Looking to 2014, not 1974: the case for spending limits

by Rob Marchant

During the last two weeks, pieces by Uncut columnists Atul Hatwal and Peter Watt seem to have caused something of a controversy in Labour circles by suggesting that Labour keep to Tory spending limits. Peter’s piece was followed by a passionate defence of the current position by LabourList’s Mark Ferguson; not to mention a more wild-eyed, man-the-barricades-the-Tories-are-coming, ad hominem attack from Owen Smith.

So before making our minds up, perhaps we might take a cool, detached look at the case for change. The question of tax and spending limits is not new: indeed, it was raised on these pages back in March. However, given that spending is arguably the most critical question to answer before the next election and will quite possibly decide its outcome, it is important to construct the case clearly and calmly, brick by brick.

Historical evidence on beating incumbent governments: Since 1974, from the table below, no party has challenged an incumbent on a tax-raising platform, and won. In contrast, we challenged three times 1983-1992 on such a platform and lost each time.

UK changes of government after 1974

Year Winning Challenger Manifesto pledge
1979 Tory Pledged to cut taxes, although raised VAT and arguably did not carry out the pledge. Cut spending.
1997 Labour Pledged to keep to Tory spending limits for two years, and did. Pledged balanced budgets and no increase in income tax for 5 years, and kept them.
2010 Tory (in coalition) Pledged not to raise NI and cut spending to reduce debt.

The tough questions: a. by 2014, why do we think that a political approach which hasn’t worked electorally in 40 years will work for us then? Especially when, in the political climate of the 1970s, people were demonstrably warmer to the idea of higher taxes in return for a larger public sector? And b., if it was felt necessary to do this in 1997 (growing economy) to get elected, why do we think raising taxes in 2011 (stagnating economy) a good idea?

Accepting Tory spending limits does not mean accepting we got it wrong on the economy: Some argue that we did, and that we should do a mea culpa on the Brown years, and particularly on debt. But it is not a sine qua non: you can perfectly well have one without the other, as was argued here.

Accepting spending limits does not mean accepting everything the Tories propose: A “thin end of the wedge” argument does not pass muster. What we need to argue about is the spending priorities the Tories are choosing, not the total cost of them. As have many oppositions before us, including ourselves in the run-up to 1997.

Our current position is difficult to understand: The debate with the Tories of cuts-yes against cuts-yes-but-not-this-far-this-fast is, for onlookers, the difference between two subtly different shades of the same thing: think angels, head, pin. Or worse: they think we are against all cuts, as pollster Deborah Mattinson confirmed last weekend.

Accepting spending limits does not mean loss of economic credibility: In fact, many commentators think that an even harder position (the aforementioned mea culpa) is required to regain credibility. Irrespective of this, it seems odd to argue that, while we are being – successfully – labelled as spendthrift, we should respond by raising taxes.

The argument on overall cuts, not how we apportion them, is lost: Yes, it is. Ask anyone outside the Labour party. We are alone in holding that view: 28% more people think the goverment cuts are necessary than unnecessary. And the gap is increasing.

We’ll end up doing it anyway, so why not now: If we do it at the last minute, it’ll be perceived as desperate – as Gordon Brown found out to his cost proposing belt-tightening before the 2010 election – whereas, done now, it can be perceived as wise and perhaps even brave.

It is not fighting the Tories on their ground and accepting their terms of debate: a movement Ed Miliband rightly warns against in his Friday Guardian piece. He is right that we cannot let them define the battleground: that is good strategic thinking. Not good strategic thinking would be suggesting that acceptance of realities, such as the constraints of the Tory tax position, is the same as letting them set the terms of the debate. Hatwal quotes Tory pollster Andrew Cooper: concede and move on. Or, as someone else said: grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.

All that said, there could be one reasonable justification for our position: timing. That is, if we are intending to stick to these limits but don’t want to announce it as yet, for some strategic reasons not yet disclosed. Although it’s unclear what those reasons might be, and there are obvious benefits to announcing it sooner rather than later, this is at least an understandable and respectable position. It may even be Ed Miliband’s precise position.

Whatever the truth on this, a convincing counterargument to the above eight points – that is, a case for raising taxes going into the next election – is yet to be put forward. The case against is here, if we choose to listen to it with an open mind.

The people proposing these things are decent people who care about their party, too. They just want a debate.

Let’s have it.

Rob Marchant is an activist and former Labour Party manager who blogs at The Centre Left

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35 Responses to “Looking to 2014, not 1974: the case for spending limits”

  1. Tokyo Nambu says:

    The Tory Party lost the 2001 general election because it wanted to re-fight 1997 (and, to an extent, 1992) but this time get a thumping majority. It assumed that the public had made a huge error of judgement in 1997 (and in 1992, by not giving the Tories a large enough majority to get its business done without needing to pander to the backwoodsmen) and that all it needed to do was re-iterate the policies of the eighties — in simplified form, with subtitles for the hard of thinking — and the public would come to their senses. Because they’d been out of office for five years and had experienced a cull of recognisable and experienced politicians, their campaign was a bright colours, short words version of 1997 and took their to another five years in the wilderness.

