Forget the talking heads – the OBR confirms the REAL truth about the ‘recovery’

There will be hour upon hour of coverage on TV and in the press today and tomorrow about George Osborne’s budget, with Labour picking holes and the Tories and LibDems fighting for the ‘credit’ for the supposed recovery.

I’ve already listened to more than I can stomach of Osborne, Ken Clarke and others claiming that their ‘hard work’ and, of course, ‘tough choices’ (we’re all in it together, after all) have resulted in the supposed economic recovery, the fall in ‘worklessness’ (their attempted fudge after the UK Statistics Authority rapped their knuckles for claiming unemployment has fallen massively when in reality it’s dropped hardly at all or risen slightly, depending when you measure from) etc.

But the government’s own OBR (Office for Budget Responsibility) laid bare the truth in a single phrase. Speaking to journalists a few moments ago, and covered by BBC News (who so far have failed to spot the telling point), the Chairman of the OBR, Robert Chote, said this:

Looking over the forecast as a trade makes very little contribution and government spending cuts will act as a drag.

Chairman of the Office of Budget Responsibility Robert Chote

OBR Chairman Robert Chote

Whatever the hype and the spin, we now have it in plain language from the most official source: government spending cuts act as a ‘drag’ on growth.

Since this government has cut, cut and cut again its spending on everything (including the NHS, in spite of claims to the contrary), this means – in the clearest possible way – that the government has consistently delayed the economic recovery.

And now they’re trying to claim credit for the appearance of something that they’ve done their best to impede, and which would have been here ages ago if it weren’t for their actions.

They’re like someone trying to stop the earth spinning but then claiming credit for the sunrise when they fail.

The scary thing is that many will fall for it. So please spread the word.

42 responses to “Forget the talking heads – the OBR confirms the REAL truth about the ‘recovery’

  1. Reblogged this on Vox Political and commented:
    The government has delayed the economic recovery, according to Robert Chote of the OBR.
    “Whatever the hype and the spin, we now have it in plain language from the most official source: government spending cuts act as a ‘drag’ on growth.”

  2. This unelected government have done nothing to help the unemployed, the sick and disabled, the poor, the elderly etc. They care about no-one except the rich! It’s about time all the Offices for any Statistics came clean and told the truth – we need the people to see properly just how bad a situation this country is in.

  3. Reblogged this on Beastrabban’s Weblog and commented:
    This is important, as the Office of Budget Responsibility was set up partly to provide an economic justification for the cuts by the Tories themselves. This is thus their own creature telling the world that their masters’ policies are hindering, not assisting, the recovery.

  4. The “market” is nothing but the aggregate interests of the most powerful industrialists and financiers, which is why they and their political mouthpieces like the market so much.

  5. The last Labour government increased government spending massively in real terms. Did it produce a healthier economy? As for favouring the rich.. I dunno. All governments primary purpose is to get elected. The rich are a small percentage of the electorate and hence carry little voting power. So why would the Coalition favour them? Perhaps it is simply a recognition that we need them over here to pay the bills…

    • The economic problems had precisely zero to do with government spending and everything to do with irresponsible financial institutions. The reason the crash didn’t happen earlier was probably in part that government spending helped delay it – and, as the OBR has clearly stated – reducing government spending places a drag on economic performance.

      This government relies on fooling and/or bribing enough people to get elected while benefiting the few, so don’t be naive about their willingness to gamble on that strategy in order to pay their corporate backers.

      • You are right of course about the bribery and fooling and its not confined to right-leaning governments. Witness the last government’s client state which the party hoped would return it to power regardless of the economic consequences
        Meanwhile I see her majesty’s opposition pedalling policies based more on their appeal to a gullible electorate than on sound economics

        Yes it was irresponsible financial institutions that pushed us over the edge in 2008, and lets not forget who was in charge at the time.

        Despite the Coalitions tough talk we are still borrowing more and more as we fail to raise enough in taxes to pay for government spending.

        So is the answer to spend even more? If yes then why are so many governments risking annihilation at the polls when they could be spending their way to success?

