by Jonathan Todd
The return of the British economy to growth and president Obama to the White House both suggest that Labour will only decisively win the economic argument when it is primarily about the future, not the past.
While welcoming the economy’s recovery, Labour claims output has been foregone due to the government cutting too far, too fast. This frames the economic debate as being about faulty decisions of autumn 2010 by George Osborne and their consequences over the next two years. As much as the celebrated speech of Ed Balls at Bloomberg in August 2010 is vindicated by events over this period, framing the debate in this way invites the question: Why was the government’s fiscal consolidation programme deemed necessary?
Of course, Osborne then cites the reckless profligacy of Labour. Equally obviously, we contend that this programme was unnecessary and the cause of the recession “made in Downing Street”. What may be less apparent is that, no matter how intellectually justified the Bloomberg speech, arguing about past decisions asks the public to reconsider events over which they have a settled mind.
They would have voted differently at the last election were they convinced that Labour had credible and effective plans for public spending. Especially given the pain that government spending decisions have since brought, it is understandable that we find it difficult to concede this. But a strategy for winning the next election predicated upon the electorate reversing a verdict given at the last election rarely works.
This does not require self-flagellation over spending or any dilution of our insistence that the government have cut too far and too fast. We do need to recognise, however, that we are not trusted on spending, as was the clear verdict of the last general election. This has two consequences for Labour:
First, we should attack government policies for their failure to realise the future potential of the economy, not in terms of what they have cost us since May 2010, as this sucks us into a backward looking argument that we lost in May 2010.
Second, we should offer alternative policies to better secure the future potential of the economy, which are demonstrably affordable. Labour policy that fails this test reinforces our key vulnerability of perceived fiscal vandalism. We can also seem to communicate the flawed idea that all government spending – even on millions of paperclips – helps growth. We need to be more fluent in arguing that the content of government spending is as vital as the level.
We make it, in other words, an argument about the future – a future that not only works but which is convincing to a people who have dismissed Labour as dangerous spendaholics. As challengers we have to say at the next election: “It is time for a change”. But we must be a believable change.
In contrast, David Cameron, like Barack Obama, will ask: “Let me finish the job”. Cameron will take reassurance from Obama for three reasons.
First, incumbents can win. Many have not amid the turbulence of recent years.
Second, aggressively targeting the challenger’s weaknesses works. We only have to look at Conservative literature in Corby to see what they think Labour’s weaknesses are. It might as well say “Labour’s spending bombshell”, as they said “Labour’s tax bombshell” in 1990s. Tax was then the millstone around our neck, overcome in 1997 by high profile commitments on tax having been one heave too far in 1992.
Third, victory can be secured if the country feels itself to be travelling in the right direction, even if the destination awaits. Obama came to office amid calamity and spectacular job losses. He did not deliver an economic nirvana but he asked for re-election in changed circumstances: a growing economy, which hires 120,000 new workers every month.
America tentatively thinks it is going in the right direction, which was enough for Obama, especially as he so comprehensively undermined the credentials of his opponent.
Will Britain think Cameron has taken us in the right direction at the next election? And will he be able to humble Ed Miliband as Obama did Mitt Romney?
The latter depends upon how big a target Miliband gives Cameron to hit. And the Corby literature indicates Cameron thinks he is throwing punches at a glass jaw by going after Labour as unreconstructed on spending.
Any number of factors impacts the former but two broad scenarios might be identified:
First, recovery suffers due to events beyond the control of Cameron – America drives off the fiscal cliff, the Euro implodes. In these circumstances, the public would accept Cameron’s argument that the economic predicament is not his fault.
Second, the light at the end of the tunnel becomes more visible. It is as foolish to proclaim an end to boom and bust at the bottom of the cycle as it was at the height of the new Labour boom. This scenario sustains cautious optimism and is likely to reward Cameron.
Either Cameron will have excuses or some success to point towards – a move in the right direction, if not a terminus of great prosperity. In neither of these worlds would Labour really be rewarded for revisiting past arguments. Instead we should do a better job than Romney of neutralising our weaknesses and convincingly arguing for a better future.
Romney is now a footnote to history. Balls and Miliband can be more than that but not if they rest on the deserved laurels of the Bloomberg speech.
Jonathan Todd is Labour Uncut’s economic columnist