck, look beyond the short-term headlines and this is the same government as it has always been. Big on political strategy but light on strategy for prosperity.
Universal credit will eventually do what the cut to tax credits tried to do to those on the lowest incomes, and many more families and individuals will lose out. The low income couple with three children, the single parent with one child, working part-time for the national living wage – all are going to be worse off come next April. And once again the biggest burden of cuts and spending will be borne by women.
This is no foundation on which to build a high skill, high pay, high tech economy Britain needs.
Without improving productivity, the rising national minimum wage will lead to serious job losses. Instead, it continues to lag behind most of our competitors. The Office for Budget Responsibility meanwhile, has revised down the growth in productivity for both next year and the one after.
Where was the long-term thinking about productivity in a modern digital economy? The autumn statement may commit to protecting the £4.7bn science budget in real terms up to the end of the Parliament. But this needs to be within the culture of productivity to show that it is alive and well, and that the state is engaging with industry in a positive way to rebalance the economy.
Whilst productivity lags and the poorest fall behind, the Chancellor is busy delegating blame. We have a looming care crisis but his solution of a 2% rates precept will go nowhere near meeting the funding gap. It will simply off-load the problem to local authorities. A Chancellor with a laser-focus on productivity would have turned to innovative technological advances to help all councils bring down their costs of adult care.
With almost five years of office to go, the government’s statement should have promoted long-term and creative productivity to pave the way towards a high-wage, high-skill, hi-tech economy. Instead, Osborne chose party politics, promoting his brand of divisive and ultimately destructive thinking. It was a lost opportunity.
Lord Simon Haskel is a backbench Labour Peer
Published 3rd December 2015