Osborne's Budget Surplus: A Cunning Sleight of the Right

17/06/2015 13:43 BST | Updated 16/06/2016 10:59 BST

George Osborne, the wily Chancellor, is at it again. In his latest political manoeuvre, masquerading as economics, he will commit Governments of all shades to run a budget surplus in 'normal times'. This means that Governments are mandated to spend less than they receive in tax revenues at a time, let's not forget, when increases in taxes are set to be outlawed. No prizes, then, for guessing where Governments will have to find surpluses from.

This is, though, nothing to do with economic prudence. Even by his own standards, Osborne has failed to put the country into surplus, and with tax credits and housing benefit ballooning to support a low-wage rentier economy, he will struggle to do so in the future. No, this has everything to do with politics. With a chaotic opposition that can't decide whether it is too left or right wing, Osborne's latest rabbit is designed to further destabilise Labour and commit them to a public perception of weakness on the one hand, or fiscal irresponsibility on the other.

With vociferous support from his chums on Fleet Street, Osborne will surely feel he can't lose. And you can already see the vacuous platitudes of household analogies ringing in the column inches. Economists have trouble with the idea that Governments are like households, and for good reason. But this doesn't matter, the message is clear, simple and resonates with the average voter whose intuition tells them that surpluses are necessarily good.

It may well be thus. And some countries do indeed mandate surpluses. But this intuition, this plea to 'common sense', relies on people's inability to make connections between the policy and what's happened in the real world. Governments create wealth for their people, but they do so with investment. Just like a start-up manufacturer borrows to invest in machinery for growth, so too can governments sell bonds to invest in infrastructure for the same end. Take the long view, the prosperity in health and wealth of today's baby boomers did not emerge organically from the invisible hand of the private sector. It relied on Governments running deficits to provide infrastructure, free higher education, a national health service, social security and housing.

So forgive this 20-something for feeling it a bit rich for the generation that benefited from mass public investment to decry it now as irresponsible. For it is us who will now take on future debts so that Governments can run future surpluses. That's right folks, when Governments run surpluses my generation, and the generations that come before mine, must run deficits - it's a zero sum game. Osborne's surplus rule is no more than a mass transfer of debt from the public sector, which can borrow at near zero interest, to the private sector, whose borrowing costs are many multiples of this.

Let's not hide from the real agenda here. It is disingenuous, and flatly untrue, to suggest that running surpluses benefits future generations. It does not. The increase in student debt, to replace Government grants. The increase in consumer borrowing, to supplement reductions in tax credits and housing benefit. The gargantuan mortgages needed to buy a house, to compensate for a failure of Governments to build affordable housing. This is a deliberate ploy to indent future generations for the lenders, the financial services, to whom our economy is depressingly subservient.

We have gifted the Tories the best chance they will ever have to strip the public cupboard bare on behalf of their associates and donors. And we have done so because of the contempt with which the largesse of the right has treated the electorate. Make no mistake, the Tories know exactly what they are doing and they are willfully complicit in this deceitful sleight of hand. When you hear a Osborne or Cameron tell you they are creating a more stable future, a better country for you and your children, realise this; there is only one beneficiary to a lack of Government investment and it isn't you.