So let's be honest about Osborne's budget. Not all of it is wrongheaded. It's just a bit of a shame that the main thrust of it is driven by a deeply flawed ideology that was proven to be a complete failure during the economic collapse of 2008. It simply isn't true that the free market is always the best way to get things done. Sometimes it is the best way to wreck the entire system in a huge banking collapse. Nor is it true that there isn't enough money around and austerity must be imposed. The Bank of England has created £375 billion of free money since 2008 and pumped it into the economy to stave off the worst excesses of austerity. That is why the economy grew before the election. If we want it to carry on growing it would be very simple to ask the Bank of England to do this again but this time to use that money more wisely. Say on investment in reducing energy consumption. Most of all it isn't true that the best way to save the economy is to make sure that the national budget is in surplus every year on both the current account and the investment account. This is in fact the best way to drive the economy onto a slower growth trajectory and thus increase government costs whilst lowering its revenues and make the deficit worse.
But let's resist the temptation to dwell on those tiny little negatives. Let's start on the positives. There really is a need to rebalance the economy away from London and create a series of regional powerhouses and the north is a perfectly good place to start. Investment per head in infrastructure in London massively exceeds investment in the provinces and the differential goes way beyond any increased costs of building in a large successful city. If we can get proper investment in transport links across a genuine northern powerhouse then it will ease pressure on housing costs in London, cut costs and increase competitiveness for UK business, increase work opportunities and boost prosperity in the regions and make the economy more sustainable.
Regional policy makes sense and rail transport links really are an important part of this. It is therefore very encouraging that Osborne has said time and again that he understands this and is determined to invest in a northern powerhouse. So credit when it is due. He is saying the right things.
Unfortunately when it comes to doing anything he is letting us down. What he is actually going to do is to put £300 million into funding a study into the possibility of starting the northern powerhouse sometime around 2020 and finishing it in the 2030s. He won't put any serious new money into real actual construction work on the northern powerhouse that starts happening right now. Instead he has told us that there will be billions invested at some point in the future. Provided, of course, that every Chancellor between now and then decides that this is a sensible investment and sees it through with determination and genuine money.
This is not a promise that has inspired anyone who has looked in detail at the implications. Nick Fallon the leader of the Liberal Democrats described it as fantasy investment on a fantasy powerhouse. Judith Blake, the Leader of Leeds City Council was equally unimpressed. She has claimed that over recent years the investment in rail infrastructure in London stood at 13 times as much per head as investment in Yorkshire and the Humber. Crossrail alone cost £14.2 billion and is close to completion. Whilst this excellent and very welcome project was underway the north has not was experiencing steady deterioration in the lines and the rolling stock year on year. This is the definition of serious disinvestment not a launch pad for an economic revival.
It would be very easy for the Chancellor to make a big difference in quite a short timescale by putting relatively small amounts on investment into improving the quality of local lines and linking them up more coherently. He is being constrained from doing so by an ideological straight jacket which tells him that he cannot undertake public investment without making budget cuts somewhere else.
This is a deeply flawed view of how to go about making sensible investments. A time of low interest rates and low inflation is the ideal moment for major infrastructure investments. When an economy is starting to slow the imperative is even stronger. Some of the investment could safely be paid for via a more constructive use of Quantitative Easing without incurring a single penny of extra debt. But Osborne's ideology of austerity won't let him do that. If that is too radical for him then he could follow the advice of almost every conventional economist and allow himself to pay for constructive long term investment via increased government borrowing at cheap long term interest rates. Once again his ideology forbids common sense practical action. If he really wants a powerful coherent transport hub across the north he could get the best value out of any investment by creating a single coherent transport authority for the north owning the entire rail service and providing a London transport style single ticketing system. But that would smack of nationalisation & so is beyond his vision.
This is a Chancellor who has quite correctly recognised that there is a very serious problem in the real world and then analysed it through the prism of an ideology which hasn't even begun to understand what happened to the economy in 2008. We may get investment. But it will come at the price of massive cuts in spending elsewhere. We may get new transport links. But the utter confusion of the rail service will be increased by selling each station off to separate private buyers. And we may eventually get increased prosperity for people in the north. Provided they don't mind taking out private insurance to cover themselves against any misfortune and discovering their schools have been raided to send cash down south and the doctors have left their local hospital to rot in its own deficit.
As I say, I think it is important to be balanced and only criticise the Chancellor for what he has actually got wrong!