by Atul Hatwal
Rule 2: Use the government’s tax and spending plans as a bridge back into the argument
All oppositions start their lives with a trust deficit on the economy.
Defeat at a general election is the most stark demonstration of voters’ lack of faith. It is the public sending a clear message that they do not believe that the party has either the policies or the capability to deliver on their promises of a brighter tomorrow.
The pre-eminent requirement for an opposition is to bridge this trust gap, as quickly as possible.
But deprived of power, and the ability to demonstrate how alternative policies would have been more effective than the government’s, the options are limited.
An opposition can make assertions about how different tax and spending decisions would have improved growth or reduced the deficit, but at all times these are just words, undercut by the abiding lack of trust the public have in a party they have recently rejected.
Without a catastrophic collapse in public confidence in the government – almost unprecedented if it’s a first term in office when voters are inclined to give the benefit of the doubt – the opposition runs the risk of being tuned out for years by the electorate because they do not believe anything the party says.
Labour’s current struggles on the economy illustrate the problem.
Despite the turmoil in the eurozone, anarchy in the markets and a stagnating economy, public confidence in George Osborne to do a better job than Ed Balls is increasing.
In June, when YouGov asked people who they would prefer as chancellor, Osborne had a two point lead over Balls, 25%-23% with 53% in the “don’t know” camp.
At the end of November, when YouGov asked the same question again Osborne had stretched his lead to six points, 30%-24% with 46% “don’t knows”.
Ultimately, there is only one tested route for an opposition to bring the trust deficit on the economy back into balance.
The second rule of opposition is to adopt the government’s aggregate tax, spending and borrowing targets. Any differences need to be ring-fenced, identifying clearly where the revenue is raised and on what it is spent.
This approach can be controversial. It’s pedigree as a New Labour tactic from the mid-1990s riles many, with charges that this amounts to a surrender to the government’s platform.
But this confuses New Labour’s early political strategy – how to get elected – with Tony Blair’s later rightward march on policy – what he then did with power. It doesn’t limit policy options for two reasons.
First, there is scope for re-prioritisation within overall tax, spending and borrowing totals. With total government spending projected to be £703.4bn in 2012, each party has some leeway to re-allocate between programmes, and revenue-raising measures, to deliver their distinctive programme.
Second, and most importantly, divergence from the aggregate totals is possible, whether it be £1bn or £100bn, higher or lower, as long as the opposition are explicit about where the money is coming from and going to.
What this approach does achieve is to close down the dangerous ambiguity within opposition economic plans which government’s habitually exploit, painting imaginary fiscal terrors that play into voters established fears and mistrust.
For Labour, the most damaging economic attack over the past 30 years has been Mrs Thatcher’s household budget analogy for the public finances. Updated recently by the coalition as “Labour maxed the credit card”, it’s immediate logic has proved almost impossible to refute, regardless of the analogy’s validity.
The one sure defence against this charge is to use the government’s own targets as defence. Only then is there a concrete rebuttal to caricatured figures showing how Labour would wantonly tax and spend more than the Tories.
On a similar basis, the most effective Labour attack on the Tories has been at they will cut excessively, removing critical support from the elderly, the infirm and the poorest.
In the 2010 election, with the Tories facing a deeply unpopular and barely functioning Labour government, fear of Tory cuts was sufficiently potent to help deprive them of an overall majority and ensure large tracts of the country north of Birmingham remained Tory free zones.
If the Tories had adhered to the Labour government’s targets, and clearly ring fenced their cuts, its hard to see how these attacks would have gained traction either in the media or with the public.
The second rule of opposition removes the basis for speculative attacks and enables oppositions to move on from the losing argument at the previous election. It focuses the debate on the areas of actual divergence between the parties – those initiatives where the opposition has provided costed alternatives to the government programme.
Its an opportunity for the opposition to draw the government onto their territory and enable a new argument to be presented to the public. If the right areas for differentiation are chosen, it will define the opposition as on the side of the people against an increasingly out of touch government.
Big if.
Which brings us to rule three of opposition – draw the right dividing lines.
Tomorrow: Re-draw the dividing lines with ring-fenced costed policy measures
Atul Hatwal is associate editor of Labour Uncut.
Tags: Atul Hatwal, economy, opposition, tax, Twelve days of Christmas
Despite the turmoil in the eurozone, anarchy in the markets and a stagnating economy, public confidence in George Osborne to do a better job than Ed Balls is increasing.
That’s because Balls caused most of the problems. He spent, and now there is debt to pay. Labour needs to axe Balls. You can’t win when the architect of the mess is one of your front bench.
Ultimately, there is only one tested route for an opposition to bring the trust deficit on the economy back into balance.
Correct. There are two balances that need to be made. One on expenditure, the other on debts.
The overspend is 140 bn a year. What are you going to cut to return that to balance? And/or who are you going to tax for how much if you want to increase taxation? Note, if you say tax the bankers, that isn’t sufficient, they aren’t paid enough to do it. If its tax the banks, it really means tax the bank’s customers. For example a Tobin tax on ATM transactions. 1 quid everytime you want to withdraw money. It’s a Tobin tax on the banks. Nice and transparent.
Next comes to balance. 7,000 bn of debts when you include all the Bernie Maddoff debts. Realizable assets – zero. How are you going to sell off hospitals for example?
