Look Left – Does Labour need its own Plan B?

In the wake of the autumn statement, and in the midst of the pensions dispute and eurozone crisis, focus has shifted to Labour’s policies on the economy.

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• In the wake of the autumn statement, in the midst of the pensions dispute, and with the eurozone crisis dragging on, focus has shifted to Labour’s policies on the economy.

Two publications this week, one on fiscal conservatism and one on enterprise, seek to challenge Labour’s approach to the deficit and its relationship with business.

Policy Network’s “In the black Labour” (pdf), puts forward the argument that fiscal conservatism and social justice “go hand in hand”, arguing the public and markets “have a right to know what the main opposition party would do about high levels of borrowing and when they would do it by”.

The document adds:

“Satisfying this demand is fundamental to being regarded as a credible alternative government…

“It is precisely the vagueness of Labour’s position over its short to medium term plans for the deficit that confirms the voters’ worst suspicions about the party’s lack of commitment to addressing the fiscal crisis.”

The report’s reliance on Office for Budget Responsibility (OBR) modelling, however, raises questions, given how wrong the OBR’s forecasting has been.

Critiquing the report, Cormac Hollingworth wrote on Left Foot Forward tonight:

“Now that the coalition’s strategy has collapsed the OBR’s prediction should be on every piece of Labour’s literature from now until the election too. The OBR is Osborne’s biggest mistake. The errors in the OBR’s model are enormous – £30 billion is the whole of the corporation tax take. £10 billion is 20% of the NHS budget.

“Getting it wrong by this much will mean it’s a liability not an asset, to any government… Osborne has created an instrument that will inflict four years of pain. It’s Labour’s job in opposition to make this count.

“And it’s this opposition mindset that is missing from this report. In the week that’s seen the collapse of the whole fiscal edifice of the coalition’s existential commitment to cut the deficit, they’ve published a report worrying about what Labour will do after its won in 2015. To win, the comrades need to show the coalition are economically incompetent.

“This report does not do that.”

The week’s other report, “Labour’s business: Why enterprise must be at the heart of Labour politics in the 21st century” (pdf), edited by former Labour List editor Alex Smith and Left Foot Forward contributor Luke Bozier, seeks to drive Labour in a more business-friendly direction, with proposals to encourage entrepreneurship, reform procurement, regulation and taxation, and reshape industrial policy.

One of the contributors to the report, Erika Watson, wrote on Left Foot Forward of the need for women in business to receive more support, concluding:

“Government has a role in enabling that level playing field and until it’s achieved, they need to recognise and support what’s distinctive about how women start and grow businesses – at all levels, from unemployed women who need to create their own job, to high flyers who want to grow substantial businesses.

“It is time for a progressive women’s enterprise strategy: it’s time for jobs for the girls.”

The Policy Network report in particular provides for interesting debate, a debate that’s well worth having – though before going too far down the ‘Coalition lite’ road, the “Black Labour” authors would do well not only to heed Cormac’s criticisms but take a glance across the pond, where the latest unemployment figures show a 0.4 point fall to 8.6 per cent, the lowest rate for two years, US stimulus reaping the rewards while UK austerity fails.

And there’s also the latest OECD Economic Outlook, which shows sluggish Britain languishing behind the world (more on this in Evidence of the Week below).

Just because George Osborne may be ahead of Ed Balls in current polling does not make him right – as the evidence above makes clear – though as the economic outlook changes (fingers crossed for the better) and 2015 approaches, Ed Miliband and Ed Balls will of course amend their plans, but throwing them out of the window altogether and moving ever closer to Mr Osborne, the man struggling to drag us out of the mire, surely cannot be the answer.

• It was on Tuesday that the chancellor delivered his autumn statement. A pretty experience it was not – especially for the un-rich.

As Will Straw revealed on Left Foot Forward, the bottom 80 per cent were hit hard:

“The small print of the chancellor’s autumn statement shows that the totality of tax, tax credit and benefit measures adopted by the coalition government or carried over from the previous Labour government will be regressive for the lowest 80 per cent of earners.

“The latest analysis will further damage George Osborne’s claim that those with the “broadest shoulders should bear the greatest burden”…

“After enduring two years of pay freezes, public sector workers including teachers and nurses will have to endure pay rises of a paltry one per cent for two years, saving the Treasury £1 billion by 2014-15.

