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Posts Tagged ‘deficit’

Letter from Wales: Where has “clear red water” got Wales?

23/06/2013, 12:18:56 PM

by Julian Ruck

Back in 2002 Rhodri Morgan gave his “clear red water speech,” declaring “We’re not old or new Labour, we’re Welsh Labour.” It set the course for Welsh Labour’s approach to government, citing Beveridge and Bevan as the inspirations.

Fine words but more than 10 years later, where has it got us?

Perhaps Morgan would have been more honest had he said, we are going to fight Tony Blair to the death and to hell with modernising public services, the Welsh economy, health and education.

We want the days of old council chamber back-slapping and back-scratching in Cardiff Bay. We want to be welsh and proud of it, no matter what the cost. You boyos in Westminster can pay our bills, no questions asked. We know our devolved rights, so go and get stuffed!

For every Welsh person almost an extra £4,000 is borrowed compared to England. This Welsh Labour dream of an outdated socialist Brythonic Atlantis has bankrupted Wales, bankrupted the education of our young and bankrupted the Welsh health service.

The Welsh Labour party’s obsession (and Plaid Cymru’s) with a tyrannical Westminster Labour party has resulted in a dire attempt to free fall into isolationism without a parachute.

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3 years on: We’re still at square one on the economy

30/05/2013, 12:23:58 PM

It’s 3 years since Uncut started so, in a series of pieces, we’re taking stock of what has changed for Labour since 2010. Jonathan Todd looks at Labour’s progress, or lack thereof, on the economy.

As anticipated in my first Uncut piece, the deficit has defined the politics of this parliament. The political premium on being able to say where the money will come from has remained high, while the interest on government debt has stayed low.

George Osborne claims these low interest rates as City endorsement for his policies when really they implore him to borrow to invest. The market, it seems, is always right but only when it’s politically convenient.

While ministers struggle to offer the Treasury the cuts that the spending review demands, the political potency of the cuts narrative hardly seems diminished. This is in spite of the government failing to meet their stated objective: deficit reduction. As they reap a whirlwind of youth unemployment and stagnant growth.

Yet the economic debate stubbornly refuses to turn to Labour. The public seem trapped in a doom loop that is economically self-fulfilling and debilitates Labour, which must convince that a better economy could be achieved under prime minister Miliband.

As well as winning on bread-and-butter issues, Miliband has to address the deep structural problems that the nasty hangover from the NICE – non-inflationary continuous expansion – decade has revealed. Economic rebalancing requires rebalancing our top heavy state. The best chance for this in this parliament came and largely went with the mayoral referendums.

Having worked on Siôn Simon’s campaign, it was a big disappointment that Birmingham rejected this way forward. I’m working with Demos to try to think through new ways ahead for our cities.

These are times laden with immense challenges and without the resources that the delusions of the NICE decade conjured. Solutions urgently demand bold imagination. “One more heave” isn’t enough, as my first Uncut piece concluded.

Jonathan Todd is Labour Uncut’s economic columnist

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The polling that shows why Labour’s lead is soft

22/05/2013, 03:32:53 PM

by Atul Hatwal

The terms of the debate are shifting within the Labour party. Since the underwhelming local elections, the question is no longer whether the poll lead is soft but why. Just this morning, one of Ed Miliband’s more doughty supporters in the media, Mary Riddell, penned her most pessimistic piece to date on Labour’s position.

This change has been partially obscured by the recent writhing of the Tory right over Europe and gay marriage but as the spending review approaches, it will come into sharp focus.

As ever, the answer to the question is to be found in voters’ views on the economy and specifically spending.

Labour’s case against the government has been clear: excessive Tory cuts killed off the flickering recovery of 2010 with the deficit rising as growth flatlines.

It is hard to disagree with the economics. But there’s a political problem.

More and more of the public back the cuts.

YouGov have asked a detailed series of questions on deficit reduction over the past three years and the shift in responses shines a light on why Labour’s poll lead isn’t so much soft as aqueous.

The public’s support for action on the deficit has been constant: at the start of March 2011, 57% felt that “the way the government is cutting spending” was necessary versus 32% who thought it unnecessary. Last week the figures were 57% and 29%, virtually no change over the past two years.

This should have been a warning that something wasn’t quite right with the poll lead: how could the public support Labour while also agreeing with the government’s approach to cuts.

But the YouGov surveys also had seemingly contradictory responses. The key question is on whether the public believe the depth of the cuts to be “too shallow,” “about right,” or “too deep.” The answers to this question initially suggested a consensus that the cuts were too deep. But that is changing.

Source: YouGov

Since April 2012 when 13% more felt the cuts to be “too deep” than either “about right” or “too shallow”, the position has shifted radically. This week, the poll had the pro-cuts camp 2% ahead.