Now what if the Tories send everyone a personalized bill for their share of the debts? 225,000 per taxpayer? What’s you response?
It’s refreshing to see someone on LabourUncut actually making some constructive suggestions – even though I disagree with them – so fair play to you.
I don’t agree with your proposed approach. First of all, it’s hardly original. It mirrors what Tony Blair did in 1996 when he promised to stick to Tory spending limits for the first two years. But – and most of you guys at LabourUncut can’t seem to grasp this – we ain’t living in 1996 anymore. Fifteen years have passed. It’s a different world out there. The Tory spending plans for 1997-99 did not crucify my constituents in my council ward like the Tory plans for 2010-2014 are doing.
Secondly, Ed Balls doesn’t have the polls on his side at the moment, but he has the facts on his side. He predicted that the cuts, being too deep and too fast, would snuff out economic growth and worsen the deficit. I don’t see the point of signing up to the Coalition’s economic policy at the very moment that it is being shown to have failed.
I think that, in hindsight, people will see the recent Autumn Statement as the day the Tories’ political and economic strategy unravelled. Their plan was to get all the cuts out of the way in the first three-and-a-half years, cutting a bit more than was actually necessary, so they could give a Lawson-style pre-election tax bribe and cruise to an overall majority in 2015 as the saviours of the British Economy. They won’t be able to do that now – low growth means they’re committed to another two years of cuts going forward to 2017.
It was always going to be difficult for us in Opposition – people will inevitably blame the party which was in power at the time the crisis hit, as they have done in every other European democracy. We didn’t do ourselves any favours in this regard with a long-drawn-out leadership contest in the summer of 2010. We spent four months talking to each other when we should have been talking to the voters. In the meantime the Tories were getting their message out that it was all Labour’s fault. But as time goes on, that argument will become less and less persuasive to voters.
Where I think you guys are wrong is that you are short-termist and can’t see further than the next set of opinion polls. The next general election will be in May 2015 as there is no chance of the LibDem turkeys voting for an early Christmas. I suspect that by then, the British economy, and the public’s political attitudes to it, will look very different to how they do now.
Balls is finished there is a certain degree of arrogance about him that the public do not like and never will. And I’m afraid that Yvette is also a non starter; I think people can detect a certain coldness about her manner. Give her a Dept and shes ok doing it, but give her a Govt and shes not. I said at the time Andy Burnham ws the man to lead Labour but only 15% agreed. So Ed is safefor the time being because there is no credible challenger. At the moment.Or we could let Darling step in as interim. The public know him and I believe trust him although they may not like his message of austerity, and they know he and Browndidn’t get on. If ever there were a technocrat the its Darling, he could get the job done. And your 2nd rule is about trust.
Your suggestion that adopting this government’s tax, spending and borrowing targets closely resembles what Brown did during the first two years of the Labour government. One new approach was announced in his very first budget though when he said: ‘”I will not allow house prices to get out of control and put at risk the sustainability of the recovery.
House prices then proceeded to rise, by 193% between 1997 and 2007. This became the bedrock for Brown’s tax and fiscal policies. Like so many fools owning houses he actually believed that this boom was sustainable. How he convinced himself that this was so is remarkable, given that gross disposable income only rose by 29% during this time, while the take in income tax rose by 90% and from NI,100%.
The boom was therefore largely financed by debt on a gargantuan scale, with results with which we are now all too familiar. And what happened to this extra cash as well as the hike in north sea taxes and revenues from the sale of G3 and of our gold reserves? The only perceivable result is an increase of 850,000 in public sector jobs.
You also mention the poorest in our society. What you do not mention however is Brown’s last budget of 2007, when he announced the abolition of the 10% tax rate, which hit three million plus of the working poor and pensioners, while in the next breath announcing a cut of 2P in the basic rate for the better off.
With the entire opposition front bench composed of people who never said a word about any of these issues in public and some who were up to their necks in their implementation at the time, you are going to need more than just a strategy.
PS: The trouble with ring-fencing projects is that there simply isn’t enough money to go around. By the time you’ve ring-fenced the important projects you’ve exhausted the Budget. And there are no Reserves. So its back to Priorities, and saying: Sorry, you’ll have to wait.
the maxed out credit card, is like the Tories view we didn’t fix the roof when the sun was shining, (if fixing the roof emant sorting out the education, crime budget,) they questiuon we chould aahve asked why was the Eucation crime systems in such bad state that we needed to fix them in 1997
Well, Labour have invested billions. That’s what we have been repeatedly told. Borrowed cash.
So those investments either generate an income (above the cost of the debts) or they produce savings (above the cost of the debts too).
Now its unlikely that any government investment is of the first type. For example, in the NHS.
So the question is, have those investments worked? If so, what are the reductions in spending that the investments in the NHS have achieved, and when then the complaints about realising those investments?
Or is it that it was just spending with another name? Given that most of the money went on the wage bill by inflating salaries, and not on increasing the numbers working (that happened too), it’s resulted in huge debts for future generations because of the unfunded pensions.
ie. The investment hasn’t produced results. Efficiency in the NHS hasn’t increased in line with the extra spending. It was bad government, and the legacy is now clear. Huge debts and spending cuts forced on the UK population.