Labour is doomed if it buys into Tory austerity, so let's spell out an alternative
12 May 2014
Hidden in an otherwise positive Guardian/ICM poll is the alarming fact that David Cameron and George Osborne are more trusted by the public on economic management by a margin of 40% to 22%. This is the Tory duo's biggest lead on the economy for two years and the trend is not in the direction Labour would want it to be a year from a general election. It is reasonable to assume that these figures have not escaped the attention of Ed Balls. He was the man who virtually ran the Treasury for most of the New Labour years and economic issues are his core enthusiasm.So party members might well ask, in between knocking on doors trying to persuade people to come out and vote in the May elections, what is the Labour leadership's plan to restore confidence in our economic leadership? Balls has a plan. He just does not feel able to spell it out to party members. It is called embracing Tory austerity. Sources close to Balls are very clear that the only way to persuade the inhabitants of the Westminster bubble of his basic economic seriousness is by demonstrating a willingness to make cuts.
A few months ago commentators marvelled that Peter Mandelson turned up at a Balls fundraiser and was lavish in his praise. But Mandelson has not been suddenly won over by Balls' charm. The key sentence in his speech was when he said that Balls was "a man willing to say no to his party and someone who will resist the short-term temptations that will bring us nothing in the long term". In other words, Balls is the man to deliver the cuts that the Tories and New Labour grandees think are so essential.
One clue was Labour's failure to vote against the welfare spending cap last month. As Osborne helpfully pointed out in the debate, supporting the welfare cap locks the Labour party into Tory cuts. For the avoidance of doubt, Osborne went through some of his welfare cuts and asked Balls whether he would support each one, and each time Balls nodded assent. After the debate the Labour leadership was crowing about avoiding Osborne's "trap". But cuts in welfare spending are not a game. There are ways to bring down welfare spending, like helping more people back to work. But they would bring down spending over the course of a parliament. A year-on-year cap would confine Labour to a Tory welfare cuts template.
And the problem with restoring Labour's reputation for economic management is that we have allowed the coalition to frame the debate. It is not just the endlessly repeated lie that the Tories had to make cuts because of Labour party spending. In the coalition economic narrative the international economic crash and the need to bail out the banks never happened. But Labour has also left completely unchallenged the idea that most of the cost of bailing out the banks should come out of public spending rather than taxation. The window for reframing the debate is closing, but it has not gone yet.
The cost-of-living debate has been successful. But the success has partly been based on the fact that it is a coded way of referencing issues that otherwise the Labour leadership is frightened of, like inequality and where power lies in our society. It may be that the cost-of-living question trumps economic competence and the coalition is looking at a vote-free recovery.
But if we accept the coalition cuts agenda, there will be another £25bn worth of public spending cuts needed after the 2015 election. They will be the deepest since 1948. It is difficult to see how a Labour government that implemented cuts on that scale could last more than one term. So the urgency of framing an alternative to coalition austerity is not just about one month's polls. It is about the long-term survival of an incoming Labour government. And, even more important, challenging austerity is vital for the long-term life chances of communities and children yet unborn.
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