Labour are stuck on a ‘things can only be mildly improved’ mantra

Ed Miliband talked sense yesterday, but the electorate still need some form of greater succour.

Ed Miliband talked sense yesterday, but the electorate still need some form of greater succour

Miliband has pronounced on the deficit: some wiggle-room on capital spend, some sombre talk on the size of the challenge, and a pledge to ring fence areas like international development and hospitals, whilst finding the necessary savings elsewhere.

In short, as someone who has criticised him on occasion, I thought this was a pretty reasonable speech.

If nothing else, it’s good to finally see a lectern and not be back in Senate House (as appropriate for the 1930s parallels as that would have been). It all looked more prime ministerial.

But what of the meat? Miliband declared that he was not outlining ‘a shadow Budget, but [giving] a sense of how we will approach these issues in government.’

This is fine, even if it does rather smack of the magician telling the audience how the trick is being done. And, to be fair, there was some detail here.

The third tranche of the Zero Based Spending Review published yesterday highlighted possible savings in local government back office and reorganisation of £500m per annum. This isn’t headline grabbing stuff but at least some of the granular detail is at last emerging.

And there is of course a middle ground here. In talking about the deficit Miliband elected to duck the impact of the potential post election specifics, which in an election year is probably wise. The already pledged 50p top rate of income tax will perhaps put £2bn back in government coffers.

A rise in the headline rate of corporation tax to something approaching 25 per cent – which Labour cannot explicitly spell out but will almost certainly do – might raise another £8bn, perhaps a bit more.

Some on both sides of the House murmur of an initially difficult post-election VAT rise to be followed by a pre-2020 cut – maybe £3bn to be gained there. But, however you spell it out (or not), the £91bn annual deficit still appears a mountain indeed.

And so, not liking the answer, Miliband’s big call yesterday was to change the question. The Labour leader argued that ‘productive investment in our infrastructure should be seen differently from day to day spending because it often has a greater economic return.’ This is undeniable. The IMF agree, and the OBR take the IMF’s word on it.

Although the OBR cannot formally pronounce on party manifesto plans, their take on ‘productive investment’ is pretty clear. That, in short, is the cover. Capital spending has a greater economic impact over the medium term than fiscal tweaking.

In most sensibly planned instances of capital spending, the interest on newly accrued borrowing is outweighed by the economic benefits it brings. Miliband’s theory is quite right.

What Labour now need is some sunny uplands stuff to square this circle. What is the grand projet that will deliver this? What can they come up with that the coalition is baulking on? Fundamentally, what makes this ‘revenue spend bad, capital spend good’ pledge anything other than an accounting story?

That is not a call to build another Millennium Dome, or get a million workers digging holes and then filling them up again a la Keynes, but to extend existing pledges. Trunk lines to HS2. Out high-speeding Osborne in the north. More University Technical Schools. Transport links across, say, East Anglia and the South West. A comprehensible and ambitious programme of capital spending.

And, most importantly, housing. Since Miliband’s speech brought up history, it is a fact, not often remarked upon, that every Tory Prime Minister since the 1970s has diminished the annual number of new house builds under their watch.

Heath oversaw a decline from 378,000 units to 304,000. Thatcher saw a drop from 251,000 to 221,000 before Major took that figure to 185,000. Cameron may just about break even, equating to a fall in real terms.

I am all for sober realism, but at the moment Labour’s pledge in this regard extends to hitting a figure worse than every year under Thatcher bar one. It may be too hard for Labour to roll back on 200,000 homes now, but a 250,000 homes target would at least hit the number needed to keep up with projected population rises, and 300,000 houses the best for almost 40 years.

The electorate – particularly the middle class vote which Labour dropped over the 1997-2010 period – does need some form of greater succour. Blair promised that ‘things can only be better.’At the moment Labour are slightly stuck on a ‘things can only be mildly improved’ mantra.

If capital spend is the call then Labour need to be bold. It’s far from certain they have built up the caché amongst the electorate to say ‘we’ll show you the projects once we’ve seen the government’s books.’ They might as well go for it.

The deficit is heading back up under the Tories. Growth is being forecast downwards from 2016 onwards. For two years it has looked like George Osborne would nail the economic timetable with regard to 2015 (and he’s certainly done better that it looked in 2012), but there is now a chink of light.

Labour should not use this moment to retrench, but to go positively on the attack and answer the crucial ‘well, what would you actually do’ point. The line on the overall fiscal deficit is at least clear, the ambition deficit not so much.

Yesterday’s speech was encouraging stuff but it is time Labour pounced – particularly if they want to avoid the spectre of the 1930s, as Miliband professes. That decade saw mass unemployment followed by a regionally specific economic pick-up and a (mostly) Tory-Liberal Coalition secure re-election in 1935.

It was memorably described in 1948 by the journalist Collin Brooks as the ‘Devil’s Decade’. The danger for Labour remains the electorate judging ‘better the devil you know’ all over again.

