Spectator blog illustrates Labour fiscal responsibility

29th March, 2011

 

The Indie journalist, blogger and tweeter Johann Hari posted an article today about Tory scare-mongering on the UK’s deficit.  (You can see it here.)

 

Hari calls the scaremongering the biggest lie in British politics.

 

Peter Hoskin, writing in The Spectator’s online “coffeehouse” has issued a swift rebuffal.  (You can see it here.)

 

One of Hoskin’s points is that the deficit (if not the debt) is the highest on record.  He produces a chart based on Treasury figures to prove his point.  (You can see it below.)

 

You may be surprised to know that I really like this chart.

 

Look at the ten Labour years before the crash in 2008.

 

See “Brown’s waste” there?  See Labour profligacy there?  See a decade of irresponsible spending there?

 

Me neither.

 

 
 
 

 

 
 

Events, dear boy. Events.

23 March, 2011

 

Harold Macmillan, when asked by a journalist what might blow a government off-course, replied, “Events, dear boy.  Events.”

As an interested, if not entirely innocent, bystander, I am following Opposition Labour’s discourse pretty closely.  It’s not a pretty sight.

Not because of the content – although there is precious little of that.

What worries me is the mood.  It is stuck.

Brave a Labour blog or a Guardian article on Labour’s future and it won’t be long before you come across a solemn sentence starting with the words, “Only when…” which goes on to bemoan the persistence of the party’s ghosts, and forlornly to lament the time required to heal.  Only when the past has been examined, understood, reconciled; only when apology has been issued and accepted; only when the contract between party and public has been redrafted and signed anew; only then will Labour come in, chastened, from the cold. The long march towards rehabilitation, on this gloomy and widely-shared analysis, might not be over in time for 2015.

But I’m not convinced that so much self-flagellation needs to be endured, that so much navel-gazing needs to be indulged in.  I think that with some shows of bold and charismatic leadership, some indications of fresh and intelligent policymaking and above all an injection of energy and confidence, the party could reposition itself in short order.  The requisite self-belief is not yet there, but it could easily come.

Remember how quickly the Tories and LibDems got into bed with each other?  They formed a legislative agenda and modus operandi in the space of a weekend.  Labour can and should aspire to such agility.

Managed properly, the public will not only not resist, but positively welcome the reinvigoration of Labour.  Last May was not so much a turning towards Conservatism as a turning away from some specific Labour problems; the public wanted change, but not so much that it really preferred the alternatives on offer.  Voters left it until the last minute to decide because the broad brush of what Labour stands for was, and is still, what the public wanted.  All parties claim to be progressive – for a reason.

I admit it’s only a hunch (and my old politics tutors would kill me for talking about “the public” as if it were one sentient being) but I have a hunch that that public doesn’t want atonement from Labour.  Last May, yes, it perhaps wanted to punish Labour.  It was uncomfortable with Iraq.  It was uncomfortable with Brown.  It was uncomfortable with the deficit.  But electoral defeat was the punishment, and it was instantaneous.  Look how new members – and old – flocked to the party in the days after the election.  The public can move on very swiftly.  It does not want to see Labour in a protracted period of psychoanalysis.  It wants a responsible, mature, vigorous Opposition.  Capable, if need be, of running the country.

The narrative on the economy must be sorted.  In the interregnum of last year, Labour failed to prevent the Tories branding the party as profligate.  That mud has stuck despite Ed Balls’ spirited start.   Labour now finds itself in the unhappy position of having to consider the old, humiliating strategy of promising to match the Tories’ spending plans in order to shield itself from attacks on the economy.  I’m not convinced it would work this time, or, even if it would work, whether it is the right strategy – given that the Tories’ spending plans are so repellent.  But that’s for a separate discussion.  (In the meantime Labour could recover ground with cleverer and more consistent use of language on all issues but particularly the economy.  This is a perennial problem for the more subtle economics of the left.  The right have this one easy; corner-shop speak is so much easier to sell.  “Maxing out the credit cards,” etc.)

But mostly my contention is that Labour will be ready when it decides to be ready.  And I hope/pray/worry that the day when it needs to be ready could be more imminent than most insiders seem to imagine.  The Coalition is not set in stone.  Libya could change everything.  The referendum could change everything.  Another economic crisis could change everything.  Not in 2015, but in months.

Events, dear boy.  Events.  Labour should stop atoning and start preparing.

 

Higher Moral Education

15 March, 2011

Today Oxford came out as another university set to charge the maximum £9,000 fees.

If the Tory-led government’s actions were, as they claimed, a) “progressive” and b) not going to put poorer people off applying to university, why does Oxford have to spend 10% of its fee income “protecting access” for the disadvantaged?

Surely the government’s progressive loan repayment scheme has that covered?

I’m joking of course. There was nothing in the government shake-up that corresponds with any decent-person’s definition of “progressive.” The fact that a few graduates may pay a little less, or more slowly, doesn’t make it progressive. If I say water is now ten pounds a bottle, it is no defence that a few people, in certain constrained circumstances, might get it for a couple of quid. I’ve still made water a luxury item.

