Growth has returned, but Labour can still win on the economy if it can answer these five questions

by Jonathan Todd

The return to solid GDP growth (at least compared to recent years) was always going to present Labour with a challenge. However, notwithstanding the immediate favourable headlines that the government has garnered from today’s figures, the present economic debate still contains numerous positives for Labour.

First, the 50p tax – enjoying 60% support – is popular. Second, the Balls fiscal consolidation plan is also. Polling for Labour Uncut prior to Labour party conference explored how voters would respond to Labour promising to keep most of the present government’s spending plans but to borrow more for public works such as building homes. Balls’ position now amounts to this and our analysis at conference revealed its appeal. Third, left popularism – otherwise known as bashing the banks and big energy – is, by definition, popular.

Inevitably, growth tips the balance towards the government on the economy, but if the public back Labour on the answer to the following five questions, the party can still win the debate. If, however, the public back the Tories, then Labour will need some new responses, and fast.

Balls v Big Business? Who will win?

It sounds like something the Ricky Gervais character Derek might ask but it’s a variation on a Huffington Post headline. The Post story noted coverage in the Financial Times (‘Businesses blast 50p tax plans by Labour’) and the Daily Telegraph (‘Bosses blitz Labour’s 50p tax rate’).

‘Big Business backs New Labour’ now seems a less likely story. Yet it was as recently as 19 December last year that Balls was quoted in the Financial Times as describing financial services as: “A massive advantage for Britain. Don’t throw the baby out with the bathwater.” Having served with distinction in the prawn cocktail offensive, we might wonder whether Balls’ heart is really in battling big business.

Soon after starting to work for Gordon Brown, joining a team that already included Balls, Miliband chatted with Phil Collins about philosophy. When Collins then revealed that he worked for an investment bank “a look of horror swept over Ed’s face,” as Mehdi Hasan and James Macintyre’s biography reports. “Perhaps it was disgust or incomprehension”, recalled Collins. “The overwhelming sense was that he just didn’t get it.”

Balls may be more instinctively pro-business than Miliband but their rhetoric is now similar. “The next election”, claimed Milband in the Q&A following his speech, “will be a choice between a big reckoning and steady as she goes.” Balls, likewise, insists he is not anti-business but anti-business as usual.

Given the unprecedented scale of cuts that George Osborne promises after 2015, he’s an unusual variant on steady as she goes and business as usual. For Balls and Milband, however, to sell their alternative, they will need to show that they do get it. Infrastructure, SMEs and competition are, consequently, key.

What’s Labour’s infrastructure plan?

Balls wants to balance current spending by 2020, slower than planned by Osborne. Balls also differentiates on capital spending or infrastructure. Osborne will harry Balls to outline his plans. Then we’ll see whether they remain as popular as Uncut’s pre-conference polling indicated.

Osborne will inevitably portray these plans as risky. But he recognises the importance of infrastructure spending, as he conceded when arguing with the Balls-like Larry Summers at Davos. Presumably, Osborne – disregarding the limited evidence to support this view – is more convinced than Balls or Summers that it can be privately financed.

Will SMEs bat for Labour?

While left popularism is relaxed about big business’ disapproval, SME endorsement is taken as a new capitalism’s harbinger. Equally, the Tories smell blood. Deny Labour the support of SMEs and Labour is nakedly devoid of business backing.

That’s why both David Cameron – the first prime minister in the 40 year history of Federation of Small Business conferences to attend – and Chuka Umunna began the week pitching to SMEs. Cameron promised to make their life easier through deregulation, as Umunna committed to a bureaucracy (Small Business Administration) to help SMEs deal with bureaucracy. The founder of the Small Business Network wasn’t over the moon with Miliband’s speech. Let’s hope Umunna’s potentially paradoxical approach is better received.

Is Labour the party of competition?

Hard pressed staffers at competition authorities are worried about their work/life balance in the event of PM Miliband. His SME focus tends toward pronouncements that seem to threaten much work for them. Our competition authorities – unlike in, say, the period preceding Teddy Roosevelt’s presidency – are already well-established and active.

References to the Competition Commission are a robust method of looking at problematic markets. Respected authorities wonder why energy has not being similarly treated, as they might also wonder about banking.

No one is denying that competition could be improved in the UK. Not least in respect of public services – something that Labour has desisted in championing. But the institutions and processes of UK competition policy deserve respect and engagement, not grandstanding or slapdash interventions.

Finally, can Labour remove the blinkers?

Labour appears sure that Mark Carney is Osborne’s stooge and dismisses Treasury claims on what the 50p tax rate would raise. On this form, Competition Commission referrals would be rejected as bourgeoisie pretence, while the neutrality of the OBR would be questioned if they query Labour’s figures.

In America, conservatives watch Fox News and liberals watch MSNBC. Never the twain shall meet. Facts shift and clashing dogmas harden as you switch channels.

Left popularism would be destructive if it contributed to sucking the UK into comparably ideologically blinkered debate. Compelling plans for infrastructure, SMEs and competition are what Labour’s economic policy now needs and are necessary for left popularism to avoid this fate.

Jonathan Todd is Deputy Editor of Labour Uncut 

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5 Responses to “Growth has returned, but Labour can still win on the economy if it can answer these five questions”

  1. Madasafish says:

    The Labour Party has two simple problems:

    One is Ed Balls. The man has spent the last decade working hard to ensure he has lost most credibility. And he has largely succeeded.

    The other is his Leader. A man who has tried to chase popular causes to offset his own personal unpopularity. Any attempt to be pro business or try to appear as such has been shot down in flames by his own words. #

    Not a happy combination as anyone who looks it dispassionately would think.

    (See also the Opinion Polls where the trends are unmistakably away from Labour largely due to the above two gentlemen).

    # Not actions as his Leadership has been categorised by lots of words.. but few actions.

  2. Henrik says:

    As long as their fundamental assumption is that business and the economy exist purely in order to provide funding for governmental spending plans and that profit is straightforward theft from taxation, Labour will never get the financial piece.

  3. paul barker says:

    It would be interesting to know how many Voters think The Economy would be better off under Labour but no-one has asked that question. We do know however how many think it would be no worse under Labour, its a whopping 26%.

  4. james says:

    I thought the Lib Dems had 50% rate as policy under Charles Kennedy – it proved so popular they won the election.

  5. Tafia says:

    Interesting that Carney expresses some doubts about the ‘recovery’ and believes that without a restoration of wages and disposable income then it will falter.

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