Ask the Chancellors: economists' reactions
Updated on 29 March 2010
Tonight's Ask the Chancellors broadcast was the first of the big television debates before the general election. Here, a selection of prominent economists - and Guido Fawkes - respond to what was said.
Guido Fawkes
I think the room will say that Cable won that, he did a great job.
Dermot Finch, director, Centre for Cities
Can't believe how quickly the debate whizzed by.
Darling and Cable initially tried to gang up on Osborne, which partly succeeded. Darling talked up his own judgment, and looked the most relaxed. He had several bashes at Osborne's "poor judgment".
Cable had the best lines - "pinstripe Scargills" etc. But Osborne delivered some clear lines of his own: "We have no plans to raise VAT" and "We can't rely on a public sector recovery".
Overall, no-one screwed up and no-one entirely dominated. A three-way draw, with Darling just slightly ahead.
More on Channel 4’s Ask the Chancellors debate
- Ask the Chancellors: debate highlights
- Ask the Chancellors: internet reaction
- Ask the Chancellors: audience reaction
- Ask the Chancellors: live blog
- Ask the Chancellors: FactCheck
- Gary Gibbon: Cable man of the match
- Gary Gibbon: Cable wins, but nobody ganged up on him
David Blanchflower, Dartmouth College
The day started with a press conference where Slasher Osborne, as I call him, backed down somewhat from his mantra of cutting to suggest that he would reverse the rise for poorer paid workers in National Insurance Contributions planned by Labour in 2011.
I have always opposed this measure and have actually called for the Chancellor to remove entirely the NIC for two years for everyone under twenty five to deal with the crisis of youth unemployment. Unfortunately, to make this move that would imply even deeper cuts in public spending to pay for it. And there is the rub - Slasher wouldn't say, at the press conference or in the debate where he would cut, presumably in case of a voter backlash.
If the NHS, education and defence are ruled out then boy is there some slashing to come if the Tories get in. Maybe he intends to scrap Trident or cut the police force by 50% or halve the old age pension! If not Slasher has to tell us what he would cut.
And then to the debate, which was actually rather flat. There seemed to be more agreement than disagreement and nobody made a huge mistake. Cable seemed to get the most applause. He sounded the most technically competent. A PhD in economics helps sometimes!
There was agreement between Darling and Cable, as I suspected, that Slasher's plans for reversing the National Insurance increase were opportunist and not credible. In Darling's words his plans were 'irresponsible' as he didn't tell us how he would pay for them. All hand waving and political opportunism there.
Osborne was very much on the back foot and seemed rather flustered. He was also very defensive on his claim that he would find money from efficiency savings despite the fact as the other two protagonists had noted, a little while ago he had poured scorn on such savings. Slasher has a credibility problem on spending cuts. Cable argued he would not ring fence the NHS but Osborne says he would which boxes him in unnecessarily. Tough to rule out anything down the road.
Of particular interest was that all three agreed that in the years ahead, cuts would have to be draconian and worse than under Thatcher. None of them would rule out tax increases of course. All three took the opportunity to bash the banks. Cable made the very good point that Darling had rescued the banks and as part of the deal they had promised to lend and they hadn't.
Darling made one rather technical reply about the fact that some firms had paid off their debt that seemed to go over everyone's heads. Point scored by Vince. Point lost by Slasher when he attacked the banks and the high paid which probably won't go down that well with the Tory base.
None seemed very convincing in response to a young lady who asked what they were going to do to help her get a job or buy a house. Osborne sounded the most unconvincing when he replied that under his plans people would get real help from a work programme.
The only problem is that this is unlikely to work if there aren't any jobs. The only sector where jobs have been created over the last year have been in the public sector. The private sector lost over half a million jobs over the last year and the NHS and the education sectors added 80,000. Cuts in public spending, especially if done before we are out of recession are going to increase unemployment. And she still won't be able to afford a house if she lives in the south-east!
No fireworks. Nobody really came out with a howler. I think it was probably a three-way draw.
Prof Andrew Clare, Cass Business School
Basically, none of them really specified where these cuts in public spending are coming from – and I still feel that that’s disingenuous.
One could make very specific simple statements about reducing the rate of growth. For example, they could say rather than increasing public spending on education in real terms by two per cent over the next five years, we’re going to keep it at a level with inflation. We then could have work ed out for ourselves what that would mean in actual spending.