    And instead of learning the lesson that whatever the popularity of Thatcherite nostrums in the 1980s, they were of no interest to the 21st century electorate, instead they fought the 2005 election on a similar platform of nostalgia and atavism; that left them unable to beat an already divided Labour party tainted by Iraq and starting to suffer from problems over things like detention without trial and ID Cards.

    Even in 2010, faced with a helplessly divided and tired Labour Party led by a profoundly unpopular PM with a manifesto that contained little beyond “we’re nice, they aren’t”, they were unable to resist the temptation to look at the past and failed to secure a general election victory. The last time the Tories won a general election was 1992, the last time they won one convincingly was 1983 (maybe 1987, but the cracks were showing) and yet they continue to behave as though they’ve had an unbroken line of victory dating back to 1979. But the last Tory leader to have a secure working majority that allowed them to ignore their own awkward squad was John Major, for the short period between Thatcher’s removal and the 1992 general election.

    Labour must learn from Tory mistakes. You cannot give hostages to fortune in opposition without paying for them electorally (de mortuis nil nisi bonum, but it’s hard to avoid the conclusion that the shadow budget was a factor in Labour’s defeat in 1992). You cannot keep telling the electorate that they got it wrong, because electorates never get it wrong. You cannot tell the electorate what you think they want to hear, because the electorate aren’t stupid and don’t forgive, or forget, insincerity. At least the emperors who offered bread and circuses controlled the bakeries and the arena; all Labour can do at the moment is complain about stale Tory bread and promise better circuses later.

    A programme of just complaining about cuts and saying “we wouldn’t have done them”, when it’s manifestly obvious that in large part Labour would have had to do the same simply makes Labour look like student politicians, demanding that the government fix the economy by finding a magic money tree. The election results this month were a total disaster, showing that the Tory vote is holding up and a significant portion of the Lib Dem vote is going to the Tories or staying at home. Maybe, just maybe, the electorate will blame the Tories when the cuts start to bite hard over the coming two years; alternatively, the Tory narrative that it’s all the fault of the Labour Party and the mess they left behind may look convincing, and in 2014 Labour confront the problem of a general election fought against a recovering economy on “don’t let them take us back to 2010”. Aside from anything else, the sight of a political party essentially basing their electoral strategy on a double-dip recession, essentially cheering on economic failure, doesn’t look terribly edifying; it becomes suicidal if the Tories are able to blame it on Labour anyway.

    Labour need a convincing narrative to explain why under a Labour government, life would be better. It can’t centre on reversing all the cuts, because no-one outside the party believes that at least some cuts are unnecessary. It can’t centre on defending every jot and scintilla of the public sector, because there are no fresh votes there and the “non-jobs in the client state” line, no matter how unfair and insulting, is going to be impossible to overturn in three years. It cannot, please, God, it cannot attempt to outflank the Tories to the right on crime and immigration, even though it is essential to admit that mistakes were made which harmed Labour’s own voters. It needs to explain how Labour will grow the economy outside the finance sector, how it will regulate the financial centre without causing it to up sticks and move to Frankfurt (for example, talk of The Tobin Tax is just pandering to the base, because it is simply undeliverable and the only people who think it’s a good idea vote Labour anyway). It needs to pull its way out of the knot Labour are in over education, aspiration and ambition: as the Guardian points out this morning, no-one responsible for education policy under Labour ever sent their children to the schools they wanted for the general public.

    Labour needs a clear vision of “why us?” which is so far sadly lacking. A labyrinthine policy review will result, without adult supervision, in a mess of narrow special interest planks which mimic the 1983 manifesto: lots of ideas which seem terribly important to Labour voters (or, more accurately, the tiny minority of Labour voters who are not only members and obsessive bother to respond to policy reviews) but have no traction outside that demographic islet. How many days of parliamentary time were spent on fox hunting? How many votes was that worth? Was it trumpeted as a major victory in 2010 to rally the troops? Has it stopped fox hunting? An electorally meaningless policy which won no new votes and hasn’t had the intended effect: my, and people accuse the Labour Party of being like a bad night at DebSoc.

    Labour can win the next election. Labour must win the next election. But refighting 2010 on some “go to the base” strategy cannot work, nor can telling lies to placate children. Labour must face up to its mistakes in office, use its experience to produce a deliverable plan for 2015–19 and campaign for that plan. Sniping tactically at Tories in office makes Labour look like the LibDems: oppositional, but not fit for government.

  2. Simon says:

    For clarity, the full title of point 6 should be “the argument on overall cuts, not how we apportion them or their scale or speed, is lost”. That’s because accepting the speed and scale of Tory cuts sets us against the majority (according to Hatwal’s cited YouGov poll) which thinks the cuts are too far and too fast.

  3. John P Reid says:

    good article, Most of tokyo’s comments good too.

  4. Simon says:

    Tokyo, it’s not accurate to say that ‘a significant proportion’ of the LDs’ council vote went to the Tories. The Tories’ national equivalent share fell around 4% from 2007 while Labour’s went up by around 11% – almost the same amount as the Lib Dems’ fell. That suggests, crudely, that the vast majority if not all LD lost votes went to Labour.

