Osborne: Not a penny more…


Osborne: Council tax in England frozen in 2012-13

The chancellor could have taken the title of Jeffrey Archer's most famous novel as the theme of his conference speech today - Not a Penny More, Not a Penny Less.

He is making it absolutely plain that he won't spend more than his deficit plan allows and will not spend less than it permits. So, his message to Tory tax cutters and Lib Dem infrastructure spenders is the same - only if it can be done within our existing plan.

George Osborne will set out a cost benefit analysis for his conference insisting that the potential cost of spooking the markets - a 1% rise in interest rates would cost families and businesses £10bn - outweighs the potential benefit of easing up a bit to spend a bit more or tax a little less.

However, he will insist that this does not leave government powerless since money can always be found for a bit more on infrastructure - Danny Alexander announced half a billion pounds at the Lib Dem conference; or a bit more for science - David Willetts has unveiled £200m to invest in Graphene, better computer infrastructure and to complete the mobile phone network; and George Osborne himself will confirm that he'll provide funds to allow councils in England to freeze council tax for another year.

Nick Robinson: "The chancellor's message today has been - the plan is the plan and we're not budging from it."

The unasked question here is - what if this isn't enough? Then Labour will insist that going slower on cuts and temporarily cutting VAT is the only answer, Lib Dems may increase their calls for faster infrastructure spending and some Tories will call for more tax cuts and faster deregulation.

The test the chancellor wanted to pass, though, was getting through the conference season with the markets still convinced that Britain was not going wobbly on its deficit plan.

PS He won't of course use the title of that Archer novel. Quoting a convicted perjurer wouldn't help when you're seeking credibility.

Update, 12:33: The most significant announcement in the chancellor's speech is also the one fewest will understand. It is his pledge that the Treasury will engage in "credit easing" - ie some as yet unspecified way to underwrite loans to small businesses who are struggling to get credit now.

The speech that they are quoting at the top of government is by Adam Posen - although I'm told that his proposal for a new bank may take too long to implement.

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  • rate this

    Comment number 31.

    Prior to the election & to a large extent now, the difference between the two main parties on spending is small The reason for that unanimity is 'fear of spooking the markets' A mature economy can get by without significant growth, not pleasant in recession but possible. On the other hand growth is essential for big bucks to be made out of the markets so expect them to be much less spookable soon

  • rate this

    Comment number 30.

    I can't help but compare UK stance with US stance - only if it can be done within our existing plan. Is this not what the American Super-Committee is supposed to be about?
    Failure to raise interest rates will inevitably cause inflation. This is happening now. So which would Osborne prefer - low interest rates (not doing anything beneficial) or inflation (which will dig into everyone's pockets)?

  • rate this

    Comment number 29.

    Fubar_saunders, correct. Whilst the tories did not win a majority of seats, they did win the vote by a much bigger margin than Tony Blair did in 2005. The vote did not translate into seats because of the massive in-built bias to labour as created by the various labour supporting boundary commissions.

  • rate this

    Comment number 28.

    The general population, never know the true story. Who to believe in power over us is the question we must ask - whatever party affiliation or the reporters?

    We survive in difficult times to keep our borrowing costs low from who knows where, while giving £billions to EU to support unelected EU Commission and overseas aid and our NHS is being dismantled?

    We are powerless - remain cynical.

  • rate this

    Comment number 27.

    Seems like the only people who think the policy is wrong are the unions , the Labour party and their acolytes .The people responsible for the enormous deficit in the first place. Do they honestly think that spending more money you haven't got is the answer to the problem. Ask Gordon Brown ; he knows it's not, because that is how he got us into this mess in spite of the oft quoted Prudence.

  • rate this

    Comment number 26.

    OK George - here's Plan B within Plan A's limits:
    1. Past a law committing the UK to sell off the £100Bn+ of bank shares over 5 yrs.
    2. Take the £20Bn PA and invest it in social housing
    3. Create 250k new construction jobs - and begin to solve rental problem
    4. Raise income tax threshold to £10k PA
    5. Raise state pension by £5 pw.