Richard Carr is a lecturer at the Labour History Research Unit, Anglia Ruskin University, and a contributing editor to Left Foot Forward. He has recently published a book, One Nation Britain

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35 Responses to “Labour are stuck on a ‘things can only be mildly improved’ mantra”

  1. littleoddsandpieces

    A former Labour deputy prime minister has found through the House of Lords library that there is a so-called ‘surplus’ in the National Insurance Fund of around £30 billion.

    This Labour person said the unthinkable faux pas that the National Insurance Fund could only be used to fund unemployment benefit and the NHS (when latter is only in small party from NI Fund).

    Entirely missing the fact that this NI Fund money is the denied state pension payout from 2013 to women born from 1953 and men born from 1951, and ignoring the fact that the 12 per cent deductions per year from wages is how a citizen gains eligibility to an amount of state pension.

    Nothing has been said about the flat rate pension that for the first time leaves the poorest men and women with NIL STATE PENSION FOR LIFE and for three quarters of the new claimants from 2016 gives an even smaller state pension than the current rate lowest of all rich nations bar poor Mexico.

    Women are losing 11 years of payout,
    from 6 years lost cash money and
    5 years of eligibility by the rise from 30 to 35 years required NI contribution / credit history, when so many women have only 30 years NI contribution history from early retirement in lieu of redundancy under massive austerity job cuts, only to get worse, and on a works pension barely 4 per cent income level, on average, for both men and women.

    The Greens are still strangely silent about a solution to all this further suffering to come:

    – automatic and universal Citizen Income, non-withdrawable
    to the level of the basic tax allowance

    – Full State Pension to all citizens, irregardless of National Insurance contribution / credit history

  2. Riversideboy

    The electorate – particularly the middle class vote which Labour dropped over the 1997-2010 period ??????? how so? This is what confuses people. It does not make sense,

  3. RoyB

    Getting better. But he still needs to sharpen the language and the focus. Austerity has failed. It removes spending power from the economy and so taxes fall and benefits rise. So the deficit rises. Sustainable growth, not housing bubbles, with well paid jobs will reduce the deficit – the tax take will rise and benefit spending fall. This needs investment in high tech, green and new technologies, and in housing. Borrowing for investment is like taking out a mortgage to buy a house. What the Government is doing is borowing to put bread on the table – and not much bread at that for very many under the cosh of benefit cuts for working families. Every time Osborne opens his mouth it’s “Labour’s mess” and “long term economic plan.” Labour crucially needs equally simple slogans to be repeated endlessly between now and next May. How about “Tory austerity has failed. Labour’s growth will cut the deficit.” The awkward concessions to current orthodoxy merely serve to confuse the electorate and truly make them seem “all the same.”

  4. swat

    I see no harm in preparing a Shadow Budget; I’m sure officials in the Civil Service would be willing to work with a possible future Govt to work out the details in outline. What is Milliband afraid of? And Milliband could also get help and advice from countless think tank of the left and bloggers to put him reight. So, what is Milliband afraid of? We have to be open and honest with the people.

  5. Godfrey Paul

    The LibLabCon metropolitan establishment are all singing from the same hymn sheet.

  6. Peter Martin

    “The deficit is heading back up under the Tories”

    Well it’s not actually. The current deficit is slowly falling. Don’t forget that word ‘current’! Ed Balls usually remembers it!–Central-government-account

  7. robertcp

    The deficit has fallen since 2010 but it is looking like it will be higher in 2014-15 than 2013-14.

  8. robertcp

    The problem is that not much more than mild improvement will be possible in the five years after 2015.

  9. Peter Martin

    The problem will be questions such as “where’s the money going to come from?” and “how is that proposal to be funded?”, and comments such as we “can’t afford” to do that.

    Of course the money comes from where all money comes from in the first instance, and as Keynes said if something can be done it can be afforded. The only danger of too much spending is too much inflation. The danger of too little spending is the recession we have now, both in the UK and, even worse, in the EZ.

    The problem is that the electorate don’t understand economics. To most people, the government is like a company or a household. To spend money it has first to acquire money etc etc. That’s true for a user but not at all the case with an issuer of currency.

    It’s rather like living in society where everyone thinks the world is flat. If we insist the world is really round then they might not like that and vote for someone else. We wouldn’t like that so the best approach is to pretend we think the world is flat too, and work our way around the problem as best we can!

  10. AlanGiles

    ” I thought this was a pretty reasonable speech.”

    Some people are very easily pleased. The man is a walking disaster. Though never at a loss for a phrase (often now delivered in that Blair “pleading” voice), especially with the word “fairness” tacked on to everything, nothing disguises the poverty of his imagination, nor the feeling that he will say anything just to hang on to his job. If he wins in May, you can be sure it will be the old coalition policies, slightly adapted.

  11. Leon Wolfeson

    LibLabConUKIP, all straight-line austerity-pushing neoliberals.

  12. Leon Wolfeson

    The Tories said the same in 1945.