~ o ~

As a comprehensive schoolboy at Oxford, I was active in the “target schools” programme, encouraging those from state schools to apply to Oxbridge. In my experience the problem was not institutional bias against the state sector, but simply getting the state-sector applications in the first place. So I’m all for access. But I’m not sure I’d have been so keen to pay for the encouragement of others to apply. I’d have wanted every cent of my education fees spent on my education, thanks.

The truth about the government’s macho stance on access is that it will probably amount to nothing. Offa has a tiny staff and limited powers. If the government, driven by fears of the cost of financing higher-than-anticipated tuition fee loans, did give real teeth to Offa, it would be accused of social engineering in a cack-handed and unfair way. Above all, students would NOT see £2700 over three years spent on “broadening participation” as good value for their money.

So I think this element of the reforms will fizzle out in time. I suspect that’ll be fine by the government, because it will have served its purpose – namely to muddy up the debate on fees and to dress up dramatic cuts as moral righteousness. This “moral ingredient” strategy is successfully deployed by the government in many other areas. Don’t be fooled. If this government really valued access to higher education… well, it wouldn’t start from here.




Putting Humpty Together Again

4th February, 2011


Nick Clegg, speaking on Radio 4’s Today Programme this morning, came out fighting with a “new model” for economic growth.


Or, if not yet a new model, it will be, when they’ve come up with it.  It seems coming up with a plan “is not an overnight job” and “you can’t just put Humpty Dumpty back together again”.


The economy, he argued, needs rebalancing.  It has been overly focussed on financial services.  It has been fuelled by indebtedness.  We’ve had growth “on the never-never”.  It is unsustainable.


I don’t think anyone could argue that it wouldn’t be nice to have more industry and less reliance on services in our economy.  Unfortunately we were deindustrialised by the Tories… but if there’s a way to get manufacturing going again, hurrah.


I don’t think anyone could argue that the private sector is not massively indebted; this is perhaps an unfortunate product of stability and particularly interest-rate stability.  Cheap – reliably cheap – money.  It’s hard not to feel jittery about that as the spectre of stagflation looms.


Trouble is, noticing that we have been over-exposed to the financial sector, or that cheap money has produced an indebted private sector, doesn’t amount to a plan for growth.


Mr Clegg suggests there are four elements to such a plan:


1) to wean the economy off debt-financed growth


2) to invest in infrastructure, skills and education


3) to boost competitiveness by reducing regulation and tax


4) to balance growth across regions and sectors


On 1) (weaning the economy off debt-financed growth) it is hard to square this idea with the constant calls for the banks to lend more to business.  Perhaps consumers are also borrowing too much, with cheap money fuelling a housing boom.  But mortgages are now very hard to get and the housing market is in dire straits.  Whichever way you look at it, debt-fuelled over-consumption seems to be the least of our problems.


On 2) (investing in infrastructure, skills and education) it is hard to see this government investing in anything.  School rebuilding has been abandoned.  Crossrail survived by the skin of its teeth, as did the high speed rail plans.  What new infrastructure might we expect?  Don’t hold your breath, dear reader.  As for “skills and education” the intentions of the Tory-led government are very clear.  They’ve completely withdrawn funding for whole swathes of higher education.


On 3) (reducing regulation and tax) these sound good.  Who likes regulation and tax?  But what does this really mean?  Are we going to reduce regulation of the banks?  I doubt it.  Regulation is there for a reason.


Are we going to reduce tax?  It doesn’t look like we can afford to.  Taxes, in fact, are going up.  Personally I don’t worry about that, because I don’t think slackening the tax regime helps growth.  Investment is driven by the desire for profit.  Spotting the chance to make a buck.  And that needs a vibrant economy – people with money in their pockets, willing to spend.  Sure tax plays a part in determining costs and profit, but if nobody has any money to buy my ice cream, you can cut my taxes all you like, I still have no sales, no profit, no tax.  Costs matter, but demand matters more.  And demand comes first.


On 4) rebalancing the economy, oh, go on then.  Let’s have some industry and not just a service economy.  And let the north thrive.  Might be a good idea to fund some regional development agencies to make that happen.  Oh no – we already have those.  Created in 1998.   Abolished on 22 June 2010. Closing soon.



The Tory-led government believes in the ‘crowding-out argument’ which I have discussed elsewhere in this blog.  When demand drops out of the economy, those who believe in the “crowding out” credo jump into action.  They cut demand even more, by slashing government spending and throwing people onto the dole.    Nick Clegg says, “we can’t just put Humpty Dumpty together again” as if that justified what they are doing to Humpty – namely to kick seven shades of shit out of him. 


The truth is I’m being mischievous when I scrutinize Clegg’s “plan”.  And so is Labour and everyone else who asks the government “where’s your plan for growth?”  Because we all know that the credo cannot allow alternatives.  The deficit reduction drive IS the plan for growth.  The dismantling of the state IS the plan for growth.  The stepping-back of government in order for the private sector to “do its thing” (or not) IS the plan for growth.


There’s no Plan B for Humpty.  We all know that.  Would somebody please tell Nick Clegg?