    Where the Tories gained from LD it was mostly due to this interaction in areas where labour are a distant third, with Tories gaining seats on a static vote to compensate for the 400 or so seats they lost to Labour.

  5. “not to mention a more wild-eyed, man-the-barricades-the-Tories-are-coming, ad hominem attack from Owen Smith.”

    It’s hard to take this article seriously when there’s this whopper of a mistake in the first paragraph.

  6. Alun says:

    I don’t really have time to look at the rest – though I’m sure several other people will – but that’s an absolutely grotesque abuse of historical evidence. Regrettably this is becoming a bit of a theme for contributors to this site.

  7. Edward Carlsson Browne says:

    Once again I disagree with the ideological posturing, but there’s a good argument here. I just think that we aren’t yet at the time where it can be properly made and discussed.

    By 2014, it may well make sense to accept Tory spending plans, unless they’re self-evidently being set up as a trap for us. That’s a debate we need to start having in detail in about 18 months.

    But whilst the cuts are happening right now, I think we should postpone the debate a little longer. Some of our voters want and need us to oppose the cuts. If we stop, we run the risk of losing them.

    We may be putting others off because we are opposing the cuts, but accepting them wouldn’t necessarily solve it or make us sound more incompetent (because it would inevitably be spun as an acceptance that we had been incompetent.) So that to me seems like a zero-sum game. We have to keep our present pool of voters AND win back more, and cuts won’t do that.

    So yes, let’s keep open the possibility of accepting Tory spending levels for 2015-2017. But that’s entirely different to following Peter Watt off the cliff of letting the Tories mock us for the rest of the parliament by quoting our own words back at us.

  8. Rob Marchant says:

    @Tokyo, an impressively accurate, if bleak, analysis.

    @Simon, I’m afraid that my wording is deliberate, it refers to cuts exactly as deep and rapid as the Tories are making. I don’t like them and I don’t think they’re necessary. But the YouGov poll shows that they have won the argument, not us.

    @Paperback Rioter: of course, how silly of me. Getting some blogger’s surname wrong defeats the whole argument.

    @Alun Oh dear, I’m sorry you don’t have time to look at the rest. Please highlight exactly where you think the historical evidence is being abused and we can debate it.

  9. Simon says:

    Rob, take a look at the full details of the YouGov poll quoted by Atul. (I don’t have a link but it was for the Sun around 18-19 April – try searching the yougov site)

    As well as the question Atul mentions on the cuts being necessary or unnecessary, the poll also asked specific questions on the scale and depth of the cuts. 50% responded that the cuts were too deep (to 34% who thought they were about right or too shallow). 57% thought they were too fast (to 33% who thought they were too slow or at the right pace).

  10. Real Chris says:


    Osborne’s rhetoric and spending plans has brought the economy to a stand still, Labour coming out tomorrow and endorsing his plans would be the first documented case of rats jumping *onto* a sinking ship. As has been pointed out numerous times you and Atul are being rather selective with your interpretation of polling on public support for Osborne’s plans. While many will undoubtedly hardly notice the spending cuts and tax rises, unless you believe the right wing press you can’t take £18bn out of the welfare budget without making many people suffer. We’ve got a perfect test case of the sort of strategy you’re in favour of in the recent Scottish elections…it didn’t work out too well there so why would it here?

    “that is, a case for raising taxes going into the next election”

    What? Why does being in favour of a slower pace of deficit reduction immediately mean Labour will be standing on a lets put taxes up platform in 2015? Unless their is a massive economic boom any government of any colour will have to run surpluses for a few years to pay down the national debt.


    Ah, you’ve taken some time off from trolling on Local Schools Network? It is an impressively long and cliché filled comment but doesn’t really say much beyond leaving the reader with the sense that is was written by a machine.

    “and failed to secure a general election victory.”

    You’ve changed your tune a bit, a month ago you were flaming Fiona Millar for suggesting such a thing.

    “A labyrinthine policy review will result, without adult supervision, in a mess of narrow special interest planks which mimic the 1983 manifesto”

    Yeh because all we ever do at Labour Party meetings is discuss when we’re going to abandon to bomb and update our lists of potential counter-revolutionaries. It is this total contempt for Labour members that damaged Labour over the past 13 years, if the “strategists” and PR men had listen to members a bit more over policy we’d have avoided numerous cock-ups like not re-linking pensions to earnings. And if they’d listened to the members I know they wouldn’t have tried to introduce a database state or invaded Iraq.

  11. AmberStar says:

    Latest YouGov Polling on “THE CUTS” for the Sun 16th May 2011

    Thinking about the way the government is cutting spending to reduce the government’s deficit, do you think this is…

    Good or bad for the economy?

    Good 38%
    Bad 47%
    Don’t Know 15%

    Necessary or unnecessary?

    Necessary 59%
    Unnecessary 31%
    Don’t Know 10%

    The majority think the cuts are unfair, too fast, too deep & will hurt them personally.

    Labour have at least 2years to decide what position to take on cuts, unless you think the Tories are going to be daft enough to call a GE before the 5yr fixed term legislation, before the cut in MP numbers goes through & whilst Labour are ahead in the polls.

