by Jonathan Todd
I had no idea that policy network was going to publish “into the black Labour” at the end of last week. Its stress upon fiscal credibility, however, chimed with one of the themes of my piece for Labour Uncut earlier last week. My other theme was the economic incompetence of the government, which Cormac Hollingworth argues was not shown in “into the black Labour” and needs to be demonstrated for Labour to return to government.
I see no contradiction between demonstrating both the government’s economic incompetence and Labour’s fiscal credibility. In fact, the whole point of my piece last week was that both are essential. There is every chance that the government’s incompetence will come to be more widely accepted by a frustrated public. However, we delude ourselves if we presume that this will be enough to return us to government. We will not win by default. We need to make a positive case for Labour that includes lessons learnt from the last general election.
“Into the black Labour” is right to see fiscal credibility as central to this positive case. To make this case, Labour needs to follow through on the policy changes that increased fiscal credibility requires and to repeatedly stress these changes in the way we present ourselves.
We need to change and be seen to have changed, such that by being this change we personify the answers to Britain’s problems. And Britain faces no bigger problem than finding the resources to pay for public services. Yet, as “into the black Labour” recognises, “it is precisely the vagueness of Labour’s position over its short to medium term plans for the deficit that confirms the voters’ worst suspicions about the party’s lack of commitment to addressing the fiscal crisis”.
As well as demonstrating the incompetence of the government, Labour must embody resolve to meeting this crisis. This embodiment would not reduce us to some pale Tory-ism. Indeed, as I argued over a year ago, it is only the honesty that fiscal credibility requires, which will allow us to be distinctive.
We won’t get the national audience that we need without this honesty and we make ourselves distinctive through the priorities that this honesty contains. “Rather than relying heavily on extra public spending, social justice will have to be advanced through prioritisation”, as “into the black Labour” argues.
The writers are absolutely right to encourage Labour fluency in the language of priorities. However, the only slight criticism that I would make of the paper is that the way it asks Labour to approach prioritisation doesn’t seem exactly right. “Labour’s criteria for spending choices should”, they claim, “be based on a simple question: will a spending option directly boost short term and long-term growth and create jobs?”
This seems to suggest, however, that necessary public goods, which would not be provided if the state did not provide them, are only worth providing if they boost growth and jobs. As much as smart government is capable of boosting jobs and growth, these are secondary considerations, as compared to the primary considerations of whether a market failure or inequity exists that would persist in the absence of public spending. The focus should be upon identifying that which only the state can do, enabling the scarce resources of the state to maximise efficiency through correction of well-defined market failures and equity through delivery of essential goods and services.
The ageing of society is expected to increase the cost of provision of services to the elderly by up to 6 per cent of GDP. Much of the health and social care that is contained in this increased cost is essential and it would offend our senses of equity and decency for them to not be provided, irrespective of what this spending might or might not mean for growth and jobs. However, given that the resources available to the state are inevitably finite, as these costs of ageing are met, there will be less money available to spend elsewhere. These acute, long-term cost pressures have caused Peter Kellner to argue for a “new social democratic business model”.
In the year since Kellner made this argument, nothing has happened to diminish these cost pressures, but the innovative thinking required from Labour to respond to these pressures continues to require development. The proposal made by “into the black Labour” that Labour “commit to a process of ‘zero-budgeting’ across the whole of Whitehall, questioning every line of public spending” could contribute. This would add to the fiscal credibility that Labour needs to meet the political challenge of this parliament and the policy challenge of coming decades.
Fiscal pressures are not going away. They are only going to intensify, as society ages. The public know this. Labour should never seem to be denying this reality. But the public should also never be in any doubt as to our priorities either.
We must be a party whose heart gives us the right priorities but whose head is utterly sober and pragmatic.
Jonathan Todd is Labour Uncut’s economic columnist.
Tags: into the black Labour, Jonathan Todd
“Into the black Labour” is right to see fiscal credibility as central to this positive case
The problem is that you aren’t even close.
For example, take the employment of Bernie Maddoff’s accountant to prepare the government’s accounts. Missing are all the really big debts. Pensions. Why shouldn’t you book the pensions to the accounts? The reason not to is that you don’t intend paying them. Booking them makes it clear to people just how much they are on the hook for, for all past governments.
Until you admit to the debts, you have zero fiscal credibility.
It’s like anything else; paying for ‘public goods’ is the art of the possible. You can only pay for them if you have the cash to do so. How much cash that takes depends in turn on how efficiently the departments that are providing the services are run. Increasing public sector employment by 850,000 over ten years for example does not come across as efficient.
The people of this country are more acutely aware than ever before of the role that public sector spending plays in our solvency. This isn’t going to change anytime soon so future governments of whatever stamp are going to have to be much tougher than in the past when it comes to committing tax payers’ cash to a programme, no matter how politically desirable it may be.
Yes.
If this guy is your “economic columnist” then you really are struggling
Politics is the language of priorities.
Socialism is an economic and political philosophy, as is Neoliberalism.
New Labour is not Socialist but Neoliberalist.
Labour needs to reject the premise of Neoliberalism, and return to Socialism (not Social Democracy).
Labour needs to pursue an alternative economic narrative, and alternative political agenda.
I hope you saw Storyville on BBC2 (7th Dec) – Inside Job.
Economics has been corrupted, as has Government, including New Labour.
Rule of the people, by the rich, for the rich.
The status quo is not an option, nor are the policies proposed achieve fiscal credibility.
Sober and Pragmatic is how you spell … Surrender to Neoliberalism.
@ aragon: Several clarion calls here but how do you propose raising the cash to support alternative economic narratives and political agendas in the absence of wealth. The USSR tried it and reduced its people to a cocktail of penury and tyranny.
“Socialism is the language of priorities”
Which means that at some point you have to sacrifice something.
What are you going to sacrifice?
It’s really quite simple. If money is tight.. and believe me the next few years will make the current situation look like wine and roses – you set priorities..
So what is priority No#1?
The poor?
The aged?
The sick?
The NHS?
Answer: none of these.
When money is tight, your priority is the health and growth of UK businesses within the UK.
Because if you do anything to improve their effectiveness, you grow the economy
and that means more employment and more tax revenues and less benefits paid.
Now, you will all argue that is What Ed Balls and Labour’s economic policy is. I have news for you. Very few businesses think it is: based on their experience of a Labour Party in power. Their experience is: more legislation, more interference and quite frankly .. more political correctness. And a higher minimum wage..
You don’t really think that all that Labour legislation was really needed?
If you do, just ignore what I have to say. You are a waste of space in my view.
If you don’t , then have a SERIOUS program of reducing bureaucracy. And business costs. And legislation.. and streamline the planning system. And the legal system (look at the shambles of repatriating illegal immigrants)
Don’t want to do it?
Give up now.. You are not serious.
Anyone who starts with a program of more spending or legislation should give up now. Anyone who thinks we can afford to spend £100thousand on legal appeals on immigration for illegals can give up now.Anyone who thinks a five year planning system is OK should give up now.
I have every confidence vested interests# and narrow minds will ignore everything I write .
I will remind you that under both Tories and Labour manufacturing has moved offshore.. Lots of talk about increasing it.. Little action.
As for education, the UK education system is a bad joke as the recent exam scandal shows. Maths and English are essentials in a modern society I used to recruit school leavers 20 years ago. 90% were unemployable then for any skilled job to lack to basic knowledge. The education system has been debased. Easily sorted..in about 5 years.
Until you increase wealth creation, all the rest is a waste of time.
# Lots of lawyers in Government helping other lawyers make £millions form bad legislation make the Banks look angels..