The Autumn Statement and the unreal economic debate in which everyone pretends the Coalition stuck to ‘Plan A’

It’s autumn statement day. George Osborne will stand at the despatch box of the House of Commons this afternoon and present his pre-budget report. The Guardian’s Martin Kettle sums up what it’s all about:

For the Conservatives, today is about redefining themselves – in the face of a run of seriously disappointing polls – as the party that feels the voters’ pain over energy prices, house price inflation, wind farms or payday loans – while still, boosted by yesterday’s strong economic surveys and the possible return of the UK’s AAA rating, managing a recovering economy more soundly than Labour. For the Liberal Democrats, it is about using the run-up to the statement to articulate different priorities – Ed Davey on green energy or Danny Alexander yesterday on infrastructure spending. Few of the announcements are new or economically significant. Today’s autumn statement is 1% about the economy and 99% about election politics. As long as we all understand that, we won’t go far wrong.

I find much of the economic debate pretty unreal.

Conservatives claim that George Osborne’s ‘Plan A’ has been vindicated. The Times’s Tim Montgomerie taunts, ‘Plan A has worked, Mr Miliband, and how, by the way, is your comrade Monsieur Hollande doing?’ The Telegraph’s Peter Oborne hails the ‘electoral consequences of this outright victory for Conservative Party economics’.

The reality is somewhat different. The Coalition long since abandoned ‘Plan A’. It gave up on it in 2011 when a flat-lining economy forced the Government to admit eliminating the deficit in one parliament was impossible. As economist Jonathan Portes – one of the leading critics of the Coalition’s economic policies – recently acknowledged in the New Statesman: “we should give the government credit for not digging us further into a hole by trying to stick to its original plans”.

Labour could be making hay with all this at the Coalition’s expense. But they can’t for two reasons.

First, the part of ‘Plan A’ the Coalition abandoned – hacking back capital investment in public infrastructure like schools and hospitals – was Labour’s plan, too, in the days when Alistair Darling was calling for “cuts deeper than Thatcher’s”.

And secondly, because Eds Miliband and Balls persisted with attacking ‘Plan A’ even once the Coalition had diluted it. Ed Balls earned a lot of credit, deservedly, for his August 2010 Bloomberg address arguing against the Coalition’s deficit reduction. Sadly for him, he then wasted a lot of it by claiming the Coalition had stuck rigidly to it, instead of recognising how far George Osborne and Danny Alexander were moving away from their original ‘Plan A’. As a result, it’s the Chancellor who is now able to claim vindication for supposedly sticking with his economic strategy – as, ahem, I predicted he would 18 months ago – and who is trusted by more voters than trust Mr Balls.

The Coalition is winning the ‘narrative’ of the economic debate by pretending they stuck to ‘Plan A’; while Labour is losing it because they, too, pretended the Coalition had stuck to ‘Plan A’. Like I say, the economic debate is pretty unreal.

* Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.

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13 Comments

  • The Coalition is winning the ‘narrative’ of the economic debate by pretending they stuck to ‘Plan A’;

    This is all just Westminster Bubble Jibber-Jabber. Gossip for those who think themselves jolly important or jolly tall and looking down on the rest of us.

    What on earth does Stephen Tall mean when he writes – “The Coalition is winning the ‘narrative’ of the economic debate by pretending they stuck to ‘Plan A’ ” ?? Does anyone in the real world care what he means?

    Can the old and the cold burn “narratives” on an open fire to keep warm this winter?
    Can you eat “narratives” if you are poor and hungry?
    If you have to work until you are 68, or 70, or until you drop, will “narratives” be any comfort?
    If you have to pay the bedroom tax and you are in arrears, will you be able instead to offer the council a winning narrative in their debate about when they will evict you??

  • James Sandbach 5th Dec '13 - 1:17pm

    I’m not sure Plan A has been abandoned as Stephen claims, but rather extended (or attempting to do so) beyond this Parliament into the 2017-18 fiscal year – attempting to bind the next Government (whatever that may be) to spending projections and limits set in 2012-13. All that’s happened is a recognition, plain to every commentator not obsessed with short term political cycles, that reducing the structural deficit as planned will be a long-haul – but the basic Plan A strategy of ever sharper spending cuts and shrinkage of public services has remained unchanged.

    In the meantime within our Party there are consultations going on with libdem members on content of our next Manifesto, to be finalised at least in outline by end of next year, and with an express intent at achieving “differentiation” from Tory policy – yet with this Autumn statement (unless Danny repudiates it – which isn’t going to happen) we have already tied our hand to whatever amounts the Treasury want to take out of departmental budgets in the next Parliament. It leaves no wriggle room for our Manifesto writers especially on economic and public services policy, even though the political reality is that whoever takes office in 2015 will most probably want to go for an immediate spending review, re-appraisal of priorities and an emergency budget (hence Labour offering a “zero-based” review etc). So we have put ourselves in a position where our Manifesto and Message in the next election will have to be “more of the same” (ie Osbornomics and Tory economic/public services policies).

