John McDonnell writes:
It’s said that a week is a long time in politics – but under this chancellor a weekend is the length of a “long-term economic plan”.
That’s exactly how long George Osborne was able to stand up his own budget before it collapsed.
It’s unprecedented in modern history for a budget, the centrepiece of a government’s economic policymaking, to disintegrate so rapidly.
Yet Osborne has achieved it.
Under intense political pressure, he has reversed his cuts to disability benefit. Within four days of presenting his budget to parliament, it no longer adds up.
And remarkably he has been forced into accepting two opposition amendments, on tampon tax and solar subsidies.
The attempted defence in parliament revealed two central facts.
First, that he will not apologise to those many thousands of people with disabilities who have spent more than a week worrying about the loss of their essential payments.
Yet he was able to say he was “sorry” that his fellow Tory Iain Duncan Smith resigned.
The personal independence payment (PIP) is paid out to allow those who have disabilities to live with some autonomy, often in order to enable people to get to work.
This is state support for things such as preparing or eating food, washing and bathing, reading and communicating.
To propose taking up to £150 a week away from disabled people that helps them to live independently and with dignity is a chilling example of the lengths Osborne is willing to go to in putting his own political career ahead of the long-term good of our nation.
The cuts to PIP are morally indefensible, and reveal a chancellor that has chosen austerity over basic humanity.
Second, it is clear from his speech that the chancellor has no idea how he is going to fill the £4.4bn black hole left in his budget.
Osborne confidently believes that by autumn the losses would be “absorbed”. But you can’t “absorb” £4.4bn.
In reality, paying for this means cuts elsewhere, or stealth taxes – something the chancellor has become rather adept at.
He is, in other words, banking on a more favourable outlook for the economy by the time we get to the autumn statement.
This is the equivalent of hoping to find money down the back of the sofa.
As Robert Chote, director of the Office for Budget Responsibility (OBR), put it when announcing pessimistic new forecasts: “What the sofa gives, the sofa can also take away.”
This is why I said he was more a chancer than a chancellor.
George Osborne could, very easily, pay for PIP by reversing his cuts to capital gains tax, which benefit the richest 5%, and the projected cuts to corporation tax.
But he will not do this because at the centre of his budget was a cold political decision.
The chancellor wants to achieve a surplus on government spending by 2019-20, by spending £10bn less than it receives in taxes.
He claimed he would eliminate the deficit by last year; it is still over £70bn. He claimed he would be bringing down the government’s debt burden, relative to GDP; it is rising and set to rise further.
The OBR has revised growth forecasts down. They have revised wage growth down. They have revised business investment down. They have revised productivity down.
The productivity slump is the most fundamental problem. It is the weakness of productivity that undermined wider growth.
This is a domestic issue for which Osborne must take responsibility. He has presided over a low-wage, low-productivity, low-investment recovery that is built on sand.
Instead of cutting government investment, still scheduled to fall over the lifetime of this parliament, he should be following the advice of the IMF, the OECD, the CBI, the TUC and international experts in driving investment up.
Labour’s fiscal credibility rule, developed in consultation with, and supported by, world-leading economists, offers a framework through which we can eliminate the deficit fairly.
We can avoid the counterproductive and cruel cuts we have seen under this government while allowing government the capacity to invest in the future.
But the chancellor clings to his surplus target because his political credibility would disappear entirely if he lost this last remaining fiscal rule.
Not a single respectable economist can be found in defence of the surplus rule.
But Osborne does not care how much pain it inflicts on the most vulnerable and he does not care how much damage it does to the economy.
He cares very deeply, however, about his political career.
Not only have the chancellor’s plans been revealed to have no basis in economics but they are devoid of basic morality.
He is not fit to hold the office.