Labour’s elephant in the room is its economic policy, and like the one on that black and white footage of Blue Peter, it is running amok, leaving its mess all over the floor. Labour’s economic strategy is conflicted. When in government, the conflict was between those who wanted to carry on spending, and those who wanted to slow it and manage the deficit. In the first scenario, the Tories were cast as cutters. Calling Cameron ‘Mr 10 Per cent’ was going to win the day. In the second, Labour could show that it saw high public spending as a means to an end, not a goal in itself. It might have allowed Labour to keep some semblance of economic credibility, now long-since shorn from our backs.
Now in opposition, a new version of the conflict remains. In January Andrew Marr asked Ed Miliband: ‘Do you accept that before the crisis happened, actually Labour was spending too much?’ to which our leader’s response was ‘No, I don’t.’ Yet he went on to explain how and why Labour would cut public spending to bring down the deficit. Labour needs a credible approach to public spending which recognises (as we did in 1997) that a trillion pound national debt is unsustainable. No Labour government should be spending more on servicing the debt than on defence. Yet the Labour frontbench is charged with talking the language of cuts, without a credible programme of cuts, or even the conviction that cuts are right.
Talking to shadow ministerial colleagues, one gets the sense that Labour’s electoral strategy is predicated on the economy slipping back into recession (the so-called ‘double dip’). Like Marxist revolutionaries, Labour ministers hope that the crisis of capitalism has within it the seeds of socialism (or at least Labour’s return to government). None would wish a recession on the country. But, secretly, they are praying that the Cameron-Clegg cuts are too deep and too hasty, and will vindicate Labour’s prognosis. How flawed is this? Let me count the ways.
First, there is no guarantee that rising unemployment, rising prices and cuts to public services will create a cocktail called Labour Victory. In 1983 and 1992, the Tories beat Labour despite the mass unemployment, repossessions and business failures. In a downturn, people are just as likely to cling to nurse for fear of something worse than vote to change the government. If downturn led to Labour governments, we would have been in power throughout the 1930s, and I don’t need to remind you that we weren’t.
Second, there is a strong chance that the Tory economic plan will be seen to ‘work’. A few hard years might easily be followed by a boomlet ahead of a 2015 election. The Office of Budget Responsibility predicts that growth post-recession will be sluggish, but that unemployment will fall back to six per cent by 2015. The rate of inflation will be within the Bank of England’s two per cent target towards the end of the parliament. With a multibillion pound surplus in his coffers at the 2015 budget, George Osborne will cut taxes rather than invest in public services. In 1987, Nigel Lawson’s pre-election budget cut two per cent from income tax and froze many excise duties. It created the ‘Lawson boom’ which led to the Major recession. But it was enough to win the election, a lesson not lost on David Cameron and Osborne.
The Tories might enter the election campaign with a smaller deficit and a successful variant on their 1996 slogan of ‘yes it hurt, yes it worked’ – and a cash giveaway. It might be a cut in income tax to generate a feel-good factor. It might be a cut in VAT to provoke a bonanza on the high street. It could be a cut on fuel duty, to cheers from every white van man and cabbie in the land.
The historic risk for Labour is to be on the wrong side of an economic argument which paints Labour as all heart but no head. In the 1980s, Labour was seen as caring and on the side of the public sector, but untrustworthy on running the economy. Everyone knew the Tories were heartless bastards, led by an Iron Lady, but they understood business and finance. Labour’s economic competence was built over many years, both in opposition and in government. It must be regained before any prospect of victory. That means a vigorous commitment to root out waste and pointless government programmes, and iron discipline to resist easy promises to spend more money than the coalition.
If Labour enters the election bleating about regional development agencies or the Audit Commission, opposing reforms in health and education, and sounding like we are itching to get our hands on your money, Ed Miliband will join Michael Foot and Gordon Brown as the least-successful Labour leaders in our history.
goodness you almost sound like that dreadful toff The Prime Minister nastily saying to Alan Johnson who is obviously a decent man and certainly not unintelligent, that he could not DO the numbers,when we all know full well its doing the BOOKS mate,a very different thing to just ‘numbers’. The Tories are surely using the ‘hurt em first then tell em ‘ to reinstate an old status quo whereby a business elite (sic) have government in their back pocket and so feel a sense of power without having to risk and dirty their image with aggression needed to succeed at the top of the pyramid that is capitalism. Labour certainly has the brains but things are so unstable at the moment in the global financial world and policy has to be developed along with an ideological position,whereas the Tories are already using their old school methods ?
Well if Labour does need a clearer economic policy then this article does nothing to suggest what it should be. It does however seem to draw on the same worryingly simple take on the current situation as Osborne, Cameron, Clegg and Alexander – that cutting spendng is the same as cutting a deficit. It would be a disaster if Labour did not challenge this from a postion of greater economic competence. You cannot cut a deficit because it is the balance between spending and revenue. The wrong cuts and the wrong pace will lead to a fall in revenue. We may be seeing the start of that with figures today suggesting a 0.5% GDP contraction in the final quarter. If you were in debt, would you take on overtime and work harder to earn more, or would you quit your job on the grounds that you cannot afford the cost of working? We need some economic planning for employment and growth. We cannot have government telling able workers to sit idle on their arses for a few years until the storm blows over. The nation has to work our way out of this situation and it is government that has to provide the stimulus.
T’is a pity you didn’t hold off until after todays announcement. Ed Balls has been smugly telling all that will listen, and that is all that are listening, that he told them so. The trouble that Labour has is that it embraced a regime of cuts before the Election and, as a result, everybody thinks that they are necessary. Necessary, that is, until it hits them. White van Nazi is not the only one screaming about pump prices, although he was told and did he really think going off to vote BNP would change that? Apparently, it t’was the weather that did it. Wrong kind of weather…lasted a whole quarter this weather. Let’s have an article suggesting what policy Labour should adopt, weather permitting or not!
Gove wants schools to teach “our island story” more ,how retrogressive ! “All mankind is of one author,and is one volume;when one man dies,one chapter is not torn out of the book,but translated into a better language;and every chapter must be so translated… As therefore the bell that rings to a sermon,calls not upon the preacher only,but upon the congregation to come:so this bell calls us all:but now much more me,who am brought so near the door by this sickness….No man is an island,entire of itself…any mans death diminishes me,because I am involved in all mankind;and therefore never send to know for whom the bell tolls;it tolls for thee”muppet. (John Donne)