  • Gwyn Williams 5th Dec '13 - 1:21pm

    The original plan was to eliminate the deficit by 2015 – Plan A. The OBR has now forecast that this will be reached by 2018-19. Labour’s plan was to make cuts to public expenditure but to be vague about where and when.If, and it is a major IF, we had avoided a 1976 style financial crisis, this was to magically keep growth going, tax revenues rolling in and the deficit declining.
    In the real world the £ has continued to rise which is bad news for exporters. The trade deficit is the real issue. How we finance it is going to be the real economic if not political debate.

  • “The Coalition is winning the ‘narrative’ of the economic debate by pretending they stuck to ‘Plan A’ ”

    Not with the electorate they’re not. Miliband’s Labour party are consistently around 7% ahead of the Tories and the Lib Dems are still in the doldrums they entered at the close of 2010. Telling people they need to work until 70 isn’t a positive economic message. Prices rising faster than peoples’ wages is not a positive message. Further spending cuts are not a positive message. The standard of living of the working population is falling, whilst the owners of capital hoover up what scant growth that there is, which is probably artificial and created by expanding consumer credit anyway. It’s bleak, very bleak.

  • @ Steve

    “Telling people they need to work until 70 isn’t a positive economic message. Prices rising faster than peoples’ wages is not a positive message. Further spending cuts are not a positive message….It’s bleak, very bleak.”

    Er, yes it is bleak because of the extent of the disaster that befell the UK economy in 2008/09. Pretending there is some easy way out, with gimmicky little ideas like fixing energy bills, is Labour’s big lie. We will have to hope that we can get voters to see how big a lie it is by 2015.

  • John Broggio 5th Dec '13 - 9:32pm

    @RC

    If it has to be bleak, why is it that the fabled 1% who magically deserve ever bigger pay packets are not sharing in the pain? That there’s not enough money is a huge whopper of a lie as can be seen from any cursory glance at boardroom pay.

  • Tubby Isaacs 6th Dec '13 - 1:42am

    “If, and it is a major IF, we had avoided a 1976 style financial crisis”

    You’re not still this, “we stopped the country going bankrupt” lark?

    http://www.bbc.co.uk/news/business-15717770

    “And although both Spain and France have smaller deficits than the UK, they will have to borrow comparable amounts to the UK in total – more than Britain in the case of France (according to Bloomberg data) – because so much of Spain’s and France’s debt is short-term, and needs repaying next year.

    It’s the number “13.99” which tells you the UK isn’t bust and probably won’t go bust. That’s the average maturity of British government debt, the number of years that we as taxpayers have to pay off what we owe our creditors.”

  • jedibeeftrix 6th Dec '13 - 8:22am

    @ STeve – “The Coalition is winning the ‘narrative’ of the economic debate by pretending they stuck to ‘Plan A’ ”
    “Not with the electorate they’re not. Miliband’s Labour party are consistently around 7% ahead of the Tories and the Lib Dems are still in the doldrums they entered at the close of 2010. ”

    Of course they are, a tory government at this stage in the cycle after a financial inheritance so awful mervyn king said it would keep the ‘winner’ out of power for a generation. labour should be doing a lot better than 7%!

  • Michael Parsons 6th Dec '13 - 9:32am

    I heard the commentators say that the “recovery” is in asset prices – shares, land-values, buildings owned mainly by the very rich – as a result of QE and similar policies. The aim seems to be to strengthen paper finasncial assets in the hope the real economy will catch up, while proposeing to clobber us wth more austerity, worse pensions and more non-jobs for the working poor etc. and sustain the rentier class by tax-reductions and give-aways. All this amidst a Commons bellowing like a bull that mounts its cows at the wrong end – unproductive self-satisfaction through the mouth.

  • Michael Cole 6th Dec '13 - 12:56pm

    RC is absolutely right and it’s worth repeating his message:

    “Er, yes it is bleak because of the extent of the disaster that befell the UK economy in 2008/09. Pretending there is some easy way out, with gimmicky little ideas like fixing energy bills, is Labour’s big lie. We will have to hope that we can get voters to see how big a lie it is by 2015.”

    The last sentence is very important for the LIb Dems.

  • Simon Banks 7th Dec '13 - 12:03pm

    Although Steve and others have a point, there have been previous elections when a good position in the polls for an opposition party has come to nothing in the election mainly because they were trusted less on managing the economy. That’s why pollsters nowadays include a question about just that. Liking what’s happening and trusting people to manage improving it are two different things.

    I think Stephen Tall has a point that Labour could have made more of claiming the coalition, when it changed tack, was following Labour’s advice but a bit late and not very competently.

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