A quantum of spin

by Michael Dugher

You always know when a government is short of ideas. In the absence of serious policies to announce, any government will revert to “process”. I can almost picture the No 10 “grid meeting” from a few weeks ago: the strategic comms team will have been lambasting their hapless counterparts in the policy unit for having nothing positive to present to the public and the media. After a fraught meeting, the room came up with the idea of a “summit” with business figures to discuss “how we can promote growth”. Today’s Downing Street summit come hot on the heels of that other old chestnut of spin-over-substance: last week’s prime ministerial “regional tour” to talk about “how we can promote growth in the regions”. But behind the spin of today’s summit, the truth is that the Tory-led coalition has no plan for jobs and growth.

“You’ll get great pictures, boss” will have been the advice to the PM from the No 10 events team. So today, in time for the lunchtime bulletins, expect pictures of business leaders arriving at Downing Street, followed by shots of them gathered round the cabinet table, sucking the Fox’s Glacier Mints, leaning forward in their shirtsleeves whilst David Cameron, George Osborne and a token Lib Dem “get down to business”. There may even be the odd business leader, probably not a current Tory donor, who will be wheeled out to do a round of interviews at the Millbank studios to talk up the success of the summit, the poor fellow flattered to be asked/used, though no doubt keeping one eye on next year’s honours list.

Scouring this morning’s newspaper reports, I could only find one policy announcement of any substance to go with today’s PR blitz. There will be a new “employment charter” which will give companies greater freedom to sack under-performing workers “as part of an overhaul of employment laws to boost economic recovery”. To you and me, that means repealing the law that says employers cannot unfairly dismiss someone if they have worked there for one year. The government wants to increase this to two years.

The Conservative-supporting commentator, Benedict Brogan, deputy editor at the Telegraph, understands the politics of this perfectly in his column today. He explains that David Cameron has “read Lady T’s memoirs closely” and wants to recreate what Brogan believes was the success of the 1980s. You will recall that this was a period when we enjoyed two of the biggest recessions in our history, punctuated by a period of growth that saw enduring levels of mass unemployment in large parts of the country.

But Cameronomics are as much rooted in the 1930s as in the 1980s. Back in the thirties, Keynes blamed “mad men in authority, listening to voices in the air” for introducing the kind of deflationary spending cuts – taking money out of the economy – that suppressed demand in the economy and sustained a slump.  Keynes showed that when markets and the private sector fail, as happened during the recent global financial crash, governments can use their power to increase demand, and thereby promote growth and jobs. This is also a key component of any deficit-reduction strategy. When you help industry and put people to work, the economy grows, tax revenues go up, benefit payments go down and the deficit is reduced. It’s not rocket science when put that simply. For every 100,000 added to the dole queue, it costs the taxpayer half a billion pounds in benefit spending alone.

Since long before today’s summit, Labour has been calling for a focus on growth and jobs in 2011, arguing that while the recovery is still fragile, the government should think again about hitting the economy with a £13bn VAT rise and a £20bn public spending reduction.

We need to make sure that small businesses can access the capital they need to grow, which is why, aside from the fairness argument about who got us into this mess in the first place, the government’s softly-softly approach to the banks is such a worry, an argument made extremely well by Labour MP Tristram Hunt in the Mirror today. It also makes no sense that the government has banned small businesses from accessing the regional growth fund.

The big concern in 2011 is about rising youth unemployment. The decision to scrap the future jobs fund, which provides 100,000 places for under-25s – in my area leading to permanent full-time jobs – was a disaster. As Labour will argue today, we face the risk of “a lost generation” of young people in this country on a scale not seen since the 1980s. Ed Miliband put it this way this morning: “There is a looming gap in the help given to unemployed young people. The decision to betray young people is not just unfair, it is the wrong long term economic judgement”.

The government says it wants a “private-sector-led recovery”, arguing as Nick Clegg did this morning that the economy had become over-reliant on the public sector. But PriceWaterhouseCoopers estimates that half a million jobs will be lost in the private sector alone, because of the government’s policies.  And even the government’s own office for budget responsibility forecasts that we will see the slowest economic recovery for forty years. Events in Ireland show what can happen when austerity hits growth.

All of this contrasts markedly with Labour’s approach, particularly during the last few years of our time in government, based around an “active industrial policy”. Last year, the Conservatives and the Lib Dems denounced Labour’s strategic investment fund as simply “signing blank cheques”. But these critical investment decisions were essential, not in propping up failing companies, but in supporting the industries and jobs of the future and in boosting economic growth.

In the automotive sector, those decisions were key to Nissan developing electric vehicles in Britain, essential to a new generation of Ford motor engines being produced in the UK and vital for the future of Vauxhall making cars in this country. This support for industry was also important to Britain’s aerospace sector, enabling Airbus to design and develop the A350 XWB, and it was critical for the development of the next generation off shore wind blades at the national renewable energy centre and Mitsubishi’s R&D centre.

The government’s lack of a plan for jobs and growth is, of course, compounded by their decision to hike up VAT. We know that VAT is a regressive tax that hits the poorest the hardest. But it also massively hinders the prospects for growth.  Four out of five retailers, major employers in most areas of the country, think that the increase will undermine sales, with nearly two-thirds convinced that 2011 is going to be a worse year at the tills than 2010, according to a recent poll by the British retail consortium (BRC), the industry body.

“The combination of the (VAT) rise, coupled with public sector cuts are leaving (retailers) gloomier than they were a year ago”, said Richard Dodd of the BRC last week. Sir Richard Lambert, outgoing director-general of the CBI, the employers’ group, has warned of a “bumpy” spell in the early months of this year in which economic growth could stall.

The economy remains the big issue for 2011. Labour has enjoyed a decent start to the new year. We were quick out of the traps in attacking the VAT rise, and our economic attack needs to be prosecuted relentlessly in the days and weeks ahead. We should welcome David Cameron’s summit on growth today as an important opportunity to highlight that the Conservatives still have nothing to say of substance on policies for jobs and growth. No quantum of spin can hide that.

Michael Dugher is Labour MP for Barnsley East.

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2 Responses to “A quantum of spin”

  1. Robert says:

    Funny how the so called blue tinted Labour people have short memories, Blair gave Tesco better planning conditions, Asda and B@Q were called into labour to discuss employing more people or have you so badly forgotten.

  2. What’s your point, Robert? Michael’s intro to the article more or less acknowledges that he’s worked process when he was in Downing Street, and the examples you’ve given are things that promote employment – new Tescos aren’t always popular, but they do provide a lot of unskilled employment, whilst talking to Asda and B&Q about employing more people sounds perfectly useful to me, especially when you compared it to weakening employees’ rights, cutting off credit to small businesses and hoping everything will be all right.

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