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The Times today leads on the fact that the Civil Service are preparing ‘doomsday cuts’ of up to 20% in public spending in order to get government finances back in order after the next election. Prime Minister’s Questions of course has focussed on little else in recent weeks but the increasingly desperate struggle on both sides to open up clear blue water between investment or cuts on the Labour side, or parsimony versus profligacy on the opposition benches.
Whatever your position on the political spectrum, the size of the budget deficit is truly worrying. This year alone, public spending will constitute 48% of GDP yet only 38% of GDP will be raised in tax receipts. That gap, an eye-watering 10% of GDP, has to be met by borrowing, something that is contingent on people wanting to continue lending money to us. The signs here are looking less than favourable.
In the first instance let me be clear that I think that the counter-cyclical spending is necessary; the aggressive actions of the Government have undoubtedly lessened the impact of the contraction. To paraphrase the Nobel laureate economist Paul Krugman, ‘public debt bad, economic depression worse.’ So, in this instance, the Tories incessant bleating about the size of the national debt misses the point*. However, politics cannot exist independent of economics, nor can economics ignore politics; confidence in the political system reinforces confidence in markets and vice versa. In short, it’s the deficit stupid. In setting up a false argument, and seeking clear ground between ourselves and the Conservatives we are not only abandoning the centre-ground; we risk playing fast and loose with Britain’s solvency.
And I don’t make this claim lightly. The first duty of any government is to be an effective steward of the nation’s finances. Labour must start to face up to the facts now that we are going to have to pare back spending; pet projects will have to be put to sleep, the credits cards will have to put cut up, and we will have to face an era of living within our means.
Whilst all this is happening, let’s not talk about another bankers ramp, or treat commiting ever larger slabs of money to public spending as a test of virility. And let’s not go for easy or politically palatable targets; Trident for example is actually surprisingly good value for money constituting only 3% of the defence procurement budget. Besides, defence spending only makes up 5% of public spending so talk of defence cuts all you like but even spending nothing on defence would still leave a massive hole in public finances.
We need to grit our teeth and look at the three biggest areas of spending; welfare, health and education. These are areas of great achievement for the government but we shouldn’t be blinded into thinking that things couldn’t be run more economically or that every penny spent has achieved value for money. And in the coming age of austerity, value for money is what will count.
In short, the till is nearly empty; let’s face up to cuts now rather than offer a false prospectus of ever-increasing spending. The public don’t buy it and neither should we.
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*Besides, much of the debt was accrued taking stakes in banks that will eventually be resold, hopefully at a net profit to the taxpayer.
So, Maggie is apparently unhappy with how the PM is handling the economy. Strip away the fact that her government legislated to ban Christmas and made it compulsory to jab puppies with knitting needles. Ignore, for a minute, the fact that the big-bang loadsa money ethos of the 80s which created a culture of invincibility in the City and destroyed our manufacturing base got us in the mess we’re in and is hampering our ability to get out of it. No, let’s not dwell on the apartheid-supporting, democracy-emasculating, section-28isms, which, when we look back are kind of endearing. I mean, she never really meant any harm did she?!
Let us instead take a little closer look at one of the underlying arguments that the Lady (and many other Tories) is making. That argument is this: the Tories are the economically competent ones who have always come in to clear up the mess of a Labour government. To see if this is true, or indeed a pile of horse-shit, let’s work through post-war governments of both stripes (with tongue slightly in cheek) and hopefully try and dismantle some of the mythology around Thatcher that she somehow was Britain’s saviour.
OK.
1945-1951: Labour. Despite the fact the country had nearly bankrupted itself defeating the Thousand-Year Reich, the government managed to create the NHS, a universal welfare state, and nationalise pretty much whatever wasn’t bolted down (and a lot of things that were). Yes, there was a devaluation, but this was more than anything brought on by the ridiculously over-ambitious crash rearmament programme that preceded the Korean war. In implementing Beveridge, it aimed for a total employment figure that, whilst well meant, 30 years hence would prove massively inflationary.
1951-1964: Tory. Some good stuff might have happened but I’m not propagandising for the other side. Suez wasn’t so good, causing a run on the pound so epic that Britain was forced into a humiliating climbdown. Later, under Macmillan, the whole Treasury Team (Chancellor and Ministers) resigned because the Tories handling of the economy was, to put in bluntly, piss-poor.
