George Osborne this week took that trusted Conservative dance partner, Tina, for a whirl. There Is No Alternative has often been a propitious Tory pitch, notably in the 1980s. But the chancellor’s difficulty is that his plans, which rest on a state scaled back to 1930s proportions, do not themselves offer a viable way ahead. If he survives the election, there will be a hurried hunt round the ballroom for Nina – Now I Need Alternatives.
Experts pored over the autumn statement documents on Thursday, and concluded that its paint-by-numbers picture of the future will not come to pass. Under the rules of accounting, if the deficit is reduced as Mr Osborne promises, then – as a simple matter of logic – there would have to be a loosening of the purse strings elsewhere. The Office for Budget Responsibility got the numbers to add up by assuming resurgent business investment, a (delayed) pick-up in exports, and newly buoyant consumer spending. But this spending, the Resolution Foundation explains, relies on household debt rocketing to 184% of income. That exceeds the peak of 170% on the dawn of the crisis; and, if business confidence or export markets should falter, the logical corollary of government prudence becomes families shouldering even more debt again.
That is neither a likely nor a desirable prospect, but then nor is the idea that most public service budgets can be lopped in half, at the same time as money is frittered on middle-class income tax cuts. David Cameron insists it will be done. He breezily told his conference he was “confident we will find the savings we need through spending cuts alone”, since these are a mere “quarter of the savings we have found in this parliament”. The Institute for Fiscal Studies immediately explained that the PM was comparing apples and chocolate oranges here. Even before this week’s materially bad news on the revenues front, the Cameron-Osborne plans implied that there was just as much cutting to come as we have already seen. On Thursday those involved with the “protected” NHS were querying how many more years of the chancellor’s pay policy it could withstand before patients felt the effect. Authorities on local government said they were not looking at “one more squeeze” at the town hall but at a minimalist re-imagining of what councils can be. Care for elderly people and child protection would both feel the full force of the axe, as would police and fire services.
There has been no real levelling with the public about what’s proposed, and there is no readiness for it. Should the great tornado of retrenchment tear a strip through the public realm, as Mr Osborne’s numbers imply, then the dangerous popular fury with “the political class” would be inflamed anew. The irony is that this most unhappy chapter is in no sense written. We live in interesting times. Away from the intellectual wastelands of SW1, many previously unthinkable things are being entertained, and even done.
Property wealth is buoyant. Where the chancellor cut total taxes, the community could be making a claim. Unemployment is falling further and faster than imagined, and without inflation. That should open up space for regulating standards at work, without the old fear of destroying jobs. And even while Mr Osborne obsesses about repaying debt to the exclusion of everything else, the Bank of England sits on piles of the stuff, which it snapped up with magicked money, and gives no sign of wanting to dump back on to the market. The national debt is, in effect, being nibbled away by money creation, just as the far bigger debt after the second world war was eaten up by inflation.
Amid such flux, how extraordinary that Mr Osborne’s ultra-orthodox pose should go unchallenged. A bold opposition might suggest that the Bank’s bonds should not be sold until some fixed date, or some particular conditions are met. Labour, however, offers no alternative macroeconomic view. It shrinks even from spelling out the tax rises – on pensions, on corporations, on pollutants – that it knows would have to be part of a more balanced austerity. The party has more to say on the jobs market, but it now needs to toughen up its proposals on things like zero-hours working if it wants to cut through. As things stand, his lack of any real argument is not preventing Mr Osborne from dictating the terms of the debate.
