Today should have been the triumphant budget from Osborne: the day he claimed the credit for balancing the books at last.
This afternoon, while studying the 2015 Budget ‘Red Book’, I thought it worth digging out a rare document from June 2010: George Osborne’s ‘emergency budget’ from the early days of the coalition.
Five years on, it makes for interesting reading.
On the first page, headed “Responsibility: deficit reduction”, the 2010 Budget sets out the Office for Budget Responsibility (OBR) analysis of the state of the public finances “without further action to tackle the deficit”.
In other words, the OBR is predicting what would have happened had the Tory-Lib Dem austerity budget never been implemented.
- Public sector net borrowing would remain at 4 per cent of GDP in five years time, having been above 5 per cent of GDP for six consecutive years, unprecedented in the post-war period;
- the structural deficit would be 2.8 per cent of GDP in 2014-15, while the structural current deficit would be 1.6 per cent; and
- debt would still be rising in 2014-15 to 74.4 per cent of GDP, with annual debt interest payments set to reach £67 billion in that year. 
The 2010 Budget suggests that such a state of affairs would be irresponsible, plunging the UK into uncertainty, and so pledges a “fiscal mandate to achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period” (2015-16).
What happened next?
So guess what? Under this Tory-Lib Dem government our public finances have performed even more poorly than the OBR predicted they would without action in 2010.
In reality, despite all the trumpeting by the coalition of their tough “fiscal mandate”, under this government we haven’t even stood still, let alone improved, on this forecast. On most measures, we’ve actually slipped back.
The OBR forecast figures published in the March 2015 Budget show:
- Public sector net borrowing is now forecast to be at 5 per cent in 2014-15 and 4 per cent of GDP in 2015-16 – the same level forecast by the OBR in 2010 without further action. For all the talk of their ‘long-term economic plan’, the Tories failed to make any more progress compared with the 2010 forecast.
- The structural deficit is forecast to be 4.2 per cent in 2014-15, while the structural current budget deficit is forecast at 2.5 per cent; on both these counts the coalition has fallen far short of the 2010 OBR forecast.
- Public sector net debt is still rising in 2014-15 and is now forecast to reach 80.4 per cent of GDP this year; this is more than five per cent higher than it would have been even if no further action had been taken in 2010, according to the original OBR forecast. 
On all of these measures – borrowing, structural deficit, structural current deficit, and debt – the effect of the Tory-Lib Dem austerity programme has either been worse than nothing or has made no improvements on the 2010 OBR forecast position.
It’s more proof, as if it was needed, that this government’s decisions on spending and tax were ideologically driven, not prompted by concern for the national interest. Their austerity budgets undermined growth for the first three years of this Parliament, leaving us in a worse position than if the 2010 Budget had never been implemented on the basis of the 2010 OBR forecast.
Far from balancing the books, this government’s economic and fiscal policies have harmed our public finances. As Ed Miliband said at the despatch box today: the only thing long-term about the Tory economic plan is that it will take them nearly twice as long as promised to eliminate the deficit.
Today George Osborne spent an hour telling people they are better off and have never had it so good. But working people are £1,600 a year worse off after five years of the Tories.
Once again, we saw confirmation that the pledge David Cameron made in 2010 to “balance the books in five years” has been broken. We’ve had five years of pain for ordinary people, five years of pulling away by the richest, and too little to show for it in deficit reduction.
1. Budget 2010, HM Treasury, June 2010, p. 1
2. Budget 2015, HM Treasury, March 2015, p. 112