“George Osborne did not claim today that “we’re all in it together”. The reason is glaringly obvious.”

Further emphasising the regressiveness of the statement, Richard Exell wrote:

“There are two big groups of losers.

“One will be public sector workers, who face two years of pay increases limited to one per cent after the pay freeze comes to an end.

“The OBR forecasts that CPI will never go below two per cent over the next five years and RPI will range between 2.9 and 3.8 per cent – a cumulative cut in benefits of around 11 per cent plus the increased pension contributions.

“The other group to lose out will be people on tax credits. It is certainly a relief that the rumours about freezing benefits have proved false, but wait for next year when the forecasts are revised down again and the commitment to deficit reduction has to be paid for somehow.”

While Tony Dolphin explained:

“The coalition now finds itself into a position where its economic policy is going to be ‘pro-cyclical’ – if the economy picks up it can stimulate it further, but if it continues to stagnate, the chancellor will be forced to further slam the brakes on…

“The eurozone crisis deepens, leading the OBR to further downgrade its growth forecasts for 2012 and 2013 and to increase its borrowing forecasts out to 2015/16, then it will also be forecasting an increase in debt after 2014/15.

“Unless the chancellor is prepared to relax his second rule, he will have to cut spending or increase taxes more than currently planned to get back on track.

“In other words, from here on fiscal policy will be pro-cyclical. Weaker growth will lead to fiscal tightening!”

George Irvin, meanwhile, wrote about how Osborne “proved the doom mongers wrong”, that “the economy is even worse than we predicted”:

“Every bit of new evidence published since the Compass pamphlet on the £100bn gamble appeared [over a year ago] suggests Osborne has lost his bet. All the revisions point downward [see here and here]. He is shifting small sums around to give the illusion of chasing growth.

“In fact, what Osborne wants is what the City of London has always wanted: near zero inflation, low borrowing rates and no Tobin tax. When it comes to social costs such as greater child poverty, shrinking social services, an extended wage freeze, growing unemployment, frankly, Osborne and his banker friends don’t give a damn.”

And Paul Krugman, in a devastating excoriation of Osborne in the New York Times, described the coalition as “bleeding” Britain dry:

“What’s happening in Britain now is that depressed estimates of long-run potential are being used to justify more austerity, which will depress the economy even further in the short run, leading to further depression of long-run potential…

“It really is just like a medieval doctor bleeding his patient, observing that the patient is getting sicker, not better, and deciding that this calls for even more bleeding.

“And the truly awful thing is that Cameron and Osborne are so deeply identified with the austerity doctrine that they can’t change course without effectively destroying themselves politically.”

Also this week, we’ve had reports on the autumn statement from Ed Jacobs, looking at the reaction from Scotland, Wales and Northern Ireland; Cormac Hollingsworth on how Osborne is “perilously close” to failing to cut borrowing at all; Daniel Elton on how Osborne will end up borrowing more than under the Darling plan; Alex Hern on how the Northern Line extension to Battersea announced by Osborne will be “built for one purpose only – private profit”; and AH again on how Osborne’s mini budget takes £1.7bn from women.

• The day after the statement, public sector workers took part in the biggest day of industrial action for decades.

The November 30th strike saw two million people walk out, affecting services across the UK, with 60 per cent of schools in England closed and 6,000 NHS operations cancelled. One hundred and thirty five thousand civil servants went out on strike.

On Left Foot Forward on Wednesday, TUC general secretary Brendan Barber wrote of the obscenity of lollipop ladies paying the price of Osborne’s cancellation of the bankers’ bonus tax:

“This government cancelled the tax on bankers’ bonuses. Instead it has brought in a nurses’, teachers’ and lollipop ladies’ tax.

“This is what the increase in pension contributions – around £1,000 a year for a nurse – really means. It is not paying for pensions but going straight to the Treasury to fill the hole left by the bonus tax.

“This is why today sees the biggest strike in a generation. The government has so alienated its workforce that as many as two million people could be striking today.”

With TUC head of campaigns and communications Nigel Stanley explaining public sector pensions are no more “gold plated” than those in the private sector:

“Everyone attacking Wednesday’s TUC day of action on public sector pensions will try to get in a reference to poor private sector pensions.

