by Peter Watt
For three successive quarters our economy has contracted. And this week there is yet another report painting a gloomy picture for the foreseeable future. This time it’s the CBI reporting that they expect the economy to contract by 0.3% this year. The CBI’s director general, John Cridland, said:
“At present I believe the economy is flat rather than falling but, nonetheless, momentum seems to have weakened and the latest official figures put the UK in recession for the second quarter of this year.”
And so it goes on; it’s hard to remember when the economy was doing anything else other than struggling or worse. Behind the headline numbers jobs are under threat, family budgets are squeezed and uncertainty stalks the land. And on top of an economic contraction we have public finances that are in a pretty dire state. No party expects an end to the current public sector budget squeeze until 2017 at the earliest. In fact, after the most recent government borrowing figures even that looks optimistic. In July 2011 the chancellor had a surplus of £2.8 billion and in July 2012 he had to borrow £600 million!
Some experts are saying that he may end up borrowing £30 billion more this year than last when the OBR had been predicting a significant drop in the amount needing to be borrowed. Not quite the progress that George intended.
So now is the time for strong and bold leadership and honesty with the public about what our increasingly dire economic position means. And yet none of the parties seem capable of either.
Firstly the government is increasingly wrapped up in its own navel gazing and appears rudderless. For months now it has seemed bereft of any sense of purpose other than deficit reduction. But now that this seems to be failing the lack of a vision is telling. You would really struggle to say exactly what the government is for and what it wants to do. There are exceptions; you might not agree with Michael Gove or Iain Duncan Smith but you at least know what they intend to do in their departments.
But beyond that, what are the government trying to do? They chop, change and squabble giving the impression of being all over the place. Policy is announced and then reversed and the briefings and counter briefings are now endemic. Who’d be a government whip right now?!
Most importantly there aren’t many government MPs left who really believe that George Osborne is the man to save the country’s economic, and their political, bacon. David Cameron appears bemused but is caught in the contradictions of the coalition. But the one thing that still binds the coalition is the central plank of their coalition, their stated core purpose, deficit reduction.
To challenge their hitherto agreed approach right now maybe sound economics but risks exposing the schisms within and between the parties. It risks further damage to that which keeps them all in government – their shared parliamentary majority.
Yet that doesn’t stop the deputy PM announcing wild and ill thought emergency taxes on the rich. He might have thought that it would make him look in tune with the concerns of those who once voted Lib Dem but everyone else just laughed!
But increasingly that is, and will be, the way – the coalition will be focused on the next election, on political positioning and factional self-interest. How ironic for a project that was initially defined in terms of putting aside self-interest for the national interest. It was probably inevitable at some point, but we’re not even half way through the parliament.
But if the government parties are a shambles, then her majesty’s opposition are hardly commanding. Faced with a government in constant crisis, Ed and Ed have decided that their economic position should be “safety first”. They know that they will need to continue to cut budgets if they win the next election but being honest about this has been ditched in favour of not rocking the boat. The calculation seems to be that government is looking likely to lose the next election all on its own and they shouldn’t take any risks.
They know that saying we need growth in the economy is easier to say than to actually flesh out. So they have decided to repeat “five point plan for growth” on a regular basis in the hope that people will believe that it might just work.
All of this has meant that the Labour Party hasn’t had to face up to the sort of difficult political choices that it will have to face if it has to deal with the deficit. And that is even if healthy growth returns and the tax take increases.
This head in the sand approach means putting off those vital debates about how to actually deliver social justice whilst cutting public spending and dealing with the deficit. Just imagine how quickly the feeling of being lied to and let down will kick in after the next election if we win and haven’t been honest about our true intentions!
So the country is stuck in an economic crisis of unprecedented proportions. No one knows when or how it will end and no one really knows what to do about it. And yet with over two-and-a –half years to go until polling day, all of the three big UK parties have decided that there is something more important to worry about than sorting this out.
That something is the political calculation that sticking with their current economic approach is in their self-interest even if it isn’t in ours.
Peter Watt was general secretary of the Labour party