by Atul Hatwal
The roll-out of the 10p tax rate pledge was a reminder of how things should be done. Expectations were expertly managed in the run-up to the speech, the announcement was genuinely striking, and the government was caught on the hop. There was no abstract talk of responsible capitalism, no uncosted black holes opening up and the distinction with Gordon Brown’s tarnished brand was clear.
This was good economics and even better politics.
Yes, it might be better if the coverage 10p tax rate band was broader but it needs to be affordable and importantly this is a powerful signal of where the party stands.
The headlines tomorrow will be pleasing and the pressure is now on George Osborne to produce an equivalent rabbit out of his hat for next month’s budget. It’s the type of bold move by Labour that could force the chancellor into a rushed response that then unravels: “Pasty tax” redux.
But, and there is big but, as good as the delivery and content of today’s policy launch was, it doesn’t address the fundamental fear the British public have about Labour.
Earlier this week the Guardian’s ICM poll gave Labour a 12 point lead over the Tories, the biggest since May 2003. Yet, below the topline, was evidence of Labour’s lack of progress on the central issue of economic competence.
Asked to identify the main reason for our current economic problems, 29% opted for Labour’s “debts … racked up to finance unsustainable spending.” This is same as last May. In comparison 23% blamed government cuts and 21% bankers for failing to lend to business.
Labour’s problem with voter perceptions on the economy is often described in terms of the deficit, but this isn’t quite right. As far as the public are concerned, the deficit is the symptom, Labour’s spending is the problem.
Over the past two and a half years, as a party we have said next to nothing about spending restraint. In January 2012, there was a brief dalliance when the two Eds backed a tight public sector pay settlement of 1% annual rises for the rest of this parliament. But since then little has passed the lips of either the leader or shadow chancellor except warm words. Whether the party still supports this pay settlement is anyone’s guess.
The nearest Ed Miliband did get to outlining Labour’s policy on spending in his speech today wasn’t heartening. He framed the problem as one of growth, talking about the need to grow the economy to tackle the deficit. Which is fine, but that’s not the question voters are asking of Labour.
Many probably think Labour would be better for growth but worry that our spending would tip us back into the mire, no matter how much growth we generate.
Until the party can convince voters that a Labour government would not be profligate spenders, polished and professional policy roll-outs such as today’s will be of ultimately marginal significance. Without tackling the central reason that voters turfed out the last Labour government, spending, the electorate will continue to withhold their permission for the party to be heard on the economy.
The elephant is still in the room, and it isn’t going anywhere.
Atul Hatwal is editor at Uncut