“And of course they are right. Pensions in the private sector have collapsed.

“Yet cutting a nurse’s pension will do nothing to boost the pension of a shop-worker, and we should challenge these critics to set out exactly what they mean when they say that public sector pension provision should be more like that in the private sector…

“Making public sector pensions as unfair as those in the private sector does nothing to increase fairness. If we compare like with like, the two sectors look very similar…

“Private sector workers should be angry not at public sector workers but at their employers and successive governments who have allowed private sector pension coverage to decline so sharply.”

While Alex Hern busted four of the anti-union myths being spun by the angry right, namely that “pensions aren’t sustainable at the level they are”; “public sector pensions are higher than private sector pensions”; “strikes are the work of ‘militants’”; and “public sector pensions should be made more like private sector pensions”.

Also this week, UNISON’s Liz Snape wrote about the disproportionate impact of the pension cuts on women; Ed Jacobs reported on the response to the strikes in Scotland, Wales and Northern Ireland; Alex Hern reported Wednesday’s PMQs clash between Miliband and Cameron on the strikes; and AH took apart the Tories’ barbs about ballot turnouts – London Mayor Boris Johnson has only a 19 per cent mandate, and his Bullingdon buddy David Cameron was voted for by just 23% of the franchise.

Progressives of the week:

The Fair Pay Network, who this week launched a video calling for “a fair day’s pay for a fair day’s work”, making the case for the living wage. You can watch the video on Left Foot Forward here.

Regressive of the week:

Well, there can only be one winner, talentless Tory bore Jeremy Clarkson, for his ‘hilarious’ comments about gunning down strikers. We’ll spare you our indignation here, but do take a look at our articles on the motormouth’s remarks, from Alex Hern, myself and Mike Harris.

Evidence of the week:

The latest OECD Economic Outlook (pdf), published on the eve of the autumn statement, that revealed UK growth at the bottom of the table, better only than Italy, Spain, Japan, Portugal and rock bottom Greece; more from Daniel Elton.

The World Outside Westminster by The Grapevine’s Tom Rouse:

Not for the first time, Iran’s fractious relations with the West have dominated the news cycle. Iranian demonstrators’ storming of the British Embassy in Tehran has sparked international outrage, with the UK recalling diplomatic staff and expelling Iran’s diplomatic contingent from London.

The attack looks likely to lead to further EU sanctions on Iran, with William Hague rallying EU support for tough new sanctions, while his predecessor as foreign secretary, David Miliband, warned against any attack on Iran.

***

In a major speech in Toulon on Thursday night President Sarkozy called for even closer ties between Germany and France. The speech acted as a trail to meetings between Nicolas Sarkozy and Angela Merkel on Monday, which Sarkozy described as essential to “guarantee the future of Europe”.

Mr Sarkozy called on eurozone countries to display much stricter financial discipline and argued the EU needed to impose tougher sanctions on countries who were unable to meet their financial responsibilities, describing a ‘new financial age’ which isn’t built upon unsustainable debt.

His argument has been endorsed by Merkel, who in a major speech on Friday declared the EU would take “concrete steps towards a fiscal union”. The markets have reacted positively to these declarations, with the FTSE up in the wake of President Sarkozy’s speech.

For the latest on the eurozone crisis, see Ben Fox’s article on Left Foot Forward today, and read Ed Jacobs         for more on the Irish prime minister’s call for a hotter firewall for the euro crisis.

***

To the States, and President Obama’s woes continue, with 70% of the US public believing the economic climate is getting worse – though the fieldwork was conducted before today’s fall in unemployment. The failure of the super committee to arrive at any sort of a deal is hardly surprising, but further undermines Obama’s attempts to portray himself as the man best positioned to lead the USA through this crisis.

He is stagnating on a personal level too, with a –8% job approval rating in the latest Gallup polling.

***

The Republican race is, if possible, becoming even more bitter with Newt Gingrich and Mitt Romney opening fire on each other. Romney’s campaign in particular is looking rattled by their latest challenger, with his team attempting to highlight Gingrich’s lack of experience in the public sector and his past misdemeanours and flip-flops.