      • They’re doing it because of an ideological commitment to a small state and an unreasoning hatred of the welfare state that has been a safety net to millions for decades.

        Who was in charge at the time of the crash was irrelevant. What happened in 2007/8 was the fruition of seeds sown in the liberalisation of the markets by Thatcher in the UK and by others of her ilk elsewhere. It would have happened whoever was in charge in 07/08.

      • Am I detecting a double standard here? Both the 2007/08 crash and the liberalisation of the markets things appear to be events would have happened anyway but only one carries accountability?
        We must surely hold all governments to account, not just their deeds but for what they didn’t do when the warning signs were clear.

        As for Government in general, I believe less is more. Read Dominic Frisby’s book “Life after the state” where he describes in very simple terms how big government distorts everything including the markets, makes everything expensive and so often achieves the opposite of what it claims to be there for.

    • ” Did it produce a healthier economy? ”
      Yes it did, by a country mile.
      ” All governments primary purpose is to get elected ”
      This coalition has one objective and that is to dismantle as much of the state infrastructure as possible in five years and preferably hand anything that a profit can be made out of to their friends and themselves.
      George D … were you born yesterday ?

  6. Dismantling the state apparatus and handing profit to rich friends is a clear vote loser so why would the coalition do this?

    On the effectiveness of higher spending my original question still stands. Why isn’t everyone doing it?

    If its all because of an “ideological commitment to a smaller state” and to save money on welfare, then at least some guys have principles in that they prepared to sacrifice their electability for what they truly believe in!

    • Your naivety is staggering and completely ignores the obvious arrogance, even hubris, of a set of people that assume they can fool enough of the people, enough of the time.

  7. Thanks for the compliments guys! It all suggests a lack of counter arguments. Most of my points remain unanswered.

    So just what is it that I am being naïve about? My central point is that politicians of both left and right put their own self-interest first, which means getting into power and staying there.

    Or is it only the right that is arrogant and seeks to fool the masses?

    • The very reason most of the Tories are in politics is to do this stuff, so to suggest that they wouldn’t try to get away with it when in office because it would be unpopular is staggeringly naive. They’ll do it, and try to manage public perception – and since much of the press and other media are their allies, they are unfortunately often successful, with the demonisation of benefit claimants and disabled people being a very apposite case in point.

      • Except the Tories are already shying away from the expenditure cuts that they would really like to make.
        At the turn of the century state spending was perhaps a third lower in real terms.
        However every percentage cut is met with protest so the coalition is setting for much more modest reductions. Some say the coalition is actually spending even more that the last government so I’m getting confused….

        By the way it is possible to believe that a smaller state and associated welfare bill benefits us all. The left does not have a monopoly on compassion and cuts are not always conceived out of malice

      • It’s possible to believe it. It’s not possible to believe it sanely. Turning everything over to the mercies of ‘market forces’ is to write off the more vulnerable and reduce everything to a cash figure.

        The Tories are shying away from cuts because now is the time for trying to get us to forget the reality of what they’ve done, just enough to get another term – and then it all ramps up again.

        Cuts are not conceived out of malice? If not malice, then blindness. No one seeing the day to day reality of so-called ‘scroungers’ could be fooled into thinking cuts are ‘all for their own good’.

      • Just who is “Turning everything over to the mercies of market forces” ?
        Are you scaring us with Bogeymen again? –I imagine these are the same Tories that want the all the poor and vulnerable to suffer?

        More seriously …. most of us know that the majority of welfare claimants are not scroungers but also that abuses exist that must be stopped. (Why do I feel the need to keep stating the obvious?)

        There is nothing moral about extending the welfare net to draw in those that are fully capable of supporting themselves, and trapping them there. It’s even less moral when done to extend the voting base of a particular political party.

        In the big scheme of things spending can go down as well as up. (I’m doing it again) Initiatives to cut welfare then are not bad in themselves but only for what they contain and of course some of the policies and tools will be blunt, badly thought out and will cause injustices. This is where we should concentrate our efforts.