    For now, at least, go with the 47% who think the cuts are bad for the economy.
    I mean, do you really think the Tories can turn the economy around? I’m almost certain they can’t. They are hoping there’ll be some fortuitous developments in the global economy that will cause a rising tide; otherwise they are screwed.

    A 1997 style pledge to follow the Tory spending plan is seductive; cuts are easy compared to having a credible plan for rebalancing & rebuilding the economy. Developing a credible economic policy will be difficult but that’s where success for our party will come from; not from promising to wield the Tories’ axe for them.

    And did it ever occur to you, that maybe we won in 1997 despite the cuts pledge, not because of it?

  12. Rob Marchant says:

    @Edward: well at least that’s a relatively sensible argument on timing (for a change!). I don’t agree with it though, as it’s just pretending we can do something which everyone knows we can’t (i.e. stop the cuts). It’s patronising to our voters, not supportive. The point is to move the debate onto spending *priorities* in different areas and stop talking about cuts in general.

    Your argument about the zero-sum game is a bit vague and doesn’t seem to be supported by any evidence. Re going off a cliff with Peter, that’s daft. We have already done this before in the run-up to 1997. And won, by the way.

    @Simon: interesting point. But I think these questions are a little misleading, for a simple reason: they don’t include the extent to which they are *necessary*. And this is a big omission. In other words, they seem to mean, “In a perfect world, where we could choose the extent to which we had cuts, what would you prefer?” Funnily enough, most people say “less cuts”. To be honest, I am not sure that is a sufficiently appropriate and unbiased question, although I’d be happy to debate it further if someone can find the data with the exact question wording.

    All this said, if your point is to prove that the anti-cuts argument is not lost, I’d have to say: you’re dreaming. Apart from anything else, we are not in power, and the cuts will be done by the time we even get a sniff of power. The public are not going to get Tory policy reversals unless we focus in very specific areas (like the NHS). And the overall cuts will still go ahead, how could they not? If they are forced to cut less in one place, they’ll cut more elsewhere. Whichever way you look at it, the overall argument is lost.

  13. Rob Marchant says:

    @Chris: I have no doubt that the Osborne approach will cause much unnecessary hardship. However it is highly unlikely that it will lead to a slump whereby we will not be back to growth by 2014. So, unless you are banking on an unlikely Armageddon scenario, we need to accept that we will not be begged back by the public to “save” the economy and we will need to deal with how the economy will be in 2014. What exactly are you proposing instead? Tax rises, or not?

    Regarding deficit reduction versus tax raising, I think it is entirely consistent to argue for deficit reduction now but accepting the reality of the tax plans as they are for 2014. Anyway, if you are arguing for not raising taxes either, then we are agreeing. If you are arguing *for* raising them, please give some answers on the eight points above.

    I am not sure that the leadership is averse to raising taxes, that is the issue. Perhaps this is not the case and Ed agrees with me, as I’ve suggested in the article.

    I’ll deal with the polling question later.

    @Amber Star:
    As per my earlier comments to Simon, the key point in the results is the necessary/unnecessary one. People may think they are bad for the economy, while recognising that they are necessary. You could argue some inconsistency here, I suppose, partly stemming from asking “overlapping” questions. But, to be honest, we are getting to analyse a level of consistency of economic arguments that is probably beyond the grasp of most of the respondents anyway.

    Don’t assume that the Tories will not call an election in the next two years. It may be unlikely, but it could well happen (we hardly have a rock-hard, unassailable lead in the polls and the coalition is a little rickety right now). However, let’s assume for a moment we go to term.

    Your question, do I really think the Tories can turn the economy around? Absolutely, I do. It will take longer than we would have taken and it will be more painful. But it will happen. To think otherwise is madness. It is betting the farm on a slump. Even the economists against the Tory policy – and there are quite a few – are not predicting a slump. Worse still, taking this position we are seen to be gleefully rubbing our hands at the prospect of others’ pain. Looking for disaster.

    Finally, yes it is possible that we won in 1997 despite the spending pledge. But it is highly unlikely, and practically no serious political commentator shares this view.

    But in any event you might answer the following from my point 1: we (and the Tories) have successfully challenged incumbents over 40 years on a tax-limiting platform. And we have lost 3 times on a tax-raising one. Does that 100% correlation between economic policy and winning mean anything to you?

    Or rather, should not red lights be flashing and alarm bells sounding at the prospect of aiming for a fourth try after the 3 failures we have already endured on a tax-raising platform?

  14. Alun says:

    “Oh dear, I’m sorry you don’t have time to look at the rest. Please highlight exactly where you think the historical evidence is being abused and we can debate it.”

    Someone doesn’t like criticism does he?

    I was, of course, referring to the little section that began with the words ‘historical evidence’. As there have only been three changes of government in the period you refer to (though quite why 1979 should be more relevant than 1974 is not immediately clear) it is somewhat questionable whether any sweeping ‘rules’ about what pledges do and don’t work can be drawn from them. Especially as the circumstances at each election were not the same and as future circumstances won’t be either.

  15. donpaskini says:

    Hi Rob,

    Your “historical evidence for beating incumbent governments” actually points to slightly different conclusions (leaving aside the problems with trying to draw lessons from just three data points).

