Autumn statement 2014 verdict: Osborne’s biggest sham yet

Four years ago George Osborne dreamed his 2014 autumn statement would be a moment of euphoric triumph. The reality is a living nightmare – and one the chancellor is trying to cover up.

No wonder they were yelling so loudly. This is the issue on which the Conservatives hope to win the election. They want the virtuousness of their economic credibility to crowd out any other gripes about immigration, or the NHS, or anything else the country wants to talk about. It's why No 10 has cleared the decks before this week. Nothing is supposed to get in the way of Osborne's message.

It is an autumn statement built on dust. In a nation still groping around for any evidence of a meaningful recovery, the man in charge of the nation's finances has tried as hard as he can to suggest everything is alright.

But nothing is alright. It is falling to pieces. The forecasts, the hopes, the optimism of the Office of Budget Responsibility have been proved just as false as the Treasury officials they replaced. One thing – the political responsibility – has not changed. But on every area that really matters to ordinary people, the chancellor has found ways to avoid accepting culpability.

But the rise of a minimum-wage economy and the decision of many workers to accept the lower pay of self-employment has made his claims of 'full employment' laughable. Ed Miliband shook his head disbelievingly. This is how the opposition wins the election: by pointing out the coalition has failed to improve living standards. It is staring them in the face.

"On average, for every day this government has been in office 1,000 new jobs have been created," he gloated. "One thousand new opportunities for people, new economic security for 1,000 people every single day." Tory MPs bellowed their approval. "And," Osborne added, as if providing an afterthought, "Britain's long-term economic plan is working."

On the economy, Osborne again insisted things are looking up. The same forecasts that have proved so disappointing time and again are once again looking rosy. What he didn't say is that growth is slowing – the second half of 2014 looks like being very flat. Problems in the eurozone are hurting Britain's prospects: this was a great opportunity for Osborne to blame Europe – yet to do so would undermine his message, so he steered clear of it.

It was on the deficit that the chancellor proved most brazen. It was on the central mission of his government – the reason the coalition existed – that his determination to hide the truth led to his most unapologetic mistruth of all.

In 2010, standing at the same despatch box, Osborne had reeled off a list of figures about bringing down the deficit. It was, he declared, the purpose of all the pain and suffering about to begin. We were told to stick with it, because the agony would be short-lived. By the time of the next general election, it would all have worked out.

In numbers terms, that means the deficit should have fallen to just £40 billion in 2014.

It has not.

It is not even the £87 billion forecast at the Budget earlier this year.

Osborne looked his critics in the Commons, the nation and the world in the eye. With a mocking tone he told those who had forecast the situation was deteriorating that "their predictions are wrong".

"The deficit is falling this year and every year," he insisted. And then he explained how. "The Office for National Statistics has made revisions to the way national accounts are measured," he said smugly, before saying they were providing comparable figures to those issued earlier this year.

The result is that, on the old basis of working these things out, the predicted deficit is £86.4 billion. Not exactly a massive cut from the forecast £87 billion back in the spring. On the revised version, the situation is worse, at £91.3 billion this year. That really is a deterioration.

Labour MPs couldn't believe what they were hearing. Was the chancellor seriously suggesting that he had done a good job?

Sometimes when the chancellor makes these claims it takes some serious unravelling to work out where the deception lies. For this one to be so obvious, for him to be so patently speaking nonsense, was a sign of how weak Osborne has become.

And it stands to reason that in order to continue cutting the deficit much more austerity is going to be required.

Instead of planning the new economy talked about so much in 2010, the Conservatives and Liberal Democrats are working on plans to extend their drastic cuts to public services for many more years to come.

That is the real story of this autumn statement. But it is not the tale being told by the chancellor. He is entirely focused on spending on roads and flood defences in and around key marginal constituencies. He is changing the narrative away from his coalition's fundamental failure and towards a general election.

He hopes no-one will notice he is proceeding with a sleight of hand on a scale so large he might just get away with it. This is a nightmare scenario for Osborne, but he doesn't want you to know about the dark thoughts that confront him when he faces up to the truth of his situation. He wants you to focus on the smile, and the steely determination, and the long-term economic plan. It has never been more of a sham.