        Why? Because at present we cannot raise enough in taxes to pay for our expenditure so it is being loaded onto future generations. There is nothing moral about this either. Opposing all spending cuts regardless is folly. We must make better use of what we have.

      • If they’re fully capable of supporting themselves, the idea that they’re ‘trapped’ on benefits is nonsense and is just Tory double-speak to justify cutting the ‘safety net’. A small number might be there by choice, but hurting the innocent majority to get at a culpable minority is never justified. Find those people and deal with them, but making wholesale changes to essential provisions is never a valid way of solving the problem.

        And who says we ‘cannot’ raise enough taxes? That’s complete nonsense too. Not taxing effectively is an ideological choice or at best utter shortsightedness.

      • Stewart the service in question was invaluable to my own parents and is very inexpensive. All of us have budgets to work to and it was the council that made the decision to cut it. Do you really believe that the council could not have found better ways to save money that did not impact so painfully on residents?

      • So its not exactly “nonsense” then. “Trapped” by disincentives I think. Human behaviour is more about motivation than ability. Yes its a small minority and yes that minority does get around. I can count at least half a dozen of my own acquaintances that could work but prefer a life on benefits plus “odd jobs”.

        Regarding taxation; despite varying levels over the last 3 decades, the total tax take as a % of GDP has remained remarkably constant. Gordon Brown squeezed very little more out of us than did Margaret Thatcher.
        Why?: Because taxation has a saturation point at which further taxation is met by human nature i.e.
        -Diverting energy away from wealth creation into tax avoidance
        -Relocating overseas
        -Working less hard or stopping altogether

        Its a cruel deception that taxing the rich more will solve our problems, but hey -it gains votes for the left!

      • So we ‘make work pay’ by cutting benefits. What bollocks. Make work pay by actually making work pay, and then people won’t be ‘trapped’.

        The taxation stuff is equally bollocks. There hasn’t been a government in decades that has taxed *effectively* (note that I didn’t say raise tax rates in the first place). Many wealthy people will always avoid paying if they can – so make the system simple and enforceable, with draconian penalties for evasion (the one thing the US has right is the severity of its evasion penalties).

      • I’m actually with you on this. I.e. Lets make work pay!
        So why did you insert the words “Cut benefits” into my mouth?

        Those who question your views are not all rabid welfare haters you know!…It’s those Bogeymen again

        Re economics, my arguments are backed by both official figures and the “Laffer curve” economic model so its all well supported “bollocks”

        I do wholeheartedly agree with simplification of taxes and as for draconian penalties, they might work

        However I still have a few questions:
        1) How much extra revenue pa will these plans raise even if successful?
        2) How big a dent will this extra revenue make in our current deficit?
        3) How will you deal with those that relocate overseas to avoid paying?

      • Because the government, whose position you appear to support, always mean ‘cut benefits’ when they say ‘make work pay’.

        With regard to questions 1 and 2, I am not an accountant. Seeing that the principles work doesn’t mean I have the time to calculate figures.

        As for 3), I’ll drive them to the airport. If they don’t want to contribute, they’re no use to us – and basic supply and demand means that for every individual or company that opts to leave rather than pay, others will rise to fill the gap. And in a culture of ‘pay according to ability’, they’ll be others prepared to pay.

      • I too would drive these guys to the airport –but only if I believed taxes were fair

        My stance is that all parties put their own interests first. Popular beliefs that the left are somehow nicer (very dangerous) are my pet hates
        I usually vote Tory as the “least worst” option because I believe in a smaller state, more personal independence and ordinary people becoming wealthier.
        Right leaning parties are more likely to foster this as it is the best way to expand their voting base

        Those dependent on the state for employment or benefits tend to vote Labour and therefore Labour governments can never resist raising public expenditure to unsustainable levels.

        Re tax revenues, I’m no accountant either. The deficit in 2013 was about £82bn (ONS/OBR) whilst a Guardian article reports there were £35bn of uncollected taxes in 2012/13. Even if we collect all the tax due, a huge gap remains.
        A smaller state and/or a more pro-business agenda is needed

        I just cannot see a Labour government promoting either

      • The uncollected taxes are those calculated as due but not gathered. There will be revenues that are avoided and/or written off (e.g. the £7bn or so owed by Vodafone) that dwarf any deficit.

