Kinnock: On Planet Osborne the Budget made sense, on Planet Earth the reality is hitting growth and manufacturing

Dear George,

Yesterday was a new experience: my first Spring Budget as an MP – a significant “fiscal event”, in anyone’s book. No doubt you’ll have fond memories of your first budget as a backbencher, back in 2002 when a Labour Chancellor announced ambitious plans for supporting the NHS, fighting crime and extending support for the disabled and working families. How times have changed, eh?

Nonetheless, yesterday I listened to your Budget with great interest, and I was struck by the gap between your rhetoric and reality – the chasm between your words and your actions.

Let’s take a look at your three fiscal rules. First, you pledged to eliminate the deficit by 2015, and to move Britain to surplus by 2016. Six years ago you said “Judge me on this one thing: getting the deficit down”. Well, George, yesterday was judgment day – and you have failed. You tried to hide the failure by using cash, rather than real-term figures, but neither Parliament nor the British people are so easily fooled.

Second, you guaranteed you would reduce debt as a percentage of GDP. But as you conceded, you have missed your target and now you’re shifting the goalposts. George, you and I know that a target isn’t much of a target if you move it every five months. You really are ‘The Miss & Shift Chancellor’. But, more importantly, that 3 per cent of GDP to debt deterioration over five years will mean big increases in borrowing – another broken promise.

And you have fiddled the numbers to pretend that you will meet your third fiscal rule. To achieve a surplus by 2020 you have penciled in a £30bn deficit fall for 2019/20 – that is double the falls in the previous years. But you told us nothing about how you’ll reach it, nothing on how you will make that enormous leap of faith from a £20bn deficit to a £10bn surplus in one year. Once again you’re making promises that you know you won’t be able to keep, George. Undermining trust and confidence, jeopardising Britain’s future, giving politics a bad name.

Well, so much for the fabled fiscal mandate. Let’s now take a look at growth. Five years ago your good friend the Prime Minister declared the government would “go for growth”, but you have failed him. Yesterday the growth forecast was once again been revised down. This holds Britain back, erodes the tax base, undermines public services and means more borrowing – thus increasing the deficit.

Ok, so the fiscal mandate is not worth the paper it’s written on. Now, where are we on exports? You promised to make Britain pay its way in the world, but we are borrowing more than ever, our exports are falling and we are nowhere near your £1 trillion export target. You promised us the “march of the makers”, but let’s be honest, George, the march is stuck on a treadmill. And you’ve been Beijing’s chief cheerleader in Europe, whilst allowing the British steel industry to be systematically undermined by Chinese dumping.

On productivity: you pledged to tackle the “productivity puzzle”, saying you wouldn’t take your “foot off the pedal”. But you have clearly taken your eye off the road. British productivity is almost 30 per cent below that of the USA, France and Germany, and this Budget offers nothing. This isn’t a productivity puzzle, George, it’s a productivity crisis.

So, what’s the verdict on wages? In the summer budget you declared your desire to create a “higher wage” economy. Yet today we learnt that average hourly earnings are down and set to grow by just 1 per cent for the rest of the decade. Median hourly pay won’t return to pre-crisis levels until 2021, and that is at the most generous estimate – if you use the retail price index, which includes housing cost, it will be even later. This means income tax rates receipts are £44bn lower than projected back in 2011, which means less money to reduce the deficit and invest in Britain’s future. So once again it is the British people who are playing the price for the disparity between your rhetoric and reality.

Back in 2010 you declared “those with the broadest shoulders should bear the greatest burden”, and last July you styled yourself as the “One Nation Chancellor”. But once more the reality and the rhetoric couldn’t be further apart. Some 85 per cent of the benefit from the higher rate threshold/personal allowance is going to the top 50 per cent, a third of the benefit going to the top 10 per cent. But 81 per cent of the cuts falling on women while the disabled will be hit by your cuts to Personal Independence Payments.  

On Planet Osborne all this may make sense, but down here on Planet Earth the reality is biting.  

What we saw yesterday was a Budget in which the country is paying for your failure. You hid behind the usual smoke and mirrors but the real story of this Budget is one of growth and investment revised down, exports down, productivity down, manufacturing stalled and borrowing up.

You failed to fix the roof when the sun was shining, and so we are now being subjected to the unedifying spectacle of a Chancellor scuttling around, trying desperately to plug the gaps in his credibility before the storm clouds open and drown his dream of moving next door to Number 10.

So, after my first Spring Budget as an MP, George, I’m left wondering how best to sum it all up. I think I’ll go with this:

“Budget 2016; a triumph of tactics over strategy; vintage Osborne.”

Yours sincerely,

Stephen

Stephen Kinnock is MP for Aberavon