  13. Leon Wolfeson

    But Labour ARE “all the same” on this policy, they ARE going with austerity.

    They’ve ruled out basic investment in housing, let alone anything else!

  14. Leon Wolfeson

    Makes perfect sense – Labour moved right and lost voters.

  15. robertcp

    But 1945-51 was a time of austerity, rationing and regular currency crises. The Labour governments of the 1960s and 1970s might be more relevant.

  16. GhostofJimMorrison

    So who do you vote for, Wolfman? Oh let me guess: you don’t, ‘cuz they’re all the same’! Pathetic.

  17. swat

    True. The electorate doesn’t understand economics, let alone anything else for that matter. They vote oin whims and fancies and half truths and the cut of someone’s gib; and whether they’ve had a good/bad day/week or not.
    Balancing acounts books is a bit more complicated than doing your weekly shop at the coop. To start off with we live on debt, and crdeit, trillions of credit.
    The Govt just paid off WWI debts a week ago; Brown paid off WWIII 5 years ago, But there’s a massive mountain of debt which is never going to be paid off, ever. That doesn’t mean you don’t have a decent quality of live. Because every country we know including the Americans and Grermans are in debt as well. So basically countries are trading IOU’s most of the time.

  18. Peter Martin

    They could have gone to the Greens on the left. A few will have gone to UKIP. There is a growing “Red Ukip” faction which is probably tolerated by the UKIP leadership as a way of pulling in ex-Labour voters – for the present at least.
    Some will have drifted back to the Tories. Their support mainly comes from the middle class.
    But there’s the Apathy party too. It’s not just that Labour supporters won’t vote. Some won’t but the key problem is that it’s just too difficult to canvas support for Labour either on the doorstep or in the workplace at present. They wouldn’t know how to answer those who claim that the party has changed and don’t like what it has become. Its MPs are, in many cases, too obviously career politicians who don’t have anything in common with the people they are supposed to represent. They don’t have any passion. They don’t even seem to speak the same language.

  19. madasafish

    An unfortunate sub-headline:”Ed Miliband talked sense yesterday,..”

    Implies Ed talks nonsense at other times ..


  20. Riversideboy

    Peter I like the world is flat scenario. Labour run as you may or may not know a policy process that includes all its members. What will be really disturbing for the leadership is that those members overwhelmingly will have asked for the introduction of the Robin Hood Tax and the re-nationalisation of the railways over a period of time along with, I have no doubt , the total reorganisations of the banks pluse making off shore tax havens illegal. Believe me all the sessions I attended and members I spoke to, without exception, want the above. Labour of course will not implement those wishes (as they should) because they think the public do believe the world is politically flat (right wing press, TV etc) and would be frightened to death by policies that would massively improve their lives.

  21. AlanGiles

    With the knowledge that Murphy won in Scotland, and Jowell looks like being the London mayoral candidate in 2016, despite both of their expenses scandals, it looks like the Blairites are back in charge. If Hapless Ed did find the backbone to come up with Labour policies he would be crushed by the Blairite rabble within the PLP.

    Added to that David Miliband, liar and complicit in torture, has indicated that he might return to British politics, it might be a good thing if ToryLite “Labour” stayed in opposition

  22. Leon Wolfeson

    Nice post sig.

    And no, I don’t vote for any party because while they’re different, on close examination, they all cross some basic red lines I have.

    Not quite your narrative.

  23. Leon Wolfeson

    The effect of rationing of the war and after *improved* the diet’s of many, and the government refused to accept the austerity agenda of the Tories and instead invested massively in housing, brought in the NHS, etc.

  24. robertcp

    Marshall Aid paid for a lot of that investment.

  25. madasafish

    Many Labour members would (no doubt) also support doubling the minimum wage and increasing benefits, doubling pensions and reducing the retirement age..

    As the world is real…..

  26. Leon Wolfeson

    That’s badly overstated.

    Britain borrowed.

  27. Guest

    …you object to it. Yes. And?

  28. robertcp

    The 1945-51 government laid the foundations for the prosperity of the 1950s and 1960s. It had many impressive achievements and protected the working class and poor from the effects of austerity.

  29. Leon Wolfeson

    Apathy? Oh no, Labour’s worked HARD to repel me.

  30. Leon Wolfeson

    …And it did it by REJECTING austerity. By not following Churchill’s mantra there. And Churchhill only came back by accepting their narrative, a narrative which lasted until Thatcher.

    We’re still stuck in Thatcher’s narrative today.

  31. Leon Wolfeson

    And I see that as propaganda. Again, austerity was REJECTED – there WAS a recovery, not the further cutting which Churchhill wanted.

    I offer this in return;

  32. robertcp

    I have not read the book or Loach’s film. It has been a long time since I read an academic book about the 1945-51 governments, so I cannot see any point in discussing a government that left office 63 years ago.

  33. Guest

    So you were wasting my time and refuse to discuss something very relevant. Right.

  34. Awart

    And it diminishes their appeal, which in contrast with populistic voices is actually too small

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