Plan A

[BillyStubbsTears]

RD

He certainly DID go in for Austerity. He cut back the things that he had control over. Specifically, capital spending which was slashed in 2010. That was the single most stupid thing that a Chancellor could have done in a demand-collapse recession. The second most stupid thing was also done as well, which was to sharply increase VAT. The result was that demand was depressed still further, and we took the decision to pay the dole to tens of thousands of construction workers rather than put investment into capital infrastructure (houses, roads, broadband etc).

Where Osborne has not been able to cut back is on welfare. Because the economy has flat-lined and welfare costs have stayed high. Other areas cannot be cut-back rapidly without causing huge dislocations. But the cuts are slowly stacking up. Education for example. After allowing for inflation, the Dept for Education budget in 2010 was £85bn in 2005 £ terms. By 2015 it will be £76bn. That's a bloody big cutback in the role of the state. Of course, last time our education spending was that low, we were processing the generation that the OECD report tore into earlier this week.

Good eh?

As for Plan B, I couldn't agree more. He saw that Plan A was a catastrophic failure, so he's done what Chancellors have done since time immemorial - gone for a good old fashioned housing boom to try to get a feel good factor before the Election.

Grand eh?

[IC1967]

Osbourne gave up on plan A months ago. I don't think he ever gave austerity a go properly anyway, we're still running a large defecit.

The economy has only started picking up after he embraced Plan B and started pumping up the housing market with his Help to Buy votes.

I agree he wasn't anywhere near as austere as he should have been. We are still living well beyond our means on borrowed money. Help to Buy is a disaster waiting to happen.

[Filo]

Osbourne gave up on plan A months ago. I don't think he ever gave austerity a go properly anyway, we're still running a large defecit.

The economy has only started picking up after he embraced Plan B and started pumping up the housing market with his Help to Buy votes.

I agree he wasn't anywhere near as austere as he should have been. We are still living well beyond our means on borrowed money. Help to Buy is a disaster waiting to happen.

Help to buy will only be a disaster to landlords that have been charging extortionate rents, now people wil be able to put their hard earned into property instead of lining the pockets of these snakes!

[big fat yorkshire pudding]

But it was the cutting in many areas that lay the groundwork for today's improvements and part of the reason why we're doing better than many others.

As for America, don't give me anything about how good they are.  Low wages, little return, thousands on unpaid leave and days away from default, I'd hardly call them the model economy eh?

As for this plan A, plan B rubbish, it is just that - rubbish.  Fact is you needed a bit of both which actually is what Osbourne delivered. Quite telling that councils have seen budget cuts but the study this week suggests improvements in services provided - amazing that.  The pubic sector is still riddled with inefficiency and they haven't gone nearly far enough.

I equally don't think the council should be playing for new political advisers. How about the political parties pay for them???  IF the labour mayor needs a political advisor, the labour party should pay for it (alongside all you mugs that listen to unions).

[BillyStubbsTears]

BFYP

"We're doing better than many others"

I'm not sure whether that comment comes from ignorance or a political angle, but it is quite breathtaking in its arrogance.

We have been doing far FAR worse than most of our competitors for the past three years. We have one quarter of better than expected growth and better growth than our competitors and suddenly it means that all is rosy.

I'll give you an exact analogy. You support a football team. It's manager ignores each and every basic tenet of football tactics. You lose on a consistent basis for three months. Most of the other teams are playing by the normal standards. Some do better, some do worse, but they all pick up points on a more or less regular basis. After three months, you are 20 points behind the next team. Your manger panics, looks back into history and finds that a straightforward long-ball game has often got team out of trouble. You try that and you win a couple of games. Your manager claims to be a genius who was right all along and your fans salute him as a hero.

It is farcical and frankly, disgraceful to hear Osborne claiming to be vindicated. Look at the graph I posted earlier and tell me honestly that Osborne's management of the economy has been competent.

[IC1967]

"We're doing better than many others"

I'm not sure whether that comment comes from ignorance or a political angle, but it is quite breathtaking in its arrogance.

I think its a bit strong to say 'but it is quite breathtaking in its arrogance'.  Its fact. We are currently doing better than many others. We've taken our medicine are are now getting better. The ones that only treated the symptoms by borrowing more and more money are eventually going to end up very ill.

I'd have more time for a Keynesian approach to things if only the politicians would put money away in the good times ready for use in the bad times. Unfortunately Mr Keynes didn't allow for human nature in all his proselytising. Any fool could work out that politicians would spend all the money in the good times (and a bit more besides) and then keep on spending in the bad times and quote the logic of Mr Keynes as an excuse to carry on spending. So while his theory may work in the classroom, it certainly doesn't work in the real world.

[River Don]

"We're doing better than many others"

I'm not sure whether that comment comes from ignorance or a political angle, but it is quite breathtaking in its arrogance.

I think its a bit strong to say 'but it is quite breathtaking in its arrogance'.  Its fact. We are currently doing better than many others. We've taken our medicine are are now getting better. The ones that only treated the symptoms by borrowing more and more money are eventually going to end up very ill.

I'd have more time for a Keynesian approach to things if only the politicians would put money away in the good times ready for use in the bad times. Unfortunately Mr Keynes didn't allow for human nature in all his proselytising. Any fool could work out that politicians would spend all the money in the good times (and a bit more besides) and then keep on spending in the bad times and quote the logic of Mr Keynes as an excuse to carry on spending. So while his theory may work in the classroom, it certainly doesn't work in the real world.

In the event though, after the failure of Plan A, he has had to revert to Keynes to create his housing boom in order to get the economy moving. Ironic, eh?

So much for rebalancing the economy to manufacturing and all that, it's back to debt fuelled growth.

[BillyStubbsTears]

RD

Bang on. And the irony is that he opted for the most dangerous form of stimulus. It'll take some very careful management to ensure that we don't have a catastrophic housing boom. Even if we don't, it'll do absolutely nothing to address the root cause of our housing problem - the fact that  house building has collapsed under Governments of both colours over the past 20 years. I looked at some number on this a few weeks back and they were terrifying. We have basically more or less stopped building affordable social-housing (what used to be council houses). And then, after the 08 crash, the private housing sector just imploded, from a historically already low base.

So, we're left with enormous amounts of demand, throttled off by banks that are terrified to lend, chase far too few, over-priced houses. Instead of addressing the house supply issue by subsidising cheap house building, the Govt has decided to try to address demand. Bizarre. This is one area where we truly DO need some activity on the supply side, and instead the Govt is stoking up demand for a limited supply - classic inflation territory.

But, in the short term, it'll make homeowners feel better about themselves, because they'll see the value of their biggest asset going up. Just in time for a General Election. Osborne may know the square root of f**k all about economics, but he is a consummate politician.

[IC1967]

I do genuinely believe that George does want to rebalance the economy. Unfortunately he has decided that creating a housing boom is his best chance of getting re-elected. Without it, he fears Labour would get in again and once more trash the economy. He sees a housing boom and a Tory re-election as far more preferable to Labour winning the election. So do I as it is the lesser of the 2 evils.

I do though wish our electorate were a bit better at seeing through Labour's pie in the sky promises so George didn't feel the need to do such a daft thing.

[Sprotyrover]

I would like to see some investment in social housing,however it needs to be thoroughly Policed to prevent the large scale fiddling that was rife between council officials and certain companies specialising in social housing. In the 'Good old days' I used to live next door to a house which was built with council building material in council time. The bloke died of a heart attack after he built it .probably because he over exerted himself for the first time ever in his working life!