1964-1970: Labour. England win the World Cup, liberalisation of laws concerning homosexuality, divorce and abortion, and the OU is founded/new universities are built offering access to higher education for hundreds of thousands of people. Another devaluation, arguably reflecting the UKs deteriorating industrial performance since the mid-50s onwards (when much of European industry was able to start competing again after being flattened in the war) and the unwillingness of governments of either party to take on vested interests and modernise. In short, not spectacularly competent on the economy, but no worse than the preceding Tory shambles.
1970-1974: Tory (well some of them would like to disown Heath but he was one of yours guys. Sorry!) Anyway, Rolls Royce nationalised, percentage of the economy controlled by the state highest ever recorded. 3 day week. Miners strike. Other bad things.
1974-1979: Labour. Industrial unrest continues. Inflation takes hold (see 1945-1951), unions don’t help. ‘Winter of Discontent.’ BUT by 1976, an ideological shift (if not shared by all Labour members as a whole) had taken place. Callaghan addresses the Labour conference and rejects throwing money at things. Healey goes to IMF and shows signs that he gets it too. In short, much of the heavy lifting for Thatcher is already going on. But boy did she put her own stamp on it…
1979-1997: Tory. That woman (followed by some grey bloke). Rather than saying, yes, Britain suffers from some serious structural problems (outdated industry, over-mighty unions) that with work, patience and courage can be turned around, she unleashes an economic blitzkrieg which, when dealing with the ossified Morrisonian public corporation dinosaurs only means one thing. Unemployment. Massive, intergenerational unemployment. Crime rockets. Homelessness soars. Riots in Toxteth, Notting Hill and Trafalgar Square. Wearing of red braces and stripey shirts made compulsory within the square mile, as are phones the size of hot-hatches. Sunshine privatised and metered back to the poor… Then Major comes along and does something. No-one remembers what exactly it is he does (except for muffing it up royally on Black Wednesday and losing an MP in bizarre circumstances). Also, the Hamiltons. Don’t forget them.
1997-?: Labour. A new Jerusalem. Death and illness are abolished. Poverty and suffering outlawed. Commentators complain when budget surpluses and proceeds from wavelength auctions are used to pay off national debt. “Surely a bit of debt doesn’t matter?” they say…
So, to wind up an overly long piece, what I’m saying is that post-war economic management by governments of both colours was pretty ropey. But, and this is a big but:
1. Labour governments still managed to do some pretty awesome things whilst we were going to hell in a handcart.
2. Callaghan (and Healey) are the ones who deserve the credit for bringing us to our senses. As Oliver Kamm puts it, “[Callaghan's] greatest single achievement was to destroy Socialism as a serious proposition in British politics. The principal turning point… in the past 60 years was not 1979, when Mrs Thatcher took office, but 1976″ (see 1975-1979 for the reason why).
So, unsurprisingly it appears that Lady T is talking rubbish.
“We’re going to cut public spending in order to enact a tax-cut that will cut private spending. That’s exactly what we need when aggregate demand is collapsing.”
Genius.
Some people say that if you can’t beat them, join them. I say that’s rubbish: if you can’t beat them, cheat.
Before I get charged with opportunism, I’ve always been an advocate of voting reform- some kind of AV system would probably do the job best- but the problem with voting reform is that the minute a party gets a majority, the minute voting reform is ditched.
So, given that experience of the last 30 years probably demonstrates that thumping majorities don’t do the parties that have them any good, perhaps it’s time to bring voting reform back onto the agenda?
