Friday, 12 June 2015

George Osborne - is he mad?

Or is he stupid?

(I'm taking it for granted that he is greedy, dishonest and self-serving).

I can't remember if I've ranted on about this already but what the hell. I just can't get my head around what he's trying to do.

First of all, he has pledged not to increase the rate of VAT, income tax or National Insurance during the lifetime of this parliament. Given that this represents two-thirds of government income, that's unnecessarily hamstringing himself (unless he can see the future, which he can't). I mean, he could do that, but why do it? It's bizarre. Why rule out your three main revenue-earners when you have absolutely no idea where the economy is going?

Next, he wants to put into law that the government must run a surplus every year, i.e. make it illegal for the government to have a spending deficit "during normal times" (which seems to me a vague enough catch-all to ensure that the question never comes up; all we know about this definition of "normal times" is that periods of recession are not "normal times"). Given that the government has managed to produce a surplus less than ten times in the last hundred years, I've a feeling that the definition of "normal times" might become a bit difficult to pin down.

OK, let's say he's adamant on those points, including making deficits illegal, what happens if - heaven forfend! - Georgie's fiscal forecasts prove nonsensical and he suddenly is faced with a shortfall of £100m? Where will he get it from? There'd ususally be other options here, i.e. grow the economy (but that's obviously not an option if he's faced with a shortfall) or borrow the money (like normal governments would) but that's illegal now, so it's either:

1. Make up the shortfall by increasing the other taxes. Corporation tax and business rates - the next biggest contributors to government income - no chance. So things like fuel, tobacco and alcohol duties would all have to seriously rocket.

2. Cut government spending like crazy. Where though? Not pensions. Not the NHS (unless he wants it to completely implode). Not defence, that 2% is already committed. Law & Order? Education? Transport? Even if he cut all three in half he'd get nowhere near the amount he needs. There's fuck all left in terms of public assets to flog to his City mates, which really only leaves Social Security.

I think he's backed himself into a corner here. All things considered, it's obvious that he intends to make slash in-work benefits, cap other benefits, etc. etc. I just wonder how he's going to square all the above without quite a lot of people dying.

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