    In 1979, 1997 and 2010, the challenging party focused on particular taxes which they would either cut or freeze, and other taxes which they would raise. The Tories in 1979 talked about shifting from taxes on earnings to taxes on spending, Labour in 1997 pledged windfall taxes and the Tories in 2010 didn’t rule out raising VAT as an alternative to raising national insurance (and pledged to keep the 50p top rate and other popular taxes).

    The only time when a challenger pledged to stick to government spending plans was in 1997 (Tories didn’t do so in 1979 or 2010), and something like 60% of people at the time expected Labour to put taxes up regardless of that pledge.

    I don’t think we should lock ourselves into accepting the overall Tory spending plans, which would plunge Labour into civil war and incentivise George Osborne to spend the next four years seeing if he could cut far enough to force us to abandon the pledge.

    Instead, lessons from history suggest that we should identify specific examples of particular taxes which we would freeze or cut in order to symbolise our approach, and others which we might choose to raise as an alternative.

    For an example of an alternative which doesn’t involve sticking to Tory spending plans, how about a programme of £10bn in personal tax cuts for middle and lower income earners (over and above whatever the Tories offer), plus £5bn extra to reverse some of the most unpopular and unfair public spending cuts, paid for by a mansion tax (£4bn), restricting pension relief for higher earners (£5bn), higher taxes on bankers’ bonuses (£2bn) and a crackdown on tax avoidance (£5bn). 90% of people paying less in tax, more money for public services, and a clear signal of shifting the overall tax system to reduce taxes on productive activity and the “squeezed middle” and increase it on unproductive activity by those who can afford it.

    Shorter version – people don’t care about the overall tax burden, they care about whether they will end up out of pocket, either because of tax rises or because they’ve lost services that they use.

  16. Edward Carlsson Browne says:

    Rob: We should talk more about spending priorities. But we cannot stop talking about cuts. Because the Tories will keep talking about them. We have to have a response until such time as our talking about spending priorities has moved the field of argument enough for them to stop bringing cuts up.

    Nor do I buy the argument that we cannot stop cuts. On certain issues, forestry being the best example, we were able to show that cuts were not wanted by the public and, in alliance with organisations with no link to us, to force a U-turn.

    There are a limited number of issues on which we can do that, but when we can it’s very effective, because it paints a narrative of the government as ideological cutters. And people support cuts for reasons they perceive as pragmatic, not ideological.

    But yes, I’d support not talking about it when we don’t think we can build such a coalition. Talk about police cuts, but not local authority cuts (except for special cases like Birmingham’s cuts to care services, which is enough of an open goal we’d be made to ignore it.)

    As for Watt’s advice, I’d argue it’s running off a cliff because a) whilst we didn’t win back enough voters this past year, we won back quite a lot. Many of whom were hostile two years ago and won over to us by our opposition to the cuts. If we artlessly do a volte face on that one, we lose them again. I’d rather be trying to win over Tories from 40% in the polls, not 33%.

    And b) because if starting a party civil war (because that’s what a major reversal on an issue like this would do) is a textbook case of walking your party off a cliff. We’ve managed a remarkable amount of comity over the past twelve months (anonymous aides who should know better leaking to the press notwithstanding). Peter’s prescription would be bound to undo that, and looking weak and divided is not the way to win votes off the Tories.

  17. AmberStar says:

    @ Rob Marchant

    Your question, do I really think the Tories can turn the economy around? Absolutely, I do. It will take longer than we would have taken and it will be more painful. But it will happen. To think otherwise is madness. It is betting the farm on a slump.
    We don’t have to look gleeful about a stagnant economy. But we don’t have to jump into bed with George Osborne either.

    And I would be willing to bet the farm on Osborne’s policies causing a slump. We’re into it already. Have you seen the April borrowing figures?

    Have you counted the number of times the OBR have revised their growth projections downward? And experienced forecasters are still saying the OBR figures are optimistic.

    So tell me, where will the economic recovery come from? Which Tory policies are going to work & why? And/or what external factors do you believe will result in the Uk economy to bouncing back? To simply believe that it will is madness.

  18. Rob Marchant says:

    @Alun, Don: well, at least now I have something to go on. Ok, you are concerned about drawing conclusions from only 3 data points. I did think of including every general election, but for an already-long 900-word piece the argument would get slightly more complex and I thought it not worth the effort. But, for the sake of completeness, here is the long version.

    There are really five more data points, the three Labour defeats and the two Tory defeats. The three Labour defeats are actually mentioned in the article, and give a pretty clear correlation between tax-raising platforms and defeat. The only exception was, as Emma Burnell highlighted with me the other day, 2001 where we openly said we were going to make a modest tax increase, although this was tempered by still saying we would balance budgets over the economic cycle. (We also were in power had regained economic credibility for the first time in a generation). In all other cases the correlation has been clear.

    You may also argue, if you are a decent mathematician, which I like to think I am, that correlation is not causation and here you might have more of a technical point. There are obviously other factors in our winning or losing. However, I think you can say that, given that economics is always a very important factor in electoral success, you would be foolish to ignore a correlation which has been positive for seven out of the last eight general elections.

