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The Spectator debate: George Osborne isn’t working: we need a Plan B

9 October 2012

Today’s downgrades from the IMF have overshadowed the Tory conference and pose an awkward question: if George Osborne’s policies were working, wouldn’t they be working by now? Is it time for a Plan B? It’s the biggest issue in British politics right now and we at The Spectator are bringing together two former Chancellors to discuss it with Andrew Neil chairing it. I thought that Coffee Housers might be interested in some details.

Alistair Darling is becoming the most powerful critic of Osborne’s policies. Ed Balls’ attacks can be written off as his usual snarling but Darling is more considered and his arguments carry more weight as a result. He is about the only finance minister in Europe to emerge through the crisis with his reputation augmented, and won Survivor of the Year in the 2009 Spectator Parliamentarian of the Year awards. He leads the case for the motion: ‘Osborne isn’t working: Time for a Plan B.’ He is backed up by David Blanchflower, perhaps the most influential economist on the left at the moment.

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Norman Lamont is speaking in Osborne’s defence. He has known his fair share of economic turbulence, and his tenure is now seen as the start of Britain’s long burst of prosperity. David Cameron famously started off as Lamont’s adviser, and he has in turn been advising the government on the sidelines on how to handle the crisis. He will be backed up by Sajid Javid, who I wrote about yesterday, a new Treasury minister who is fast becoming on the government’s most convincing advocates. He can defend bankers and be applauded for it: he’ll help Lord Lamont defend Osborne which is perhaps a far tougher sell.

The Battle of the Ex-Chancellors will kick off at 7.15pm in Methodist Central Hall in Westminster on Monday 29th October. Tickets are selling fast. We will be posting it online, but if CoffeeHousers would like to join us I suspect it will be a highly entertaining debate. You can book your place here.

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Show comments
  • TomTom

    The IMF is a waste of time. Frankly NOONE knowx how to get out of this mess. It is System Collapse and that is simply too big for these one-trick ponies. The Western Economic Model has never faced this dilemma before – manufacturing in China, Finance in London and New York, with unfettered immigration into Welfare States sporting large Public Sector jobs with high pay.

    Never in the history of the world have nations faced this particular mess with Derivatives equal to 10 Times Global GNP

  • HooksLaw

    The IMF forecast is nothing new. They are predicting 1% growth next year for which we should all be grateful for if it happens.
    The IMF forecast is only disastrous if taken in isolation. Look how it compares with other countries. The IMF have lowered the forecasts for Asian countries and downgraded France saying the economy would grow only 0.1 percent this year
    and 0.4 percent in 2013, cutting its estimates from 0.3 percent and 0.8
    percent respectively in July.

    The notion that Darling is some sort of sage is risible. He left a deficit of 159 billion and provided an endless list of overoptimistic forecasts before that. Even by the standards of talking up your own event your comments are pathetic.

  • AnotherDaveB

    This is Plan B.

    “Conservatives liked Plan A. That said eliminate the structural deficit this Parliament, relying 80% on spending cuts to cut it. Many Conservatives are disappointed that this has not been attempted.”

    • HooksLaw

      That’s right, there has been a Euro crisis and the euro economy has stalled, so therefore has ours. The USA has been struggling too. Faced with this the govt expended the period to eliminate the structural deficit. These seems sound to me and gives the lie to labour’s bogus claims of cutting too quickly.

      • AnotherDaveB

        Cutting too quickly I could live with. It’s the not cutting at all that galls.

  • dalai guevara

    Moving to a Plan B would require moving GO(ne) back to folding towels at a much-loved superstore. It’s as simple as that.

  • Mike Barnes

    “if George Osborne’s policies were working, wouldn’t they be working by now?”

    Finally somebody asks the right question. Lets remember the point of ‘expansionary fiscal contraction’, it was said if we cut back the state, it would give confidence to the private sector. The confidence boost and the ‘expansion’ should have been immediate, but it wasn’t. It’s all contraction from here as the cuts start to take more and more demand out of the economy,

  • ToryOAP

    In my book the IMF forecasts have about as much credibility as Balls’ or Brown’s. Also some IMF senior analyst (who’s name escapes me through sheer ennui) talking to Eamonn Holmes on Sky News this morning was supportive of Osborne’s plan A and would not be drawn into saying there should be an alternative. And what about the OECD’s prediction yesterday that the UK would outperform the EU? And as for Darling and Blanchflower having any credibility you must be fucking joking. Darling presided over the collapse of our economy hand-in-hand with the worst chancellor/Prime Minister in living memory. And Danny Blanchflower is a bitter underperformer in the vein of that other no hoper brought on constantly by the BBC, Will Hutton. Mr Fraser, I am beginning to wonder what is going on with you. You used to be quite reliable but since your vacation you appear to have transmogrified into a labour clone. What on earth did you read on your hols? We gave you a good reading list.

