Saturday, April 03, 2010

George Osborne: business revolt has destroyed case for Gordon Brown.

I find this, frankly, ridiculous.

Gordon Brown's sole claim to remain in office, his ability to secure the economic recovery, has "collapsed" before the election thanks to the growing business revolt against Labour's plans to raise national insurance, George Osborne, the Conservative campaign director, says in a Guardian interview today.

With Labour trailing the Tories by nine points in the polls, Osborne denied the election was the Conservatives' to lose, but said: "Gordon Brown's central argument has collapsed a couple of days before the start of the general election campaign."

He said: "Brown has been caught out by the British business community who have risen up in an extraordinary way, saying increasing national insurance is the wrong thing to do in a recovery.

So, a lot of business leaders - who have always supported the Tories anyway - have told us that they favour the Tories. And that is supposed to be a big news story.

The real story here is why the Tories, the party who have been telling us for months that we have to tighten our belts and ready ourselves for a time of great economic sacrifice are now, effectively, running for office whilst promising a tax cut.

In the interview, the shadow chancellor also disclosed, for the first time, that he would not reduce public spending by more than £6.5bn in the current financial year. He said £6bn would come from efficiencies, and £500m from cuts to child trust funds and working tax credits for the better off.

There would be no further "in year" cuts in his emergency budget, scheduled within 50 days of a possible Tory victory, he said.

So, the Tories are now reversing everything which they have previously told us. Nor has Osborne given us any indication of how he intends to make up the shortfall if he doesn't raise national insurance, other than to make vague promises to find the money through £6bn of Whitehall "efficiency savings".

Where these "efficiency savings" are to found, he doesn't say. But he clearly shares Cameron's hopes of being elected simply on the grounds that both Cameron and Osborne are not Gordon Brown.
He denied the £6bn efficiency savings were illusory or duplicatory. "People are rightly sceptical when politicians talk about inefficiencies and waste, but the big difference is I am not Gordon Brown, and we really mean it.
That's reassuring. We all know that Cameron is not Brown, what we don't know are the substantive areas where their policies differ.

Brown has suggested a rise in national insurance. Cameron has said he will not implement it. But he hasn't told us where he intends to find the money which is needed other than through a vague promise to fund it through "efficiency savings".

A couple of months ago we had Philip Hammond, the shadow Treasury chief secretary, promising to be "the nation's hate figure" such was his zeal to slash public services; now the Tories appear to be running on a promise to cut taxes.

There is utterly no coherence to their plans. Their muddled thinking became evident in January of this year, when they first started to backtrack from their promise of savage cuts, and it continues to this day. It used to be said that Cameron's team had identified £35 billion in cuts:

The James report identified £7.9bn of savings at the HEALTH Department, with a 35 per cent cull of civil servants and sale of £171m assets.

In EDUCATION it pinpointed £5.7bn savings with 2,700 civil servants and 881 Ofsted school inspectors axed. The review found £12bn to save at the DEFENCE Ministry, with a 15 per cent cut in civvy staff, and £1.2bn at WORK & PENSIONS, where changes included privatising JobCentre Plus.

The BUSINESS Department would list quangos to be killed off and get rid of 3,395 staff, saving £186.5m. And the TREASURY would also see swingeing staff cuts, saving £661m.

A Conservative spokesman said: “We know savings are there to be made. Our approach will be based on changing the public sector culture so the war on waste is entrenched at the heart of what every government department and agency does.”

Compare that to the £6billion in "efficiency savings" now promised by Osborne and you will see how far the Tories have scaled back their plans as the election approaches.

Indeed, compare what Osborne is saying now to what he was saying at the time of the Northern Rock crisis:

The Tories today accused the chancellor, Alistair Darling, of picking the "worst option" for resolving the future of Northern Rock, as he came under pressure over his decision to nationalise the bank.

The shadow chancellor, George Osborne, accused Darling of handing the bank a commercial advantage over its private sector rivals that was economically and politically "completely unacceptable".

Osborne utterly lacks credibility. There was a time when he promised 'savage and swingeing' spending cuts and 'dramatic' tax rises if the country didn't "act now!"

Now, he is effectively promising a tax cut. He was flat out wrong when he opposed the nationalisation of Northern Rock, but at least he was sticking to an identifiable Tory policy; an unswerving belief that the markets always sort themselves out.

Since he made that gaffe, the markets almost completely collapsed. Now I can't work out what he believes. And I'm left thinking that the Tories are saying what they think we want to hear in order to get elected.

Click here for full article.

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