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

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.

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