Osborne's putting the economy on the rack

They say it's a sign of insanity when you keep on doing the same thing over and over again, but expect a different result. That fits George Osborne like a glove.

He's been told by the IMF, the Organisation for Economic Co-operation and Development and the Federation of European Employers, let alone the CBI, Chambers of Commerce and the Federation of Small Businesses, that he absolutely must inject growth into the economy - and he knows that perfectly well himself - but he adamantly fails to do so.

He insists, against all the evidence, in continuing with the same existing policy of semi-permanent slump.

Osborne knows too that as a result government borrowing is rising sharply, not going down at all, which was supposed to be the whole point of this endless austerity.

The forecast he made in his 2010 Budget that public-sector net borrowing would be £322 billion over the period 2011-15 has now had to be revised upwards to a staggering £539bn, an increase in borrowing of £217bn. And this is for one reason only - the failure of the economy to grow.

So the central objective of the Autumn Statement mini-Budget was, and had to be, getting the economy to grow.

The magnitude of the Chancellor's failure is that as a result of all the measures announced in the statement, his own Office for Budget Responsibility estimates that it will increase the growth of the economy by precisely 0.1 per cent of GDP.

Almost all the predictions that he's now making about future growth are virtually identical to those he made in his first Budget in May 2010.

In other words, if at first you don't succeed, forecast the same two to three years later and imagine that the result will be different.

Osborne's other central objective, as he himself announced, was to rebalance the economy away from finance and in favour of a stronger industrial base in order to lay the foundations for future growth that would be sustainable long-term.

That's why he announced with some fanfare 18 months ago the "march of the makers."

It never happened. He's now promising £40bn of guarantees for private infrastructure investment, but he doesn't seem to realise that the problem isn't too little credit - it's too little demand for credit.

The construction industry is plummeting ominously, mainly because of its extensive dependence on the public sector, which Osborne is doing his best to shrink.

And as for manufacturing, Britain is suffering this year the biggest deficit ever in the country's history - about £110bn, or 7.5 per cent of GDP.

If this is not reversed, it must inevitably before long bring about an almighty crash in British living standards.

And what is causing it, or certainly greatly aggravating it? Persistent lack of growth.

Osborne is not insane, but he is insisting on keeping the British economy on the rack. And under his policies there's no hope of ever getting off it.

• Michael Meacher is Labour MP for Oldham West and Royton. For more of his writing visit www.michaelmeacher.info

The welfare state: Get the facts

It's been a long time coming, but the Tories never give up (if only Labour had the same determination and relentless drive!).

First they broke the pension link with earnings - that was Thatcher's opening gambit in 1979.

Now 33 years later they're breaking the benefits link with prices, even with the lower CPI index of prices, let alone the higher RPI measure.

Now that Osborne has so provocatively thrown down the gauntlet, Labour must make this the rallying point to link up with charities, churches, voluntary groups and community organisations, as well as Labour and trade union activists to fight this issue across the whole country.

For this is the first time since the 1930s that the income of the poorest households will fall in real terms as a result of deliberate government policy.

It's not as though the welfare state has become bloated and over-generous as the Tory press constantly parrot.

The facts tell a very different story.

Osborne is giving Labour an open goal to ram home the grotesque disparity in this government's treatment of rich and poor.

• The single rate of social assistance in 1948 was equivalent to 18% of earnings. It is now 11%.
• Of the £53bn real-terms rise in benefits expenditure, nearly half (£24bn) is accounted for by the rise in pensioner benefits.
• The £10bn rise in housing benefit is explained by the abject and reprehensible failure to build affordable homes which drives up rents because supply cannot keep pace with demand.
• Similarly the £17bn spent on family benefits and tax credits is a despicable subsidy to scrounger employers who don't pay their workers a living wage.
• Only £2bn is paid out in unemployment benefit, even though there are still over 2.5 million workless.
• David Cameron bangs on about the £5.2bn lost in benefit fraud - and of course any people who do engage in benefit fraud, or any other kind of fraud, should be firmly dealt with. But what he didn't say was that £4.2bn is caused by DWP or Treasury error. Nor did he mention that tax fiddling is on a far bigger scale - £35bn last year according to HMRC, £228bn over the last six years.
• The richest 1 per cent have had their 50p rate of tax cut at a cost to other taxpayers of £3bn, while at the other end of the scale an average family with two children will suffer a cumulative real-terms loss of £2,800 (£53 a week) by 2015-6.
• The 1,000 richest people in the UK, according to the Sunday Times, have gained a staggering £155bn in the three years since the crash.