The endorsement of Gingrich by the Union Leader newspaper in Manchester – New Hampshire’s largest paper – was confirmation Gingrich is here to stay. Despite being seen as a rank outsider only a few weeks ago, the quest to find a ‘Not Romney’ candidate has led the GOP to rally round Gingrich.

***

The latest sex scandal surrounding Herman Cain looks to have ended any chance the pizza magnate stood of securing the nomination. Cain has been accused of conducting a 13-year affair with Ginger White and if these claims stick he will have no choice but to withdraw from the race.

***

And in Los Angeles, the Occupy LA protesters have been forcibly evicted from City Hall Park where they had been camped for two months – more from Alex Hern.

Ed Jacobs’s Week Outside Westminster:

Northern Ireland:

First minister and DUP leader, Peter Robinson, called for an end to the sectarian divides that have dogged Northern Ireland for too long.

Addressing his party’s annual conference near Belfast, Robinson told delegates:

“The lasting challenge for us will be to tackle the causes of division. An end to the Troubles did not bring an end to division and that dilemma will not solve itself.

“Our critics have claimed that we want a society which is carved up rather than shared. Some of them accuse us of wanting a separate but equal society. Let me be clear – nothing could be further from the truth.

“It isn’t right and it wouldn’t work. I don’t want a society where people live close together, but live separate lives.

“There can be no greater legacy than a more shared and united community. It isn’t just good for Northern Ireland; it’s good for unionism too. If we want a better society it can’t be ‘them and us’. It can only be ‘all of us’.”

Meanwhile, as Peter Hain met with police over allegations News International hacked his computer when he was Northern Ireland secretary, his successor, Shaun Woodward, warned lives could have been put at risk by accessing the personal emails of one of the most sensitive security-related Ministers in government.

Wales:

The untimely death of the Wales football manager, Gary Speed, prompted a display of unity from the parties in Wales in disbelief and sadness at the news.

For the UK government, Welsh secretary Cheryl Gillan said:

“Gary Speed served club and country as a player and manager with great distinction. We will all mourn his loss, while remembering the huge contribution he made to football both on and off the pitch.”

First minister Carwyn Jones, meanwhile, spoke of his sadness and expressed his deepest sympathies to Speed’s family and friends.

Elsewhere in Wales this week, the Institute for Fiscal Studies warned the autumn statement made it virtually impossible for the government to meet its target of eradicating child poverty by 2020, with Carwyn Jones making clear the Welsh government’s commitment to ensuring it is met in Wales.

Speaking at the “Eurochild” conference in Cardiff, he explained:

“There is no greater priority for me or the Welsh government than ensuring that our children have the best possible start in life. Wales has long led the way in the UK in recognising and giving practical expression to the intrinsic rights of children and young people.

“We are proud of our record.

“We are alone in the UK in enshrining the United Nations Convention on the Rights of the Child in law and this year saw the ‘Rights of Children and Young Persons (Wales) Measure’ passed in the National Assembly for Wales.

“We are also alone in granting children and young people with special educational needs and disabilities the right to challenge decisions about their education. And we were the first of the UK nations to pass legislation on child poverty.

“We have to get this right in Wales. We have some very real challenges and that is precisely why the Welsh government maintains its rightly challenging target of eradicating child poverty by 2020.”

Scotland:

Alex Salmond used First Minister’s Questions to announce the establishment of a new post of Minister for Youth Employment.

Outlining the plans, he explained:

“Scotland’s youth employment rate is higher than the rest of the UK but we must not be complacent.

“We have already made an explicit commitment to our 16-19 year olds that if they aren’t already in work, education or training they will be offered a place in learning or training through Opportunities for All.

“We face unprecedented economic challenges and we know that more needs to be done. And this government’s key commitment is to those young people who yearn to be productive. No young person should go through school only to become an unemployment statistic at the age of 16.

“The £30 million announced today will be invested in helping Scotland’s young people into training, work or education to secure a stronger workforce for the future.”

Responding, Labour’s Iain Gray declared:

“Alex Salmond seems finally to get the point the SNP government have not done enough to tackle youth unemployment. I welcome the fact he will now follow Labour’s call for a minister for youth jobs.

“Youth unemployment has doubled under the SNP since 2007.”

Meanwhile, following an autumn statement that spread little cheer in the run up to Christmas, the Herald had a blunt assessment of the chancellor’s announcements.

