Call it the revenge of the geeks. On every other day of the year, politicians feel free to play fast and loose with the figures. Anything to massage them towards their own ends. But having stayed up all night going through Treasury forecasts, the day after the budget belongs to the experts. This is when they get to have their say on the government’s competency, and the chancellor can do little but sit back and suck it up.
Philip Hammond is quite happy to kick back his heels and listen to MPs from all parties delivering their verdicts in the Commons in the post-budget debate, as he knows that almost all of them are totally innumerate. So even if one of them does happen upon an accounting error there’s a fair chance no one will know if it’s accurate or not. But a big thumbs down from the nerds can be career ending. And there’s no one the chancellor fears more than the Institute for Fiscal Studies, an independent thinktank that has a far better track record of getting things right than anyone in the Treasury.
Like all self-respecting professional economists, those at the IFS don’t function well in daylight. So an audience of more than 100 was bundled into an overheated, windowless underground cellar just off Tottenham Court Road in London to hear director Paul Johnson begin his presentation. His opening remarks were music to Freewheelin’ Phil’s ears. There were no major screw-ups in the budget. Everything did more or less what it said on the tin. Over in the Treasury, the chancellor took his Playmobil Michael Gove figurine out of his pocket. “Take that you little shit,” he muttered, jabbing pins into its head. “You’ll have to wait a while longer if you want my job.”
Had Freewheelin’ Phil spent a little less time working on his anger issues and more time listening to the rest of what Johnson had to say, it’s unlikely he would have remained quite so cheerful. The reason there were no major errors in the budget and it more or less balanced was almost entirely because there was so little of substance in it. It’s hard to get your sums wrong if you don’t even attempt to answer the questions. Best to keep quiet and be thought an idiot than to open your mouth and prove it.
If the aim of the chancellor’s apparent inertia was to inflict damage on the UK economy, he was nicely on track. The Office for Budget Responsibility forecasts for productivity, earnings and economic growth, made less than two years ago, had needed to be revised down massively. Britain was going to take a £65bn economic hit and a projected budget surplus of £10bn in 2019-20 was now promised to be a £35bn deficit. Productivity was flatlining, we were in danger of losing two decades of income growth and the UK was one of the worst performing countries among the advanced economies. And that was just the good news.
The real downside was that there was no end in sight. The chancellor’s remedy for austerity was more austerity as there were still £12bn of welfare cuts to work through the system. There was no chance of anyone in the public sector getting a pay rise much above 1%. In fact, it was quite likely that the government would cut the number of public sector jobs to pay for the well-below inflation pay rise. To make matters even worse, the chancellor couldn’t even blame Brexit for everything going tits up, as that had been factored into previous forecasts as an annual £15bn hit. This time the government had managed to cock things up all on its own without any outside interference.
Johnson sat down to allow other IFS economists to make the same points in greater detail. This time with graphs that all headed in the wrong direction. Not least the one that showed the last time any government managed to build 300,000 homes was when it did so itself. Something this government has no intention of doing as its promise of £44bn of funding was whittled down to £1.5bn of new money when put under the IFS microscope. Johnson couldn’t even give the chancellor’s stamp duty rabbit a total thumbs up. The best he could say was that at least the higher prices first-time buyers would be likely to pay would all go towards the house rather than the government.
One particularly depressed member of the audience asked if there was any point in the government having any fiscal rules at all as it never seemed to keep to them. Johnson shrugged. On balance, it was better to have some rules that got broken than none at all, he said. That was about as good as it got. No government ever got held to account for missing targets because it was invariably some other government’s targets that had been missed. Accountability was an illusion.
“In one,” yelled Freewheelin’ Phil. The rightwing press and his own party had decided his budget was OK and that’s all that mattered. By the time everything unravelled he would be long gone. Time for a celebratory drink.
John Crace’s new book, I, Maybot, is published by Guardian Faber. To order a copy for £6.99, saving £3,go to guardianbookshop.com or call 0330 333 6846. Free UK p&p over £10, online orders only. Phone orders min. p&p of £1.99.