    @Don: your argument is interesting and elegant, but I fear still wrong. Yes, in these three years some individual taxes may have risen, but the overall burden has stayed the same or fallen (the possible exception here is 2010, where tax had to be raised to pay off debt after the financial crisis, but this is anomalous – a challenger would clearly never get away with this normally. Also the Tories wanted, obviously, to raise tax less than we did, which is the critical factor).

    Your second point is interesting: you seem to be arguing that, since a lot of people didn’t believe us in 1997, that the pledge was pointless. But if 40% of people *did* believe us, that could easily be enough to swing a general election.

    When you start warning ominously of civil war, there we part company. We didn’t have civil war in the run up to 1997. It is perfectly feasible to repeat that. If Osborne wants to play a game of brinkmanship to make us rescind the pledge, let him. We will have to live with whatever he comes up with anyway.

    Your penultimate para, I agree that is a good way to present tax and spending plans. The only thing you have missed out is the politics – we cannot be seen to raise the overall burden, as that is what will kill us.

    And your final assertion is plain wrong, I’m afraid. People DO care about the overall tax burden, not the sum of tax and spending changes as you suggest. For a very simple reason. One they can quantify and one they can’t, easily.

    Now, you CAN convince them that you can pay more tax in return for more or better services, as we showed in 2001. But there are two preconditions: 1. that they need to trust you on the economy in the first place, that you will not go “taxing crazy” when you get in power, and 2. you need to be seen to have delivered and be delivering, on the services, or at least that they fully trust that you will deliver in future. Both conditions were in place in 2001. Both are absent now.

  19. Rob Marchant says:

    @Edward: on the cuts thing, of course we can and should oppose individual cuts where appropriate. I think we agree on that. What we should stop doing is banging on about too far, too fast. That is, the *overall* cuts. Re your concerns on civil war, I refer you to my answer to Don above. And I think you’ll find voters remarkably sanguine about our positioning. They know as well as we do that we’re powerless to stop anything but a few really unpopular ones, which is what we should continue to do. But the overall burden? Why pretend we can do something everyone knows we can’t? It merely reinforces the public perception that we are in denial about no longer being in government.

    @AmberStar: first rule of politics: don’t bet the farm. Let’s talk in 2014, I am willing to make a bet of at least 10 quid with you (a bet I already offered to Sunny Hundal but he hasn’t taken up for some reason 😉 ) that the economy has recovered by then. But you have to pay me.

    Trust me. It’ll come back – it always does. I did my masters studying this stuff. We have recessions in the UK with monotonous regularity but they very, very rarely turn into slumps.

  20. iain ker says:

    And/or what external factors do you believe will result in the Uk economy to bouncing back? To simply believe that it will is madness.


    I think one ittle wittle external factor to bouncing back the UK economy might be GLOBAL GROWTH.

    In what way does believing this make me mad?

    I’m interested.

  21. donpaskini says:

    Hi Rob,

    Thanks for the response.

    “People DO care about the overall tax burden, not the sum of tax and spending changes as you suggest. For a very simple reason. One they can quantify and one they can’t, easily.”

    No they don’t care about the overall tax burden, and yes they can quantify the difference (if we help them to do so) :

    Between 1995 and 2000 tax revenue as a percentage of GDP increased from 34.5% to 37.1%. Labour went into the 1997 election pledged to increase the overall tax burden via a windfall tax on private utilities in order to pay for increased spending on public services. This increase in the overall tax burden manifestly and obviously did not “kill us”.

    And we can help people to quantify whether they would be better or worse off from our changes. What will kill us is if we let the media explain our tax plans to people. So here’s what we could do instead:

    1. Use our door to door campaigning over the next three and a bit years to help build up our database of what people think would particularly help them, their families and their area, and use this information to draw up a targeted set of pledges which address the most prevalent of these (rather than the mishmash of priorities of special interests and lobby groups which filled our last manifesto).

    2. Come up with a tax policy which leaves 80% of people better off and 20% of people paying more via mansion taxes, windfall taxes, tax avoidance crackdowns etc.

    3. As we launch our policy, send a mailing to as many households as possible (with all the usual targeting strategies), using our database and mosaic data to explain to them how much better off they would be as a result of Labour’s tax plans, with specific examples based on what we know their priorities are, adn explaining that our plans come from the ideas of ordinary people based on more than ten million doorstep conversations with Labour volunteers.

    We’ve got the capacity now to do this kind of campaigning, and we should let our strategy be defined by the voters and their priorities, not by George Osborne and his. I think it would be effective on its own merits, and it would also be a powerful way of symbolising how we’ve learned from our mistakes and changed for the better.

  22. Rob Marchant says:

    Oh dear. Might have to agree with Iain on that point.

    Mind you, good of you to recognise that it’s largely external factors (i.e. that the Tories are likely to be more of a hindrance than a help), eh Iain?

  23. iain ker says:

    Mind you, good of you to recognise that it’s largely external factors (i.e. that the Tories are likely to be more of a hindrance than a help), eh Iain?


    I don’t believe I said that.

    Oh yeah, maybe i ‘implied’ it.

  24. AmberStar says:

    @ Rob

    I’ll see your £10 & raise you £10. Because the economy is not going to bounce back within the 3 year time frame that the Tories need it to. Not without a major strategy change by them or a major piece of external good luck.

