by Atul Hatwal
Next week, George Osborne will finally spring his long prepared spending review trap.
Here is the chancellor’s basic choreography: the Tories announce an eye-wateringly tight spending round, Labour opposes and the Tories attack Labour for being unreformed spendaholics.
Alternately, Labour back the government’s spending plans, in which case, the Tories attack Labour for being reluctant converts to fiscal responsibility and, as a happy sidebar, Labour’s Keynesian prescription for boosting spending to revive the economy is effectively de-funded.
Either Labour play to the stereotype of profligacy that lost the last election or become me-too Tories.
Ed Balls’ big speech a few weeks ago was intended to unpick this problem and re-position the party. The commitment to aggregate Tory spending plans covered the party’s fiscal flank while Ball’s retained the Keynesian differentiation with his £10bn capital spending boost, funded through increased borrowing.
On paper, it went some way to neutralising the chancellor’s likely attacks.
But there’s a problem.
Now Labour has shifted to a more politically realistic position on spending, it needs to robustly assert this new line.
It needs to use every opportunity to publicise the new approach. To make the progressive case for adhering to overall Tory spending totals (while having different individual priorities) and ensure the public knows that a major change has just taken place.
Otherwise, next week, the Tories will hammer the party for running scared of its own policy. They will paint Labour as insincere and irresolute on spending. The taunts about whether Labour believes what it says will turn the party’s economic drama into a political crisis of leadership.
For the public, the net result will be little different to if Labour hadn’t changed its fiscal stance. Perhaps worse, when taking into account the collateral damage to Ed Miliband’s personal ratings from any squirming on policy.