It might just be me, but politics at the moment seems so chroncially boring I just want to switch off completely. Whether it’s the self-feeding, media-induced sense that there is crisis in the heart of government or the constant predictions of how big the Tories’ majority will be, I’ve lost interest in the next general election two years before its probable date. So, OK, things have gone wrong in the last six months but mistakes get made by governments of all colours- it just happens that we’ve had a particularly concentrated period of them that’s not been helped by the media acting as a feral pack and deliberately trying to destabilise things further. Looking abroad as well, there’s nothing to get cheered about: the European project still seems to have stalled and needs to get a new sense of momentum, the centre-left is in retreat across the EU, and McCain is going to win in November regardless of who gets the Democrat nomination (besides, both Democrat candidates are so lousy I’m not sure that’d be such a bad thing). Anyway, I hope to rejoin the fight soon but quite frankly, at the moment, I just don’t care…
Apparently, our campaign team is following the Conservative candidate around wearing Eton top hat and tails. He didn’t go to Eton, but then, why should the truth matter when it comes to making a particularly crass, ineffective, and divisive point about class? Surely they realise that this is going to backfire?
Morevoer, as Dominic Lawson in today’s Independent, has pointed out, our attack on inherited wealth and status “jars almost comically with Labour’s decision to field as its candidate Tamsin Dunwoody, the daughter of the late MP for Crewe and Nantwich, Gwyneth Dunwoody – who was herself the daughter of the former general secretary of the Labour Party, Morgan Phillips.”
Surely someone realises that these attacks don’t work? Cameron went to Eton, and he’s ahead in the polls. Boris went to Eton, and he bloody well won. Sometimes, I despair…
“Save the poor, vote Tory” has the ring of “Save the whale, vote Harpoonist” about it.
-Tim Hames, The Times, 12 May 2008
It’s great to see that my colleague in the Oxford Labour Party, Cllr Joe McManners, got a motion passed last year to ensure that all City Council employees are paid at least £7 per hour, effective from April. Getting measures like this passed is particularly critical in cities like Oxford where the cost of living is so high. Hopefully, now that Labour has regained the reins of power at Oxford Town Hall, the extraordinary purchasing power and influence of the council can be brought to bear on all employers across the city to give workers a fair hourly rate.
It’s by taking a lead on issues like this that Labour can differentiate itself from rest: it’s in local government that parties show their true colours, as Polly Toynbee identified a few weeks ago. Whereas Labour councils invest in services, the Tories are reducing youth provision, cutting funding to libraries and school transport, and giving less support to voluntary organisations. So, aside from the obvious political benefits of having a strong base in local government, it is (unsurprisingly) crystal clear that people and families on low incomes benefit from having a local Labour council. We just need to get out there and start selling that message.
A good piece over at Luke’s blog today with a few sensible suggestions about how we collectively take a step back from the abyss in the light of this morning’s awful poll. In fact nationally, it seems that we’re currently watching a demonstration of chaos theory: a few errors at the end of last summer have cascaded into something of near-cataclysmic proportions in the present day.
Hopefully the reverse is also true and a slow, steady stream of good news stemming from a) a recovering economy and b) a collective remembering that we came into politics to help the poorest in society, can start to turn the tide…
It’s from a few weeks ago, but this article by John Rentoul in the Independent is interesting all the same. Whilst a hung parliament is likely on current polling information, what is less likely is which party will benefit out of it. Rentoul suggests that David Cameron has been speaking to Prof Vernon Bogdanor, a fellow at my college, and the thinking is that the Conservatives would expect to form a government even if they were smaller than Labour in a hung parliament.
The precedent is supposedly the first Labour Government which took office in 1924. After the 1924 election, Stanley Baldwin commanded more seats in the Commons than Labour but could not command the confidence of the House. It is essentially this event that Prof Bogdanor argues creates a precedent for a hung parliament being a political problem rather than a consitutional one. However, I don’t think that it’s as easy to brush aside the constitutional implications: in the event of a hung parliament, the prime movers are the Queen’s Private Secretary and the Cabinet Secretary.
The political issue is of course which party the Liberal Democrats would assent to having confidence in (or at least abstain in a confidence debate) but the fact remains that a political decision would have to be taken by the two Secretaries, with the tacit approval of the Monarch, as to how long any party would have to try and cobble together a deal that could secure a Government with the confidence of the House. That this political decision would have to be taken by people without the constitutional privilege of making political decisions, underlies, I think a broader constitutional problem. Should one party fail to command the confidence of the House should the other be given the chance? What if dissolution and fresh elections would specifically benefit one party? Should a dissolution be granted anyway? I’m not saying I have the answers but trying to deny the constitutional problems of a hung parliament helps nobody.
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