Cable got the closest when he said the Lib Dems would cancel Trident. But some of the measures that even he made were not that helpful – for example, he talked about cancelling the ID card scheme. But we’ve already spent billions on that, and you cannot just cancel a scheme like that with private sector contracts without incurring penalties.
One final thing. There’s two ways to get public sector deficits under control. You can increase taxes, in the same way the Japanese did. Or you can cut public spending, as the Swedes and Canadians did. And if you look at the difference between those two models, which one would you prefer to be? Japan, living through 10 years of deflation and depression and still spiralling public sector debt, or Sweden and Canada, that are today models of fiscal probity.
I guess overall, though, that Cable came out best. He was more specific, he was more honest with the public.
"It was a terrific way to kick off the election. I think having a whole hour just listening to people speak really gives you a chance to see their characters. I think this could change the whole way the election plays out."
Nigel Stanley, head of campaigns and communications, TUC
Many will have watched this as they would a sporting contest. The pre-match buzz said that the real test for all three was not to make a mistake. On that basis none of them did. Each managed a few shots at goal - and some of them hit home.
George Osborne probably had most to lose. The other parties have apparently identified him as a weak link. Tonight it did often seem to be two against one, even if not strictly true if you look at strict policy lines.While Cable and Darling agree that you should not cut spending this year, Cable and Osborne think you can tax banks unilaterally while Darling disagrees.
Perhaps this is because to the extent that there is still an ideological dividing line in UK politics, the Conservatives are one side while Labour and Lib Dems are on the other, however much Darling and Cable agree or disagree on particular points. And it was issues that illustrated this - such as inheritance tax when it came alive.
But I doubt that tonight's programme will have done much to change voting intentions. While Lib Dems can justifiably complain that they are excluded from the news, that does not apply to Vince Cable. No-one will have been hearing him speak for the first time, and his better record than most in calling the crash gives him moral authority, and I expect he will win the best performer polls tonight.
But Alistair Darling also derives authority from the comments that got him into so much trouble with his next door neighbour - and a similarly straightforward unflashy budget.
The contents of the debate were also pretty predictable. The differences are already well-rehearsed.
And while it was an entertaining exchange, it was as interesting to note what was not said, rather than what was.
There was little real debate about whether tax rises or spending cuts should do most to plug the structural deficit. None of them came out for Robin Hood transaction taxes as a progressive indirect tax that can provide real revenue even when introduced unilaterally.
No-one really wanted to set out where the cuts will hit, and we had diversionary tactics such as talking about public sector pensions for the few very well paid public sector staff that won't make any real contribution to reducing the deficit. There were too many euphemisms about efficiency savings, and tosh about saving front-line services. Public facing staff need the support from behind the scenes colleagues to do their job. If no-ones bought the scalpels, operations get cancelled.
Such debates will always have an inbuilt paradox. On the one hand everyone is interested because there is an election.But bBecause there is an election the politicians will be at their most risk-averse, focus-group fed and cautious.
Andrew Haldenby, director, Reform
Tonight's programme was so valuable in helping us understand the three parties' positions in this pivotal election. It showcased the role of television in elections and whetted the appetite for the leadership debates to come. But the actual content of the remarks was not so positive. None of the three really wanted to talk about lower levels of public spending despite the fact that all of the audience expected them to show leadership on how and what to cut.
The furthest they would go is that Vince Cable refused to guarantee every job in the NHS, quite rightly given the inefficiency in the service, and that George Osborne said that he would rather cut wasteful spending than raise taxes to pay for it. Most importantly, none of them explained that public services can be reformed to make them both better and more efficient, which is what people in the public sector think can happen.
Similarly none of them wanted to talk about tax rises. Getting more revenue from VAT was a taboo subject yet that would be the best way to raise revenue without penalising income and employment. All three candidates gave the impression that taxes on top earners affect that small group alone; in fact we will all suffer as the 50p rate tells the world that the UK does not want to be one of the very best investment locations.
All three were happiest talking about the banks but only George Osborne seasoned the anti-banker rhetoric with the real point which is that regulation failed in the UK but worked in countries like Canada. Alistair Darling claimed that the UK banks were now stabilised; I doubt he believes that.
Raspberry of the night went to the student who wanted a "guarantee" of a "job and a house". What about the flat screen TV?
