Now, although it wouldn't have been my personal choice to listen to George Osborne wittering away to the party faithful in Manchester, as it turned out, having to listen to his 35 minute speech and watch as he pushed against an open door was no great hardship really, considering that he made such a half-assed job of it in the end. I'm not quite sure whether his new hairstyle was designed to make him more likeable, or possibly more electable, but whatever the reason, he still came across to me as a faltering, out-of-touch and deeply dishonest spiv, which probably accounted for the content of his conference speech, with its overspill of political and personal hyperbole, jingoism and rhetoric.
I've said it before, but I'll say it again, I'm no financial expert! However, as far as I'm concerned neither are many of our elected representatives, most of whom couldn't run a bath, let alone a multi billion pound economy like our own; and Osborne has to be one of our least capable politicians, with a degree in history! Mind you considering that we have a modern day snake oil salesman actually running the country, we really shouldn't be surprised at the sorts of second-raters that Mr Cameron chooses to surround himself with. Compared to the likes of Osborne, Gove, May, Duncan Smith and Hague, Cameron probably looks golden, although it's a shame that in reality he's nothing more than Iron Pyrite.
Anyhow, to get back to Mr Osborne and his set-piece speech to the Conservative party faithful! Even though it had been heavily trailed beforehand, the central announcement was to inform the country that true to their party values and based on the ideology that they had inherited from the late Lady Thatcher; that they were going to give the unemployed yet another severe kicking. In line with the ethos of the Daily Mail's readership, all of the welfare scroungers, layabouts and shirkers were going to be targeted by SS (Social Security) Chief Iain Duncan Smith and his department, in order to ensure that they earned the £70 per week that was allowing them to live the "high life" at ordinary taxpayers expense. From now on, the 200,000 long term unemployed would be required to attend their local jobcentre each and every working day, or made to cook meals for the elderly, would be compelled to pick up litter, or if they were unemployed through addiction, lack of education, or training, then they'd receive as much help as was needed to get them back onto the right path.
Unfortunately, Mr Osborne failed to explain how this new shiny Welfare programme would help the remaining 90% of the country's unemployed. Bearing in mind that we currently have 2.5 million people out of work and that the 200,000 mentioned only represents 10% of that total figure, what is he going to do about the other 2.3 million that are looking for work? Also, on a basic calculation, the cost of the scheme is reported to be in the region of £300 million, which if divided by 200,000 jobseekers, works out at £1500 per person. Just who is going to monitor and oversee these unemployed jobseekers, when they turn up at the various jobcentres, when they are cooking meals for the elderly, when they are picking up litter, or when they're being retrained, re-educated, or weaned off their various addictions? And how is £1500 per person going to pay for that in the long term?
Even though most Conservative politician's seem loathe to describe the new programme as a workfare project, in essence that is exactly what it is, a more modern version of the Victorian workhouse, where inmates (or in this case claimants) are compelled to work for their supper (or benefits). The danger is of course, is that in common with the old workhouses, how can one ensure that abuses within such a wholly compulsive work programme do not arise through the actions of those people overseeing the project; and the compliance of the participants, or indeed at the hands of some of the various commercial organisations that will ultimately benefit, from what is after all a free labour resource. It is no great secret that a significant number of Britain's major employers made full use of jobseekers under the terms of the Coalition government's previous employment scheme, to the extent that some high street businesses were able to save themselves the regular cost of paid worker's wages, simply by accepting jobseekers from the government's work scheme, at no cost to themselves. At the time, the Coalition were openly accused of offering "cheap labour" to some of the UK's wealthiest employers, a charge that both vigorously denied, but which continues to taint their corporate reputations right through to the present day.
It cannot be a coincidence that Britain's 2.5 million unemployed closely mirrors the 2.9 million foreign workers that both Labour and Conservative parties have allowed to come into our country over the past two decades, something that Mr Osborne was keen to lay at Labour's door alone. Although no-one should doubt the serious damage that both Tony Blair and Gordon Brown's administrations actually did to the indigenous population's employment prospects, the harm done by John Major and that continues to be done by David Cameron and Nick Clegg's parties in coalition should not be understated especially by George Osborne, one of the chief architects of their overall strategy. After all, it wasn't Tony Blair or Gordon Brown who decided to take a fiscal knife to the UK's Public Sector workforce, to the NHS, to the Police Force, to the Armed Forces; and in the process putting tens of thousands of workers on the dole. That was entirely the work of the Coalition government, of David Cameron, Nick Clegg, George Osborne, Liam Fox, Philip Hammond, Andrew Lansley and their own cost cutting cohort.
But of course the financial probity of George Osborne's Coalition government is another one of those great deceits that have become a characteristic of British government over the past few decades. As the Chancellor of the Exchequer, one would expect Mr Osborne to know the difference between the Government's Borrowing Deficit and the UK's National Debt, which are entirely different to one another, but often confused, either accidentally, or sometimes deliberately, to confuse the general public.