    If you & ian ker think that GLOBAL GROWTH will fix the Uk economy within 3 years, I’d say you are being extremely optimistic. Q2’11 figures: 1% public spending increase masking a ~0.5% fall in the other sectors; the cuts haven’t really started & it’s pretty clear what’s going to happen when they do.

    There will be a fall in Uk output because private sector investment & GLOBAL GROWTH will not pick up the spare capacity in the Uk economy. That’s a slump. Or is there a new definition of ‘slump’ that has passed me by?

    BTW, let’s not get into an arms race regarding qualifications because I’m not short of those myself. And neither is Ed Balls. 😉

  25. Rob Marchant says:

    @Don, you argue your case well, but it still does not convince. Firstly a confession, I wrote in a slight hurry – where I said spending I meant services, as you equated above. The first can, of course, be quantified, but the second depends on efficiency and delivery. The problem is that people do not trust politicians to delivery (a) efficiently, and sometimes (b) at all. So you need to reach a very high level of trust before they will give you extra money and trust that you will do something useful with it. My point is that we have not reached anywhere near that level. Anyway, that’s why I think it’s difficult to quantify – how do you quantify service delivery?

    Your point about the windfall tax is well taken. But it’s also, obviously, a one-off. As a (Shadow) Chancellor, you have very few “pain-free” tax raising ruses like this, sadly. We have already got the bonus tax accounted for, mansion taxes raise little and are politically ugly and the old “closing tax loopholes” chestnut is always wheeled out by the Tories but never amounts to much. So, yes, there is the odd thing you can do like this, but it absolutely cannot form the basis of taxation policy and provide an ongoing, significant tax raise. This can only be done on the basis of trust, and very much little by little, if at all. In Britain (as opposed to Continent) we do not have much of an appetite for high taxes, although with a longer incumbency and a competent government we might just be able to move in that direction.

    I like your idea of going direct to voters to explain tax plans – in fact, we’ve kind of done this in the past – but I’m skeptical that this would overcome the inevitable “Labour Tax Bombshell” campaign that would follow any proposed overall tax hike.

    Another overall issue with your plan is that it (perhaps typically in Labour circles!) seems to be defined by what we would like to do, rather than how much money there realistically is to spend. While this might be managerially ok, it builds the argument without reference to the political realities of the outside world.

    Probably the major constraint on spending is not what we would like to spend but, in reality, this: “how much extra money will the public trust us to spend?” and the answer, in this case, is zero. Until, that is, the two preconditions, trust not to go tax-crazy” and “trust to deliver” are fulfilled. As in 2001.

  26. Rob Marchant says:

    @Amber Star: There will be a prolonging of the downturn following the cuts. It will last longer than it needed to. Then it will pick up. It may even, as you rightly say, require an adjustment to Tory policy, if today’s OECD figures are anything to go by.

    But the Tories are not stupid. They’ll adjust if they need to. And it will be back “in time for Christmas” 2014. They’ve already done a couple of U-turns when required. As John Rentoul points out, this is a sign of strength, not a sign of weakness. Do you think an adjustment to their cuts programme will make the public say “oh, Labour, we’re sorry, you were so right all along. Have my vote”? Nah.

    PS Ed Balls, as you rightly say, is very well-qualified as an economist. But he sometimes loses it on the politics, as I have argued before here.

    Anyway looks like we have a £20 bet then! I’ll be sending my bank details shortly 😉

  27. iain ker says:

    Ed Balls is well-qualified as an economist, so ‘well-qualified’ that with his boss he drove the UK economy down the pan.

    I come here with a private sector mentality – what matters is DELIVERY.

    Balls didn’t deliver – he failed. Is that really so hard for posters on here to comprehend? Why do you want to give him the opportunity to fail again? A public sector thing, right?

  28. AmberStar says:

    @ Rob

    I really want a Labour government asap. But I also really want there not to be unemployment & rising poverty. So I hope the Tories do change their cuts policy, as you think they might in the face of pressure from the OECD etc.

    If you are correct, I will seek you out at a Labour event somewhere & happily give you that £20. 🙂

    But I think it is possible, if Labour handle it cleverly, that we can get some economic credibility back from sticking with the too fast, too deep message because it looks like the Tories may be forced to come around to Ed or at least Alistair’s plan.

  29. Rob Marchant says:

    @Iain: Agree about importance of delivery (I too have worked in private sector many years, you know – you are not the only one). You are wrong about Balls though – you seem to be tying him in with Brown at the Treasury when in fact he was Schools Minister. His may have issues, but they are not about delivery.

    @AmberStar: Good luck with that! One final word from today’s New Statesman, rather supporting my last comment, that even if things get worse, as they will, we’ll still get the blame. Enjoy!

  30. Stephen says:

    “The debate with the Tories of cuts-yes against cuts-yes-but-not-this-far-this-fast is, for onlookers, the difference between two subtly different shades of the same thing: think angels, head, pin. ”

    That may be – but it may also be crucially important as to whether we achieve economic growth and actually reduce the deficit. Please look at what is happening now – growth has slowed down and the recent public borrowing figures are not looking too happy. And then you might also wish to look at how the Irish and Greek economies have responded to their cuts in public expenditure.

