Posts Tagged ‘budget surplus’

Labour must support George Osborne’s budget surplus law

11/06/2015, 04:15:30 PM

by Samuel Dale

George Osborne is fond of saying that in opposition you move to the centre while in government you can move the centre.

Ed Miliband’s disastrous attempt to move the centre from opposition is the latest example proving this valuable piece of political wisdom.

You can not change the rules of British politics from opposition but you can if you’re sat in the Treasury.

Labour built a new consensus over 13 years.

In the 2002 budget, Labour decided to increase national insurance contributions by 1p to fund higher spending in the NHS.

The Conservatives now back rising NHS spending every year.

The same is true of the minimum wage, devolution and public service reform

And so it’s happening again.

In his Mansion House speech this week, Osborne resurrected his idea to make deficits effectively illegal in “normal” economic times.

The plan is that only the OBR could approve a budget deficit and otherwise a surplus must be run. It shifts the political centre.

It’s an attempt to shrink the state and force future governments to cut spending or raise taxes if it wants to spend more.

Some in Labour argue it makes sense to “borrow to invest”, which justifies deficit spending even in good years. In simple terms it is sensible to take out a big mortgage loan (capital spending) but not a credit card (current spending).

Maybe. But the hard truth is that the economics don’t matter. With Labour’s economic credibility hole only the politics matter.

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