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Osborne’s reputation for economic competence is fatally damaged. Labour must now start restoring theirs

23/04/2013, 12:13:09 PM

by Matthew Whittley

Perceptions of economic competence will largely determine who takes power in 2015. It is well-known that Labour has its work cut out to regain trust with the nation’s purse strings, but if anyone needed further proof that the economy isn’t safe in George Osborne’s hands, the need look no further than today’s economic news.

The latest figures tell us that there has been no improvement in underlying borrowing, which is has been running at almost the same level for the past two years. According to OBR forecasts, it will be around the same this year. As a result of the failure to stimulate any growth in the economy, the government is now set to borrow £245 billion more than planned

George Osborne’s main opportunity to do something about the hole he’s dug for the nation, was in March with the budget. But he blew it: the budget amounted to no more than a “do nothing” series of holding measures.

With household budgets squeezed and business lacking confidence to invest, Osborne should have prioritised growth by borrowing to invest in capital projects, rather than borrowing to finance failure as is currently happening. One doesn’t need a PhD in macroeconomics to know that capital spending has a huge multiplier effect on growth.

However, the derisory £2.5bn of capital investment promised in the budget falls way short of what is required to kick-start the economy. To put this figure in context, the Economist, hardly a bastion of Keynesianism, recommended an extra £28bn of infrastructure investment.

It should have become clear by now to him that the debt can’t be reduced in the absence of growth. The UK has grown only 0.7% since the third quarter of 2010. During that time, Japan and Italy are the only major G20 economies to have performed worse than the UK.

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The reverberations from April 1992 still ring out

05/04/2013, 01:44:11 PM

by Kevin Meagher

Next week sees a grim anniversary for Labour people of my generation. Losing the general election on 9 April 1992 was a gut-wrenching experience and the memory is seared into our collective minds. A government long in the tooth and mired in a recession of its own making couldn’t win a general election, we confidently told ourselves. Only it did.

The argument about how Labour “snatched defeat from the jaws of history” in 1992 is well rehearsed. Neil Kinnock wasn’t trusted. The Sun and the right-wing press were unrelentingly hostile to Labour; and John Major was a newish face who was worthy of a second chance, voters felt.

But a loss is a loss and Major’s unexpected victory had as big a psychological effect on the Labour party as Ramsey McDonald’s ‘betrayal’ for establishing the National Government had on earlier generations.

It seems another age given the three election victories the party would go on to win, but there was serious talk Labour was completely finished after its record fourth defeat. As Tony Blair put it in his autobiography, ‘A Journey’: “The party had almost come to believe it couldn’t win, that for some divine or satanic reason, Labour wasn’t allowed an election victory no matter what it did.”

This defeat and the self-loathing which followed, paved for the way for New Labour’s decade of iconoclasm. Dumb before the shearer, the party more or less acquiesced as reform after reform to party structures and policy were pushed through. As the late Tony Banks succinctly put it, “my constituents will eat shit to get a Labour government.”

But 1992 represented a triumph for Conservative politics too. A party that held its nerve in the face of massive odds prevailed. Just two years previously the poll tax riots were in full swing and 18 months earlier they had dethroned Margaret Thatcher. However their instinct to fight to the bitter end was rewarded with victory. The Tories’ iron nerves triumphed yet again.

So is history going to repeat itself? Will the Tories’ 2015 campaign plan simply re-run 1992?

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A good day for Ed Miliband but the elephant is still in the room

14/02/2013, 01:44:26 PM

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.

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Sadly, neither party offers much hope for 2013

27/12/2012, 08:00:03 AM

by Peter Watt

This is my final post for 2012 and inevitably I am therefore reflecting on the year just gone. It has been an incredible year for the country from the euphoria of the jubilee to the emotion and pride of the Olympics and Parlaympics. Sat in the Olympic park back in early August you could feel the optimism and the pride of all who were there. You could feel it on the trains and on the buses and in the streets as people enjoyed a sense of something shared that was good.

And it wasn’t just a London thing – I spent super Saturday watching Brazil versus Honduras in a packed St James’ Park and then watching the evening unfold on a giant screen in the heart of Newcastle. The mood was the same, and it felt great.

Once again across the country, families will have struggled to make sure that they had a good Christmas. They will have done all that they can to have a good time, to enjoy their time together, to party and to be optimistic. The queues at the Boxing day sales show that people want to spend if they can and no doubt we will all be hopeful as the clocks countdown to midnight on the 31^st.

But sadly, reality will soon kick in. Because sitting behind all of the hope and optimism of the year are the hard economic truths of a flat-lining economy, flaky export markets, huge economic uncertainty in Europe, a weak financial services sector, and austerity in the public sector.

From early January families on modest incomes will lose child benefit, from April many will see their taxes rise as more are dragged into the 40% bracket. Other families will see their levels of tax credits fall relative to prices, or the amount of support that they get to help with their disability fall. Others will lose their jobs or have to reduce their hours. If you are young and unemployed then your chance of finding work will be slim, not much better if you are over 50. Fuel prices will continue to rise, food won’t become cheaper.