  8. Its not just a cut in welfare bill benefits that is affecting ordinary people. My 91 year old mother relies on a Lifeline pendant so that if she falls she can contact someone quickly. She pays £10.00 per month for this but has just received a letter from the local Council saying that they can no longer afford to subsidise the actual cost of this service and it will increase by £3.00 per month now and a further £4.00 per month next April. If she can’t afford this increase her Lifeline will be discontinued. This increase is necessary because County Councils have had their funding slashed by this government. £7.00 may not seem much to many people, but along with an increase in her rent and of course utility bills it is making a big dent in her weekly pension. Many of these cuts are hidden and affect the most vulnerable.

  9. That is so mean and it annoys me that some councils have been known to slash such vital services to make political points, whilst vanity projects, and highly paid jobs of questionable value remain intact. I hope your council can be made to change its priorities.

    • So the fact that council budgets have been devastated is not the cause, it’s simply councils making malicious choices for political means. God love Mr Pickles for giving those nasty councils what for.

  10. Stewart the service in question was invaluable to my own parents and is very inexpensive. All of us have budgets to work to and it was the council that made the decision to cut it. Do you really believe that the council could not have found better ways to save money that did not impact so painfully on residents?

  11. George, you miss my point I think – the Council where we live is having to make ridiculous savings and has no choice but to cut many services which affect the most vulnerable in our society. The service may seem inexpensive to those living in big cities, but in rural areas it is a large chunk from people’s income. Many of my mother’s elderly friends have to make choices within their “budget” as to whether to heat their homes or feed themselves properly. This seems to be fairly widespread throughout the country and you will never convince me that it is not a direct result of the government’s attack on welfare spending and what it sees as unnecessary molly coddling of those less fortunate in our society.

  12. Hi MacPolly
    In the context of the overall squeeze on the nations finances, I don’t really have a answer to the broader question on the plight of the elderly. I just despair at government wastage at both national and local level and wish it could be spent on things that count.
    I actually believe smaller and leaner government would create more value for most of us, elderly included, but that’s another debate.

  13. I had assumed that these sums were included in the £35bn uncollected taxes but maybe not. At only £7bn a throw we would need quite a few of these “extras” to “dwarf” the deficit.
    To further complicate things, money “retained” by the Vodaphones of this world will find its way into the business and the wider economy creating jobs and expenditure that attract taxes of a more collectable kind. Of course Britain might not be the main benefactor.
    We need someone good with the figures now .. . we could ask Mr Osborne…… –only kidding!

    • There are some £700 BILLION of cash sitting in company coffers in this country alone, plus trillions squirrelled away offshore to avoid taxes. The right revenue on those sums would indeed dwarf the deficit. That money is hoarded, not finding its way into the economy.

      • I refer you to a Guardian article “Never mind tax havens – the real hidden billions are in company coffers” – (Richard Seymour May 2013). He puts the amount hoarded by Britain’s companies at £318 bn. The “Trillions” figure for tax havens sounds a bit dubious –implying a multiple of Britain’s entire GDP. Most estimates including Richard’s own are in billions. Still these are big sums that could surely be invested more productively.

        Just why are governments are so impotent in making this happen? The article claims that George Osborne has “begged” businesses to help the recovery. More disturbingly after 13 years of a Labour government with a sizeable majority, the situation remains. What could they have done and why didn’t they do it?

  14. Thanks for the article –which I have studied

    Even if we go with your figures. The money pot is not what it seems.

    Lets imagine appropriate taxes could be applied. Just how does reducing our debt from £850bn to £590bn give us the kind of society we seek? –we are still hugely in debt.

    Alternatively if the £260bn windfall had been applied to balance the budget deficit anytime post 2008, then there would typically have been nothing left after two years.

    Raiding corporate coffers might add a bit more but would carry its own side effects and only delay the day of reckoning at best.

    Finally none of our governments have ever managed to effectively tax these “pots”. Just what good is a pot of money that is inaccessible?

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