Stephen Hill takes a sideways look at the Budget, the Brexit debate and the resignation of IDS.
Osborne’s 2016 Budget was labelled the pre-Brexit Don’t Frighten The Horses Budget, as the rows of pro-Brexit Conservative MPs seething away on the backbenches were ready to seize on any EU slips or giveaways. Osborne chose to knock the disabled PIPs benefits instead of confronting the real issue: his record on borrowing is worse than Gordon Brown’s, with his doubling of the National Debt to £1.5 trillion, and still rising by some £55 billion this year – that’s going past 85 per cent of GDP.
The sensible debt cap set out in the Maastricht criteria for EMU was a maximum debt of 60 per cent of GDP: only tiny Luxembourg met this criterion at 2002’s launch of the Euro, just five years before Global Crash struck.
The outcry against this sloppy Budget was ably led by Jeremy Corbyn, much to the surprise of all those in the House, including himself. To make Corbyn look good is pretty hard pounding. Last week, however, the Bankers’ Bank, the Bank for International Settlements, issued its direst warning yet that the level of government debt everywhere – G7, G20, BRICs and especially Emerging Markets – were such that Global Crash II was not too distant.
Related
The previous month Mervyn King in his book The End of Alchemy had made a very similar warning, seizing on the world of economic imbalances everywhere. Osborne’s UK economy, after over ten years, is almost on the same reckless trajectory as the US, whose National Debt now stands at $1.9 trillion and rising, at well over 106 per cent of GDP. But these figures are not the real ones.
The purists reach for the non-existent National Balance Sheets and correctly add in the off-Balance Sheet financings like PSI, state guarantees and especially unprovided liabilities for future medicare and pension costs etc. These purists show that the actual debts are some four times greater – the great demographic provision, if you like.
But then the Week of the Budget That Wasn’t suddenly exploded into The Week That Was with the resignation of IDS as Work & Pensions Secretary, interpreted as an attack on Osborne’s No. 11, and even No.10!
No, it wasn’t a well-organised plot by Boris – how could such a thing possibly come to pass? – and anyway he was off skiing, a much better excuse than toothache. No, it was the railroading by Osborne’s Treasury of IDS’s careful One-Nation approach to welfare reform. If you know IDS, his resignation was on this point of principle. But as in politics, one hare often sets another unintended hare haring around, particularly in the month of Mad March Hares. I am sure IDS, a Brexiteer, had little idea he would really fire up the Brexit debate, but he has.
Content from our partners
But then there was a little-noticed Brexit point of principle, made by PM DC himself: he hared off to Brussels the next day, but was caught briefly on camera bickering away about the EU-imposed 5 per cent VAT on Tampons, of all things, which Osborne said he wanted to end, but the EU didn’t, so there. So, where are our Budgets being written: in No. 11 or in Brussels?
This seemingly trifling incident shows you how Britain will be governed after full EU political AND fiscal union – that’s what the Brexit Debate is all about: the basis of all democratic freedom and accountability is over taxation and expenditures, a freedom that was confiscated by the Preamble – yes the Preamble, not the Act Itself! – to the 1986 Single European Act. Not many people know that – but the Brexiteer Sir Michael Caine does, surely?