In a comment article the day after the statement, the paper concluded:

“The Tories’ most famous campaign poster featured a snaking queue of the unemployed with the caption “Labour isn’t working”; yesterday the opposition was entitled to the riposte “The coalition isn’t working”.”

This week’s most read:

1. Four myths about today’s strike: BustedAlex Hern

2. Public sector pensions no more gold-plated than those in private sectorNigel Stanley, TUC

3. How to be Jeremy ClarksonAlex Hern

4. UK growth – bottom of the table, wallowing with the PIGSDaniel Elton

5. Appeal backlog reveals false economy of the welfare cutsAlex Hern

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12 Responses to “Look Left – Does Labour need its own Plan B?”

  1. Martin Paul Hume

    Look Left – Does Labour need its own Plan B? http://t.co/pBngOYkM by @ShamikDas ft. @TRouse11 & @EdJacobs1985 #AS11 #N30

  2. Political Planet

    Look Left – Does Labour need its own Plan B?: In the wake of the autumn statement, and in the midst of the pensi… http://t.co/ZvLbP5Nh

  3. Robert CP

    Look Left – Does Labour need its own Plan B? http://t.co/pBngOYkM by @ShamikDas ft. @TRouse11 & @EdJacobs1985 #AS11 #N30

  4. daniel vazquez

    Look Left – Does Labour need its own Plan B?: Osborne has created an instrument that will inflict four years of … http://t.co/1DtIuO6V

  5. Shamik Das

    Look Left – Does Labour need its own Plan B? http://t.co/pBngOYkM by @ShamikDas ft. @TRouse11 & @EdJacobs1985 #AS11 #N30

  6. Sera

    Look Left – Does Labour need its own Plan B? http://t.co/pBngOYkM by @ShamikDas ft. @TRouse11 & @EdJacobs1985 #AS11 #N30

  7. Anonymous

    Ed M is on the right track to a coherent Plan B when he makes the distinction between productive and non-productive businesses. Any return to rising living standards is dependent on getting this right and it will mean taking on some very powerful vested interests.

    Housing offers good scope for triggering a productive revival but only if land prices are axed through handing over huge land banks for housing use via rezoning, taxing un-productive land /property holdings and compulsory purchase where necessary. Combine this now cheap development land with strict requirements for innovation, low carbon and new technology and you have the potential to reignite engineering, building and manufacturing sectors, but only if it is backed up with a joined up investment in skills and other UK productive capacity. The ability of investers to hold land / property as assets has to be removed, e.g. by punitive taxation. Local authorities should police productive use of the land and property in their areas, perhaps raising taxes on empty / unused land to fund operations and return these resources for productive uses.

    Affordable investment capital will need to come via a national bank (with printed ‘new’ money) or similar and from taxation of un-productive businesses that use economic activity to redistribute wealth rather than create it – some businesses even destroy wealth in the process of concentrating it and these need the highest taxes.

  8. Anonymous

    Even after the deficit is reduced, the state will still be spending some £700bn a year. That’s less in
    real terms than before the Crash but still a very significant proportion of the UK’s GDP. It means the
    state can still do much to promote equality and social justice but it will also mean facing up to big
    strategic choices about how to use existing expenditure. As such, given the flat-lining economy, the
    hit to living standards and the need to identify new sources of potential growth, Labour’s criteria for
    spending choices should be based on a simple question: will a spending option directly boost short
    and long-term growth and create jobs? This may mean very constrained funding for healthcare,
    pensions and welfare for the foreseeable future. It’s tough, but the alternative is ducking the genuine
    decisions nearly every government of an
    advanced economy currently faces.

    Not a lot about hitting the rich or the richest or the Bankers a hell opf a lot about welfare aned hitting those on welfare, lot really to indiacte this is new labour

  9. alexsmith1982

    RT @leftfootfwd: Look Left – Does Labour need its own Plan B? http://t.co/tQ2qypUS

  10. Michael Bater

    RT @leftfootfwd: Look Left – Does Labour need its own Plan B? http://t.co/6dNUlqf0

  11. Economic update, December 2011 – UK teeters on brink of recession | Left Foot Forward

    […] also: • Look Left – Does Labour need its own Plan B? – Shamik Das, December 2nd […]

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