The Coalition this week launched a media briefing campaign around the idea that the Labour Government had deliberately overspent prior to the election; this is far from surprising as George Osborne has been promising that he would find that the budget was much worse than previously thought for over a year. This clearly fits with both the original assumptions of the Tory campaign - that they would win a large majority and be in a position to implement their manifesto and more - and also with the later "rush to Downing Street" plan to demand a Tory minority government "to reassure the markets". How well it fits with the coalition is another matter, although the fact that the first story to deploy is sourced to Vince Cable suggests that the Tory and LibDem spin operations are currently functioning fairly well together. Alternatively, this could have something to do with Vince having given a post-election interview to the Guardian in which he described his ministry as the "growth ministry" and a counterweight to George Osborne - perhaps he's been ordered to keep better station on the flagship.
However, whether it is at all true is another matter. As Chris Dillow points out, new finance ministers always say this. Gordon Brown called an emergency budget in 1997, if memory serves. And, shortly before the election, the latest lot of budget numbers actually turned out to be £22bn better than expected - not a trivial sum, in fact roughly the same as the 2000 UMTS spectrum auction brought in. This is important - this wasn't really a surprise, as the previous figures reflected the tax revenues of January, 2009, or the absolute pits of the Great Recession. The trendline is going the right way. As the increasingly influential LibDem economist Giles Wilkes - who's written a whole valuable report on reducing the budget deficit - points out, there simply was no "spending spree". The UK fiscal stimulus was relatively small; what made the difference was the economy running over a cliff, taking tax revenues with it. As this chart from his report shows, over half forecast government debt for 2012-2013, the expected peak year, is directly attributable to the crash - essentially, everything on the left half of the chart.
You could also ask impeccably neoliberal Financial Times columnist Martin Wolf:
It's due to the recession
But "it's worse than we thought!" is a classic from the political playbook. Becoming the government isn't the same thing as winning the election - as we've all learned from the last few weeks. It requires gaining other people's confidence, gaining legitimacy, gaining media control. Declaring a crisis is one way of doing this - it puts the other side on the defensive, and provides an instant legitimacy hit for whatever you're planning - especially important when there is only a brief gap when parliament sits before the summer recess.
Hence the story of the Clinton aides stealing all the Ws from the White House keyboards and trashing the building - basically fabricated, as Bob Somerby pointed out. The same little plan was rolled out in the UK for Boris Johnson's first few weeks as Mayor of London - we were informed that a special audit would soon reveal that vast sums of money had been stolen by the socialist menace. Remember the famous wine cellar? Committees were formed. With wearying inevitability, nothing turned out to be wrong, but a significant number of Tory campaign staffers and sympathisers did manage to spend many months on the public payroll as part of the "transition team".
So, we should be structurally suspicious of this stuff. Even more so when the last-minute scorched earth strategy turns out to include the RAF's new aerial refuelling tankers - a contract which passed Main Gate in 2007 and was finally signed in March 2008, as Flight International reports. Fortunately, parliament ain't in session yet, so you can lie as much as you like. We'll have more to say about those tankers, by the way. Another element of the strategy is the creation of the "Office for Budget Responsibility" - there's a PR-tested monicker if I ever heard one. There's a basic discussion here, but there are a lot of questions that want asking here. At the moment, and essentially forever into the distant past, forecasts of macroeconomic aggregates like the government budget are prepared by the Treasury and the Office for National Statistics. That is to say, by civil servants who are employed under the provisions of Northcote-Trevelyan, with the right of appeal to their line managers and the Civil Service Commission.
In order to avoid the possibility of political interference, we're asked to believe, they are to be replaced by Sir Alan Budd, and a logo. Why Sir Alan? Because George says so, as far as we can make out. He is, in any sane sense of the word, a political appointee - he's not a civil servant, he's not been elected, he serves at the whim of the executive. Has there been a competition for the job? Really, have any of the normal procedures for making important public appointments been followed? There's hardly been time. This is as classic as "it's worse than we thought" in the political playbook; it's another example of replacing responsibility to the elected power, or to some intermediary institution, with "accountability" to either accountants - i.e. the private sector - or to the prime minister's power of patronage. It's a key element of modern thinking.
The genuinely worrying thing about this is that the Tories, taken in a broad sense, have form for wanting policy-based evidence. George Osborne and Fraser Nelson have been in the habit for some time of using their own, cooked, measure of the government budget to pretend that the country is more indebted than it is. The trick works like this - you simply redefine the measure to include more stuff, typically the bank assets, public pensions (and sometimes, if you're feeling really dishonest, local authority pensions, despite the fact they are funded and therefore asset-backed), and PFI schemes. As no other European country does this, you get a big number. This completely ruins the utility of the statistics, of course - there are basically two purposes of statistics, to make comparisons in space and to make them in time. In order to compare the UK with other countries - say, if you wanted to buy government bonds - you'd have to reconstruct the proper data. If you wanted to know if the UK was getting more or less indebted - say, if you wanted to buy government bonds - you'd have to reconstruct the proper data to get around the huge discontinuity in the time series.
But then, Tories and statistics don't go together. Here's Michael Howard in 2004, wanting to abolish the British Crime Survey because it didn't agree with him. Later, during David Davis' time as Shadow Home Secretary, the BCS figure for the crime rate went above the police count of reported crime, and Davis shifted overnight to using the BCS - it was now the more alarmist option. Of course, if your aim is to impose a hard-right Tory programme on the country, scary budget numbers are very handy. And, well, if you can redefine the stats one way you can redefine'em back the other way when it suits you, as the above example makes perfectly clear.
The TUC blog reckons that the Tories are keen to cut the investment budget for what used to be Peter Mandelson's department, now under new management. BIS has been quietly pushing money into manufacturing over the last couple of years - funding Sheffield Forgemasters' new 15,000 tonne hydraulic press, something you need if you ever want to make a nuclear reactor containment vessel, for example. And it's having some impact, obviously in the context of the cheap pound and recovery in world trade. Sensible people recognise this...sensible people like Giles. So there's a defining tension in the coalition between the Treasury and BIS - oddly, having a coalition partner in charge of it probably considerably boosts the second economic department's power. Which is another reason to want funny figures.
The people like Giles Wilkes had a choice of the people like Chris Dillow or Duncan Weldon, or the ones like Fraser Nelson and Paul Staines. Their choice is a matter of record.