Lies, damned lies and fraud on a grand scale
Ian Bell
BACK in Fe b r u - ary, rating agency Moody’s decided that Britain could wave goodbye to its triple AAA credit rating. Given that he had invited us to judge him by his ability to preserve this totem, this ought to have been bad news for George Osborne. Instead, he blamed Labour.
It wasn’t an original tactic. Ministers have been employing it since 2010. You might have thought it would have become a little shopworn, but polls say it works a treat on a majority of less-alert voters. Assailed by Ed Balls in the House of Commons i n February, the Chancellor simply replied: “He is responsible for the mistakes that got Britain into this mess.”
Given the scale of the mess, it’s quite an indictment. Conservatives and Liberal Democrats were busy filing the charge again on Tuesday in the wake of Osborne’s spending review. This time they had to explain why, three years after promising to rid the country of a budget deficit, he had done no such thing. On cue, they said another £11.5 billion of cuts were inevitable because of “Labour’s mess”.
A simple question, then. Do the people making the charge believe it? Does “the mess we inherited” make the slaughter of the public sector a bitter necessity? Did Labour spend like embezzlers on the run? Was there something else going on, perhaps, during Labour’s last years?
Andrew Haldane is the Bank of England’s executive director in charge of financial stability. Last December, he gave an interview to Radio 4’s The World At One. He described the banking “crisis” as follows: “In terms of the loss of incomes and outputs, this is as bad as a world war. That is the scale we are talking about.”
He added: “If we are fortunate, the cost of the crisis will be paid for by our children. More likely it will still be being paid for by our grandchildren.”
You could work that much out for yourself. Last week, Osborne put an £11.5bn price tag on a year’s worth of cuts. We paid £45.5bn just to rescue RBS. “Support” for banking has been a £1 trillion operation. Would the Coalition have allowed the financial system to collapse? That doesn’t sound like them. On the other hand, they talk a lot less about banking’s crimes than they talk about Labour’s mess.
Fraud is the word. They seem to have a taste for it. In January, David Cameron produced a party political broadcast – scripted, beyond doubt – in which he said: “So though this Government has had to make some difficult decisions, we are making progress. We’re paying down Britain’s debts.” The UK Statistics Authority was forced to rebuke the Prime Minister for telling fibs.
Why would Cameron do such a thing? Either he doesn’t know that public-sector net debt stood at £1189.2bn at the end of May, that it is rising by the day and forecast to go on rising for several years to come, or he does know. If the Prime Minister is ignorant, that’s worrying. If he’s banking on the fact that most people don’t know the difference between deficit and debt, he’s deceiving voters.
SMARTER ministers, like Osborne, stick to talking about the deficit – the budget shortfall, the difference between what comes in and what goes out. This pressing problem has justified all the Chancellor’s efforts, so he says. It explains why he was talking again last week about hard choices, fairness, future generations and why – yes, he said it again – “we are all in this together”. But there is a problem.
In 2011- 12, public- sector net borrowing (the deficit) was £121bn, or 7.9% of GDP. In 2012-13, according to the Office for Budget Responsibility’s forecast, net borrowing will be £120.9bn (7.8% of GDP). The minuscule difference will be achieved, meanwhile, thanks only to Treasury ingenuity with the numbers. Debt is rising and the war on the deficit has reached a stalemate. Labour’s claim that at this rate it will take 400 years to put the public finances in order is only a tiny exaggeration.
Last week, undaunted, Osborne