    • George_Arseborne

      Osborne had once been a stooge to IMF, today they are lambasting his credibility. We all knew he was an Economic illiterate. By the way his speech yesterday was as flat as a flat beer. No Economics, Political jargon, in short nothing to write home about.
      Ed Balls did the right prediction long time and today we are in Double dip recession. I rather listen to Ed Balls than getting Rubbish from both IMF and Boy George.

      Remember Darling( COMPETENT) left this Country growing and what is happening under Osborne( INCOMPETENT)? NO GROWTH
      As a chancellor he can not defend his own Record. No wonder he is relying on Ken Clarke, Javid , Poor Chloe (Where is she now? Paxman), Lord Lamont, Micheal Fallon.

      The simple Question ; why is he still the Chancellor? This shows how incompetent and elitist this Government is.

      • ToryOAP

        You are a fool. The NIESR are reporting today: “Our monthly estimates of GDP suggest that output grew by 0.8 per cent
        in the three months ending in September after growth of 0.1 per cent in
        the three months ending in August 2012. This is the most robust rate of
        growth since the three months to July 2010.” Ed Balls is also a fool.

        • dalai guevara

          Exactly, let Balls burn out, then Chuka that. We know you prefer to look back.

  • Nick

    You’re deluded. Completely barking mad. The reason goes back to the fundamental problem, the state is bust. Bankrupt.

    Ah, but the debts on 80% of GDP. Therein lies your delusion. That isn’t the debt, that’s just the borrowing. On top of that are the debts that matter to most people, their retirement and their pension.

    Paid for up front, and the state can’t pay back the 20% of the money that they are currently paying out.

    Plus, why GDP? Surely its taxes that’s the appropriate denominator. ie. Fiddling the ratio to make it look afford able.

    So ask them the simple question. Why isn’t the state pension a debt, and how much do they owe people for their contributions.

    Here are my predicted answers.

    1. Other countries don’t report the pensions. Hmm, neither did Bernie Maddoff

    2. We can always change the law. Hmm. So the plan is not to pay the state pension. Should people stop contributing if you aren’t paying out.

    It’s a fraud. Time for journalists to stop pandering and to start asking the difficult questions.

    • james102

      Yes your points are valid our political class only do short
      term planning. The intergenerational transfers are going to cause problems but
      they hope they will be retired to gated estates abroad by then.

    • HooksLaw

      No, again you a ranting pointlessly. The national debt is just that and is the widely understood measure.
      Pension liabilities are another issue and are again being dealt with by the govt – they are extending the retirement are and they are cutting the state and local govt workforce. As long as we have a conservative govt they will continue to be dealt with.

      • LB

        The national debt is just government borrowing.

        The true debt is 7,000 bn on income (tax) of 570 bn.

        How can the government pay out on those debts when its 13 times geared, with other spending commitments such as the NHS, schools, …

        The problem is pension liabilities are a debt and they are hidden.

        When you say dealt with, you mean they aren’t going to pay out in full on the debts. Lets be honest. However we will be expected to carry on paying in.

        Lets face it. It’s a fraud.

        1. Hide the debts
        2. Encourage people to pay in.

        Offence under section 2 of the 2006 Fraud act.

  • Archimedes

    I agree Darling is a capable pair of hands, but I’m not sure I’ve heard of anything substantial that has suggested doing? As far as I’m aware, he has not been one to jump on the stimulus bandwagon? It seems he has mostly taken up the role of critic.

    We’re pretty much done with the growth stifling impacts of austerity now anyway: changing course would only serve to undermine confidence. It’s also slightly curious to suggest that Osborne’s plan has been a categoric failure, when we’ve had robust job growth: that may not have translated into economic growth but at a time of low global confidence, higher employment figures should be more welcome than higher GDP, as it suggests capacity for a higher growth trajectory if confidence begins to return. People rarely seem to be concerned with wage increases during a recession, and much more concerned with whether or not they are going to have a job.

    • james102

      GDP per capita and economically active/inactive stats are
      needed but we seem to have problems with population numbers.

      • LB

        GDP isn’t needed.

        Just use tax revenues. A far more accurate proxy for economic activity, and it can’t be fudged.

        What matters is debts, and why the government has hidden its big debts off the books.

        For example, the state pension.

        Ah, perhaps its because they aren’t going to pay it, because they can’t.

        In which case shouldn’t people be told.

    • telemachus

      Darling’s final budget was based on Darling’s fantasy projection of a rapid, sustained
      recovery for the British economy.
      Was he wrong and stupid?
      Or did Osbornre blow it?

      • Derek

        3.75 percent this year was never achievable given that this recession is the result of too much credit. Deleveraging made this an impossibility given tat the economy had been set up to only grow with expansion of consumer credit.

        That said nominal GDP minus target inflation could have delivered a more robust set of real GDP growth figures. QE and VAT meant that nominal GDP had to grow 7-8 percent to deliver real growth of 2-3 percent.

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