    I don’t support the Tory spending plans because I don’t think that they will work – and a similar approach did not work in the 1920s and 30s either. This may be difficult to present and argue for – but that is not an argument for adopting a position that is wrong and unlikely to work and damage everyone in the long run.

    I am sorry you work out the right position first and then work out how it is best presented- especially when it comes to your basic economic stance. The position in 1997 was completely different and there were good arguments when the economy was growing relatively strongly and there was already some planned expansion of public spending not to accelerate such spending.

    Perhaps one way for us to get back some economic credibility is to come up with a coherent analysis of what created the crisis in the first place, including a mea culpa for what we didn’t get right. But if you want to counter the Tory mantra that it was all due to not controlling public spending – I somehow think that arguing that agreeing with the Tory spending plans will just be taken as acknowledging our agreement with that view and I supect the electorate would just support the Party that got to that position first. So even in presentaional terms I think you are on to a loser.

  31. Richard says:

    “During the last two weeks, pieces by Uncut columnists Atul Hatwal and Peter Watt seem to have caused something of a controversy in Labour circles…”

    You mean the Labour blogotariat with its head up its own circle.

  32. Rob Marchant says:

    @Stephen: I appreciate your concerns and to some extent share them: most Labourites agree that the Tory programme is wrong and is slowing growth, the issue is what to do about it. We are not going to turn around their cuts program, it makes us look like ineffectual King Canutes. What we can do is focus ourselves in forcing changes in key areas (like the NHS). A scattergun approach does not work.

    If you are saying we should be anti-cuts simply because people may come out on the streets about it, like Greece, and we should be “with the people”, that is attractive but ultimately futile populist politics. The people who are demonstrating mostly want no cuts at all, as the demo showed. And in 2 years it will all be forgotten when the economy recovers.

    You are arguing against adopting this position because the cuts will “damage everyone in the long run”, but the damage is as good as done. In fact, the important spending plans are those from 2014 onwards, not from now.

    By the way, there is a big difference between *agreeing* with Tory spending plans, and *accepting* them. You can say we don’t agree but we accept the reality of what will be in place. The Tories did this with some success and so did we.

    Personally (as per one of the above links) I am *not*, in contrast, in favour of the mea culpa strategy, that really would give the Tories unnecessary ammo. But acceptance that we cannot change overall spending is just taking a rational attitude to the reality we’re faced with. Hope I am explaining the difference.

  33. Stephen says:

    “If you are saying we should be anti-cuts simply because people may come out on the streets about it, like Greece, and we should be “with the people”, that is attractive but ultimately futile populist politics.”

    No – I’m not and I don’t believe in futile gestures and celebrating our failures. You do however to set out a clear and consistent view of what you would do differently and why what your opponent is doing is wrong. If the damage is done – and I think it will be done – then the Tories may well start to trim towards your position (and that isn’t a bad thing) and we are more credible in the next election.

    “By the way, there is a big difference between *agreeing* with Tory spending plans, and *accepting* them. ”

    Now who is dancing on the head of pin – try and explain the difference to the electorate. With regard to accepting them in the true sense of the word – we really have little choice I’m afraid, the to the barricades lot will, I think we both agree, only have the impact of strengthening the Tories position. Cooly and logically explaining our position and what we would do (cuts can also fall in different places as well as at a different time) will strengthen ours. A good response to the Tory mantra would be that we wouldn’t need to cut as much because etc. and that we would cut X instead of Y

    Re “mea culpa” I think we will find that arguing for sensible NHS reforms will need some acceptance on our part that there was alot we could have done better – a lot of additional money was spent and the results were mixed to say the least. If we want to argue that unregulated financial markets were the main cause of the recession then we will need to be honest that we didn’t get financial regulation right – the electorate are not that stupid I’m afraid. We perhaps also need to understand than much of our thinking as to how financial regulation (and other regulation) should best work and what are the best organisational structures for the public sector is pretty limited at present – and just isn’t where our thinking has been for many years. Leave it to the market really isn’t very New Labour if you really believe that policies need to change to reflect different circumstances.

  34. Rob Marchant says:

    @Stephen: I suspect that our positions on this are not really that far apart. Re agreeing vs accepting, I take your point to some extent, but it really depends upon how you present it. What I am *not* suggesting is that we roll over and say “the Tories were right, we give in”. In fact, the preferred action may not even be to make an open declaration on spending limits at this point: simply to start making our costed plans based on Tory projections now, and stop banging on about it in the media (e.g. if there is another large demo in June, as seems possible, Ed needs to steer clear). Neither of these things, I believe, is happening yet.

    On “coolly and logically explaining our position and what we would do”, I am absolutely with you. Sad thing is: we’re not. We will not even get to first base until we have some costed policy plans.

    Re mea culpas, the one on financial markets has already happened (a few weeks back). Not sure if one on the NHS is politically necessary, we are doing quite well opposing that already. Where we might part company is that I believe our thinking on public sector reform was, on the whole, pretty good and that is why the Tories are carrying on some of it. But that’s a much longer conversation…! 😉

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