Podcast Summary: LSE Public Lectures – The 2012 Autumn Statement

Date: December 19, 2012
Host: Martin Rogers (LSE Film and Audio Team)
Guest: Tony Travers

Episode Overview

This episode offers a timely analysis of the UK Government's 2012 Autumn Statement, delivered by Chancellor George Osborne. Host Martin Rogers is joined by political commentator Tony Travers to dissect the economic and political significance of the statement, assess its policy content, and discuss its implications for the government, opposition, and the broader economic landscape. The conversation contrasts the Autumn Statement with the preceding "Omnishambles" Budget and explores both fiscal and political credibility, as well as the likely impact of various tax and spend decisions.

Key Discussion Points & Insights

1. Setting the Scene: The 2012 Autumn Statement

• Main update: The government officially acknowledged that its target for deficit eradication had been pushed back several years.
  • "Because growth was much, much slower than was originally expected, that the Government's efforts to eradicate its deficit by 2015 were no longer going to occur... going to take to 2017, 18 or 2018, 19." – Tony Travers (00:18)
• Consensus among observers had already anticipated this extension prior to Osborne’s announcement.

2. Learning from the "Omnishambles" Budget

• Professionalism and presentation: Travers contrasts the Autumn Statement’s handling with the earlier, much-criticized Budget.
  • "The first thing is this wasn’t all leaked in advance, which was a big mistake they made in the March Budget. But more than that, he put on a confident performance..." – Tony Travers (01:07)
• Political impact: Osborne appeared better prepared, while the opposition (specifically Ed Balls, Shadow Chancellor) was caught off-guard, reversing the narrative from the chaotic Budget earlier that year.
  • "...it was seen that the Opposition had underperformed and that they had done less well out of it." – Tony Travers (01:23)

3. Credibility of the Government’s Numbers

• Use of future income: Critique of Osborne including anticipated proceeds from the 4G spectrum auction (which had not yet happened) to show deficit reduction.
  • "He’s already included that in order to show the deficit coming down. And yet he made a big play of saying we don’t fiddle the figures anymore like Labour used to." – Martin Rogers (01:51)
• OBR’s independence: Travers argues that while such accounting is odd, it is consistent with standard government finance practices; the more pressing concern is the one-off nature of asset sales.
  • "You can only sell things off once. So whatever the effect is in the next year’s figures, it won’t be there to have that effect in the year after or ever again." – Tony Travers (02:54)

4. Future of Public Spending

• Spending cuts v. Welfare commitments: The bulk of deficit reduction is being achieved by spending restraint rather than tax rises. However, protected areas (NHS and schools) and rising welfare costs (especially driven by demographics and sluggish growth) limit flexibility.
  • "A great chunk of public expenditure cannot be cut... for the remainder of public expenditure... they’re being hit much harder." – Tony Travers (03:50)
• Outlook: Further cuts will be required, impacting areas like capital investment and local government; these pressures are not likely to abate before decade’s end, regardless of which party is in power.
  • "...none of this will change. Even if there’s a change of government, that means very, very difficult. Huge pressures on particularly local government expenditure looking ahead." – Tony Travers (04:44)

5. Taxation and Stimulus

• Corporation tax cuts: The strategy of continued competition to lower corporation tax rates is questioned, especially given current publicity around multinational tax avoidance.
  • "Reducing corporation tax a little bit more is the key to Britain's economic success, I suspect is fanciful. It’s going to take more than that." – Tony Travers (05:42)
• Stimulus strategy (or lack thereof): The government’s focus remains deficit reduction; neither radical economic stimulus nor industrial policy shift is evident in the statement.
  • "If you ask, does this government believe in radical stimulus to boost growth in manufacturing, or does it believe in... radical changes to industrial policy, I think the answer is not. Not much clue in this Autumn statement that it's changing that view." – Tony Travers (06:55)

6. Political Fallout: Who "Won" the Autumn Statement?

• Relative performance: The government avoided major pitfalls; Labour failed to capitalize on the event.
  • "The budget this year was so bad for the government that even an average or moderate reaction... would have been okay. In fact, I think the government's come out of it relatively well..." – Tony Travers (07:40)
• The real test: Ultimately, the next election will hinge on economic performance, which is out of direct government control and shaped by global events.
  • "This will be the most important issue. And that's not in the hands of the government. It’s in the hands of what goes on in the Eurozone, what goes on in America and China." – Tony Travers (08:20)

Notable Quotes & Memorable Moments

• "You can only sell things off once... it won’t be there to have that effect in the year after." – Tony Travers (02:58)
• "Huge pressures on particularly local government expenditure looking ahead." – Tony Travers (04:44)
• "Reducing corporation tax a little bit more is the key to Britain's economic success, I suspect is fanciful." – Tony Travers (05:42)
• "Not much clue in this Autumn statement that it's changing that view." (On stimulus or industrial change.) – Tony Travers (06:55)
• "This will be the most important issue. And that's not in the hands of the government..." – Tony Travers (08:20)

Key Timestamps

• 00:18 – Acknowledgement that deficit eradication target is delayed
• 01:07 – Lessons learned from the "Omnishambles" Budget
• 01:49 – Inclusion of future 4G auction funds in the figures
• 03:33 – The mechanics and outlook for public spending cuts
• 05:23 – Critique of the corporation tax cut policy
• 06:36 – Government's stance on stimulus and industrial policy
• 07:38 – Political fallout: Conservatives vs. Labour
• 08:20 – Importance of global economic events for UK recovery

Conclusion

This episode offers a clear-sighted, non-partisan evaluation of the 2012 Autumn Statement. Travers emphasizes both the constraints on government action and the centrality of global factors to the UK’s economic future. The discussion is frank about the political theatre, fiscal realities, and limitations of the measures announced, providing a nuanced context for listeners seeking to understand both the details and the bigger picture.