George Osborne’s credibility deficit

“I am not worried about the deficit. It is big enough to take care of itself.”

In office Ronald Reagan never completely lost his actor’s sense of timing and the gift for delivering a good line. When he made that quip in 1984 most saw it as a joke. But as with many good jokes there was a serious point to it. An FDR Democrat, Reagan knew that you didn’t cut deficits to boost growth. It was the other way round: healthy growth shrinks the deficit.

The reason George Osborne is failing to convince neutrals that he knows what he is doing is that the description of recovery and economic growth which he provides does not match people’s own experiences. As Mark Serwotka, general secretary of the PCS union, said on Any Questions on Friday, it is a funny sort of recovery that involves stagnating or falling wages and disappointing tax receipts for Her Majesty’s Revenue and Customs.

The implosion of last week’s autumn statement has not quite matched omnishambles levels. But the political significance may be just as great. The chancellor’s outrage at being asked to justify the “colossal” (IFS) cuts his statement envisaged was revealing. John Humphrys refused to play the Westminster game in his Thursday morning interview on the Today programme. He took the Treasury’s numbers at face value and asked Osborne to explain them. This the chancellor was unable and unwilling to do. We should probably not have been surprised by this. At a Resolution Foundation briefing that same morning several of the country’s top economic commentators agreed that the budget cuts outlined by the government were undeliverable, and unbelievable. The news has now caught up with a key member of the “quad”, the deputy prime minister Nick Clegg, who is appalled – appalled! – at what his government is planning to do. He can hardly believe he has signed up to all of this. But, you know, he has.

Osborne’s cleverness is over-rated, not least by himself. It is his recklessness and inhibition that should concern his friends and admirers more. The most recent warning that the chancellor’s thought processes were somewhat askew came when he claimed to have halved the contribution due to the EU from the UK, when it turned out he had in fact used the UK’s rebate as a down payment as part of a (in reality) unaltered UK contribution. Now he presents an autumn statement which reveals a rising not falling budget deficit, continued missed targets on exports as well as on the public finances, a proposed £55bn of further spending cuts, while also maintaining that the unfunded £7bn of income tax cuts mentioned by the prime minister at the Tory party conference will still go ahead. And yet to question his grip is somehow scandalous and unfair. “Questions are not attacks,” as John Humphrys gently pointed out.

Rattled, the chancellor felt forced to offer a further defence in yesterday’s Sunday Times. But here again he revealed rather too much. Osborne tried to dismiss the idea that you could “take a little longer” to repair the public finances. But of course with his excessive and unbelievable forecasts that is precisely the political space he has opened up, as Damian McBride argued in yesterday’s Sun on Sunday.

The deficit will not quite take care of itself. But nor will it ever come down if the Conservatives’ version of “recovery” is allowed to persist. Productivity and wages need to rise. But for that to happen different and better jobs need to be created. The alleged UK “jobs miracle” is one in which two thirds of people who have moved from unemployment into work in the last year are paid below the living wage, while the average self-employed person earns 13% less than they did five years ago, according to the Joseph Rowntree Foundation.

Labour does not have to claim to be able to transform people’s lives in an instant. It should say that it will try to make things at least a bit better, starting right away. One of the ways it can do that is to “take a little longer” to bring the deficit back down. Compared with this chancellor’s autumn statement, that approach will look like sanity, and achievable common sense.