    Boosted demand= growth.

  • rate this

    Comment number 25.


    Your posts certainly never do, Jon. Same old tripe, day in day out, as sure as night follows day.


    "Looks like any Tory government to me".

    If this looks like a tory government to you, I would venture you spent between 1979 and 1997 in a cave or you're far too young to remember the last tory government.

  • rate this

    Comment number 24.

    biffmyster 15

    'well looks like we are going to end up the same as
    greece if it didnt work there why will it work here '

    It didn't work in Greece and it didn't work here. Spending way beyond your means for years on end that is. Now we're both paying the price for that folly. Thankfully we 'only' had 13 years of it and still have a chance to turn things around.

  • rate this

    Comment number 23.

    With all the cutbacks, where is he going to go for defence when the Falklands are invaded again? just give them away as he is doing for Britain

  • rate this

    Comment number 22.

    'credit easing' - there is already a Loan Guarantee Scheme available, just that it is so restrictive and unusable it doesn't get used.

    Don't we already own 1 or 2 banks we could use?

  • rate this

    Comment number 21.

    This morning a cautionary tale from Greece. Too much austerity might not be a good thing. Lower than expected tax receipts are making Greece miss its deficit reduction target as specified by the 'Troika'. No wonder the Greek PM was begging for the bailout money before the results were in. Were you listening George?

  • rate this

    Comment number 20.

    I question whether "a 1% rise in interest rates would cost families and businesses £10bn". This is offset by increased interest to savers and reduced costs of inports - the value of the pound would increase. We may be better off with higher interest rates. We need the whole costing, not just the half that misleadingly justifies lower interest rates.

  • Comment number 19.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 18.

    The economy is jammed between a rock and a hard place. There is no room to move..

    The Coalition has just three things it must do:
    Balance the budget.
    Reform the banks.
    Begin to rebalance the economy.

    The first will take five years: it may need to be faster.
    The second needs to be now: not in 2019.
    The third is the big difficult one.

    They really need to get a move on.!

  • rate this

    Comment number 17.

    Jeffrey Archer? The key gist of his message is more in the vein of that great philosopher of life, Kevin Cronin: 'sometimes I wish we could...leave all this trouble and heartache and pain for another day' but 'can't fight the feeling' the deficit has to be cut to keep the fire of the British economy burning so, roll with the changes, borrow less, spend less and live every moment, love every day.

  • rate this

    Comment number 16.


    `Back in the good old days of 2009-2010 the national debt was going down, the enconomy was growing, educational results where improving...'

    Sounds good: in what country was this taking place, then?

  • rate this

    Comment number 15.

    well looks like we are going to end up the same as
    greece if it didnt work there why will it work here
    and theres no one there to bail us out

  • rate this

    Comment number 14.

    I was brought up in Socialist Glasgow but realised long ago how well meaning but totally disastrous were the policies of Labour. George Osborne is absolutely correct in stating that you cannot borrow your way out of a debt black hole (created by New Labour). Cuts have to be made and the pain suffered. The hypocrisy of Socialists always amazes me eg. The Kinnocks, Blair, Mandelson etc. - greedy.

  • rate this

    Comment number 13.

    Good. I've been saying it for years - do not re-nationalise, but instead create a publicly-owned organisation to compete in the marketplace with private sector companies on equal terms.

    That includes any key area of infrastructure - banks, energy firms etc.

  • rate this

    Comment number 12.

    6 "We should have had a year of good solid growth"

    Like who, as a comparison?

    The fact is that what the coalition are doing is needed. It'll take time, that's all.

    Besides aren't you always going on about how brilliantly you yourself are doing?

    Me, I've just this month had a 7.2% payrise. That's very small, I admit, but these are tough times. You need a dose of realism Jon.


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