The Deficit is actually known as Public Sector Net Cash Requirement, which was previously known as the Public Sector Borrowing requirement. This is the rate that the UK government must borrow in order to maintain its financial commitments on an annual basis. In his speech today, George Osborne told his party conference that he had cut the deficit, the PSNCR (or the PSBR) by one third, even though at the beginning of the coalition's first term in office, the intention had been to cut the deficit entirely by the end of their first five year term, an objective that has now been put back until 2018 at the earliest. Bearing in mind the austerity measures introduced by the coalition government, including the billions saved on the cost of the NHS, Public Sector workforces, the Armed Forces, etc. this explains the reduction of one third in the deficit claimed by Mr Osborne. As he is spending less on government projects, he therefore needs to borrow less from the international markets, hence the overall reduction in the deficit. However, the deficit is entirely different to the UK's National Debt, which is still rising and that is explained below. As an example in the year 2011/12 the UK government's total spending was an estimated £710 billion, while its total income was only £589 billion, leaving a shortfall of £121 billion, which it had to borrow from the international markets. This £121 billion then became the deficit and currently cost some £2 billion per week on the National Debt simply to service it.
The UK's National Debt is the total amount of money owed at any one time through the issue of securities (gilts, etc) by the UK government. As of the first quarter of 2013 the UK's total National Debt was said to equal £1,377.4 billion, or 90.7% of Gross Domestic Product. The cost of servicing the UK's National debt was estimated to be £43 billion per year, or 3% of GDP. Forecasts suggest that the UK's National Debt is expected to rise to 95.6% of GDP by the end of 2013, to 98.7% of GDP in 2014. Because of the still relatively high Budget Deficit, as mentioned above, the Coalition government's National Debt is reported to be increasing by £121 billion per annum, or £2.3 billion per week. It was in part due to this stubbornly high Deficit that the International Credit Rating Agency Moody's downgraded the UK's Debt worthiness from AAA to Aa1.
By peacetime standards the UK's National Debt is fairly high, but during World War II Britain's National Debt was reported to have risen to 180% of GDP, although given the circumstances such a high rate was hardly remarkable. Depending on who you ask, some sources believe that the UK's total National Debt, including all outstanding government pensions, etc might be as high as £5 trillion, whilst most other estimates suggest a figure of between £845 to £900 billion, around 35% of which is owed to overseas investors.
The point is this. Along with David Cameron and many other politician's, there is a suggestion that Mr Osborne likes to play fast and loose when talking about both the Deficit and the National Debt and how exactly that message is being put across to the viewing public. Although Mr Osborne has undoubtedly reduced the deficit, mainly through introducing austerity measures to big spending sections of the economy, it is clear that the National Debt has continued to grow; and will continue to do so. As of 2012, it is reported that the National debt costs every British household around £2000 per year to service, a situation that is likely to get worse in the coming years.
The other great announcements made by Mr Osborne at conference were the "Help To Buy" campaign and his support for the proposed HS2 Rail Scheme, both of which he believes will be hugely beneficial to the UK economy. Making the point that house prices are falling in the North, as opposed to rising in London and the South, Mr Osborne's entire argument was flawed right from the start, although he didn't seem to let a little thing like that get in the way of his argument. Surely if house prices are artificially high, due to a shortage of homes, then maintaining the high prices with government backed mortgages is simply going to drive prices even higher again, as affordable homes become an even scarcer commodity. Surely commonsense would dictate that prices need to be allowed to fall, thereby making properties more affordable. Rather than London and the South being the exception, by maintaining the high property prices, the Coalition is simply replicating the London price model nationally? The last recession was caused in part by the huge sub-prime market in America, where house buyers were actively encouraged to take on excessive debt, only for their investment to go belly-up when the interest rates increased. So George Osborne is encouraging first-time home buyers to take on excessive debt with government help, when interest rates are almost non-existent, so what happens when interest rates start to rise, which they inevitably will at some point in time, possibly when the unemployment rates reach 7%, as suggested by Mark Carney, the new Governor of the Bank of England.
Like I say, I'm no expert, but neither does it appear that George Osborne is either. Most experts believe that you have one of two options to drive an economy forward, you either save your way out, or you spend your way out. Clearly the former option, as adopted by George Osborne, with all of his cost cutting, services cutting, welfare cutting, jobs cutting and every other sort of cutting, is still driving our National debt through the roof. What began as a five year plan to eliminate the deficit completely, has now become an eight year plan, assuming of course that he doesn't change his mind again in the next couple of years. That's the trouble though when you appoint someone who isn't an economist, to do an economist's job, they're almost certain to screw it up! But then maybe that's why you get a speech like Mr Osborne gave today, long on rhetoric and short on good ideas, because that's what people do when they haven't got a clue?