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It’s been a dreadful conference for the Tories but they will still leave Birmingham happy

10/10/2012, 07:59:31 AM

by Atul Hatwal

One wonders if the Tories can see how their conference has looked to the rest of Britain. Once upon a time in the mid-2000s they used it as a platform to speak to the country. It was an opportunity to demonstrate how they had changed. There was talk of voting blue to go green, civil liberties and hugging hoodies.

The rank and file might have been unhappy but the message to the general public couldn’t have been clearer: “we are not the same old Tories, we have changed, we live in the modern world.”

These last few days have been like looking at the photo negative of days gone by: cutting workers’ rights, slashing benefits and battering burglars.

The pre-briefing about this conference focused on the Tories new magic word “striver.” In itself it’s a good idea; aspiration and hard-work will never be out of political fashion.

But the Tories seem to have got confused.

Tough messages on law and order and benefits might be perennially popular but without some balance in other areas like civil liberties or the economy it all begins to look decidedly familiar. More red meat vicar?

It’s as if the Tory political managers have given up on ever returning to those halcyon days when the words “progressive” and “Conservative” were routinely used in the same sentence. They have meekly accepted their slide back into the comfortable embrace of the past.

For the Tories, uniquely of all of the parties, the only audience that matters at their conference is not out in the country, but sat in the hall.

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Advice for Ed: Unless Ed shows how Labour can be trusted on spending he might as well sing his speech in Swahili

30/09/2012, 07:00:31 AM

by Atul Hatwal

Third speech as leader, maybe it will be third time lucky. The task remains the same as in 2010: tackle voter concerns about Labour on spending. Note the focus here: spending. It’s not the deficit, nor debt, though both ideas are clearly very closely linked. It’s spending.

Too often when issues such as fiscal credibility or deficit reduction are raised, the Labour leadership’s immediate response is to talk about growth.

It’s understandable, our leaders are most comfortable describing ways to grow the cake rather than shrink it. No-one joins the Labour party to slash services. But just talking about how to boost the economy completely ignores the reason Labour lost the last election: voters don’t trust Labour on spending.

We could have the best plans for successfully stimulating the economy, reducing unemployment and supporting businesses and it would all matter not a jot.

That spurious charge, “Labour maxed the credit card” has stuck. For many, debt and the deficit are the consequences of our reckless spending. No matter how effective Labour’s plans for growth, voters think we would simply spend our way back into trouble.

Until this perception – and it is just a perception – is effectively rebutted, the party does not have voters’ permission to be heard on the economy.

The latest Ipsos Mori poll, released last Friday, has some stark figures that illustrate the depth of the hole in which the party finds itself.

In terms of the party with the best policies for managing the economy, Labour has fallen back since May. Immediately after Osborne’s bodged budget, the party had pulled level. Now, we are 5 points behind with 30% saying the Tories have the best policies and 25% opting for Labour.

Lest we forget, this slide on economic competence has happened during the worst of the double dip recession. If and when growth does return to the economy, what will happen to Labour’s economic ratings?

In his speech, Ed Miliband needs to directly address our problems on spending. He needs to acknowledge it as a real concern for many and show why voters can trust Labour again.

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Sunday Review on Thursday: Progress Political Weekend 2012

22/03/2012, 01:22:41 PM

by Jonathan Todd

Peter Mandelson was there but, pace Michael Meacher, the Progress Political Weekend 2012 was not a meeting of the Bilderberg group. For one thing, I imagine, the Bilderberg Group comes to conclusions.

This was not the only difference. There was no secret agenda. It was advertised online. This was less an elite stitch-up and more the imbibing, both of learning and alcohol, by bright young things.

The discussion was perceptive, but the themes covered were not unexpected: fiscal credibility, public service reform, southern discomfort. So much was everyone on pretty much the same page that Douglas Alexander arrived, having followed earlier proceedings on twitter, worried that Liam Byrne had already delivered his speech.

I’m not sure what Meacher would expect but I got what I anticipated, which was some education (Phil Collins’ session on speech writing was particularly illuminating) and some reflection on the hard questions that face Labour.

But I’m not sure how far we got with answers.

At the same conference a year ago Douglas Alexander and Jim Murphy in separate sessions said that Labour needs “a draw on the deficit, a win on growth”. How is that working out?

This year Patrick Diamond warned against Labour being hawkish in principle and dovish in practice on the deficit. Talking tough on the deficit but not providing support for cuts to match this tough talk.

But Meacher can be assured that no plans were hatched to carve up the state in the country house, now owned by the NUT, just a taxi ride away from the grocers in which Margaret Thatcher grew up.

Not one suggestion for a cut was proffered, as far as I recall, though, sadly, I needed to be in London on Sunday, so missed the second day of the conference and perhaps some proposals for cuts.

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