“We need a plan B!” “We need to spend more!” “We should be spending even less!” “Raise taxes!” “Lower taxes!” Just what should the chancellor do?
Poor Gideon, sorry, I mean George. It must be hard to do your job when so many people disagree with your plans. But what are his options, and what do economists, politicians and lobbyists think he ought to be doing right now?
The Conservative conference began this weekend and Osborne needs to justify his economic strategy and lay out plans to boost growth. But what exactly should he do to help the country recover?
Lest the chancellor is struggling for ideas, we’ve compiled this handy list of what other economists, politicians and interest groups think he should be doing.
If you’re reading this George then brace yourself. Some of your critics are quite… critical.
Cut less, invest more (says Labour)
According to the opposition, the Coalition’s economic strategy is “hurting but not working”.
Even though the shadow chancellor Ed Balls has admitted there would be spending cuts under a Labour government too, the party still has some helpful advice for its opponents.
Labour thinks George Osborne should temporarily reverse the VAT rise, which it claims is costing families with kids around £450 a year.
It also calls for the rich to be targeted, by reintroducing the 50p tax band and repeating the bankers’ bonus tax. The money should then be spent getting young people into work.
Last week, shadow chancellor Ed Balls argued that the government should help fund 100,000 new affordable homes and a two-year stamp duty holiday for first-time buyers. He said this could be partly paid for from the profits made by selling 4G mobile phone licenses.
Tax the wealthy more (say the Liberal Democrats)
At the party’s recent conference, Lib Dem leader and deputy prime minister Nick Clegg promised to push for a ‘wealth tax’, to ensure those with the greatest assets paid more.
He believes this would protect the poorest from further cuts, making the current austerity plans fairer.
This is on top of the party’s policy that a 1% ‘mansion tax’ should be imposed on residences worth more than £2 million.
Tax the wealthy less (says Liam Fox)
Conservative MP Dr Liam Fox has argued that capital gains tax should be suspended for three years to boost growth.
It’s currently at 28% but the former defence secretary told the Times it should be scrapped for three years and then reintroduced at 10%.
This would “shock” the economy back into growth and show the world that the UK is ready to do business.
Critics have said this would mostly benefit the wealthy and asked how the MP would fund such a cut. The answer didn’t please everyone – he would like the government to fund the tax break by cutting benefits further.
Increase minimum wage (says Unite)
There’s a way to get Britons spending and the economy growing, according to Unite, and it wouldn’t cost the government a penny.
The union’s general secretary Len McCluskey has called for the minimum wage to be increased to £7.19 an hour. He claims this will boost the amount they spend, reviving the flagging economy and boosting growth.
McCluskey said: “The minimum wage should increase because if low-paid workers received an extra £40 a week they would spend it, not put it into some fund in the Cayman Islands.”
Spend more (says the TUC)
There are few people more critical of the current economic policy than the TUC general secretary Brendan Barber.
He’s described the current austerity strategy as “failing spectacularly” and called for the government to change course.
What would he do? Spend and invest until the country is fixed: “The government must abandon self-defeating austerity, and prioritise public and private investment in infrastructure and in the futures of our long-term unemployed to get Britain working again.”
Quit (says a senior Lib Dem)
When you’re chancellor of the exchequer and the country’s in recession, you expect to be hit with some pretty damning criticism.
But few critics have been as outspoken as Lord Oakeshott, a former Lib Dem treasury spokesman and ally of Vince Cable.
He told BBC Radio Four’s World at One programme that Osborne was “doing well as a chancellor on work experience”. Ouch.
In his opinion, the chancellor should change roles and make way for Vince Cable to take over.
Spend more, even if he doesn’t have it (Keynes)
We can’t actually ask John Maynard Keynes, one of the most influential economists of the 20th century, what he’d do in the current economic situation. He’s been dead nearly 70 years.
But plenty of proponents of Keynesian economics are happy to tell Osborne exactly what he’d do. They say he’d restart growth by borrowing more money, printing more money and investing in infrastructure.
In effect, governments should spend money even when it doesn’t have it, in order to reignite growth and cut the deficit in the long term.
Cut more aggressively (Some Conservative backbenchers)
Some Tory backbenchers have started to mutter that the country needs a more aggressive deficit reduction programme. That if public spending fell even further, the chancellor could cut taxes.
The idea is that if taxes fell, the private sector would be spurred into growth, boosting the economy.
However, Osborne doesn’t seem to support this strategy. Following weaker-than-expected private sector growth, he’s extended his deficit reduction plans to seven years instead of the five he’d originally planned.
Expect to be booed (say Paralympics supporters)
Okay, it’s not fine-tuned economic advice, but it’s clearly what some people think. After a spectacular booing at the Paralympics, many of the hostile crowd told reporters that he should have expected that reaction.