Last week was the week when we – finally – dealt with head-on the subject of Labour’s economic legacy. And we seem to have been debating it ever since, because it’s perhaps the most important subject which will define a lot of the next 4 years. It’s complex, as Steve Richards argues and, paradoxically, there are two seemingly contrary arguments being advanced which are both right (or so it seems to me).
Firstly, Philip Collins is right, or at least partly so. In his (paywall) follow-up article he attacks Ed for “denying all responsibility” for the country’s economic woes. He has not. He has merely stuck to the facts about the economic argument, which is not the same. Where Collins is right is that we overspent. Now, I must admit, I was almost taken in by the argument that we were merely guilty of “underestimating the tax take”. But it’s rubbish. It’s the same, underestimating the tax take, and overspending; if you underestimate the tax take, you must spend less. If I expect that I’m going to have a pay cut next year, I cut out the expensive summer holiday. I don’t keep spending and ramp up the credit card. And if I’m not sure about the pay cut, I leave a bit of rainy-day money in the bank, just in case. Gordon didn’t, and was caught with his pants down. End of story.
John Rentoul in today’s blog echoes the sentiments of Collins – he divides the world into supporters of GB Mk I (Prudence) and Mk II (crazy spender), with him in the first category. But I believe this is unnecessarily self-flagellating, and it ignores the politics.
Now, this all stemmed from Thursday’s Times (paywall) where Ed set out his stall for the economic debate – and stuck to the facts, as reported here on Left Foot Forward. He does not say anywhere “it wasn’t us, guv”. He rightly moves the debate on from whether VAT is fair (rightly, because the public cares less about fairness, more about how it affects them personally). He points out that Labour fully agreed with the need to cut the deficit, before and after the election. He takes apart Osborne’s specious comparison with Canada. And notes that deficits rose across the developed world but we are the only country pursuing such a madly drastic programme of cuts. You know what? Ed’s right too.
In sheer economic terms, our major sin was that we ran a high deficit. So what? We are talking about a Chancellor who followed his “golden rule” of no net deficit over the economic cycle slavishly for almost two full terms, and then broke it. It was an error of judgement to drop it, but hardly the worst one. Let’s put this in context: Conservative governments did this repeatedly and average debt was higher under them. They also repeatedly made terrible economic errors such as the Lawson boom, poor management of interest rates using ineffectual measures like M3, and Black Wednesday, all of which had a far worse impact on the UK economy than Brown. More than that, as many objective commentators point out, they are currently engaged in reprising once more this disastrous age of economic experimentation. We are playing the Tories’ game in beating ourselves, when they have selective amnesia on their own record.
Where does the truth lie? Well on economics, I’m afraid the Blairites are right. We screwed up. On the politics, Ed is right. Given that we only screwed up once on economics over the course of 13 years, let’s not kill ourselves over it. Why? And here is the key: because all the public will hear is the following: “we screwed up last time you put us in charge of the economy. Now, please, let us do it again.” And, in truth, we screwed up a little, not a lot. A fine distinction perhaps, but an important one.
Alistair Campbell who, as one of New Labour’s architects, you might conceivably have expected to agree with Collins, apparently does not. On the contrary, he makes the argument here that it is not too late to stop Tory rewriting of history, and that it’s vital to challenge
“the line that every difficult decision they make is forced upon them because of the so-called mess left by Labour…it can be done over time”.
All this, by the way, assumes the Collins article is not a continuation of Blair-Brown feud by proxy, for the benefit of posterity and the advantage of no-one but the Tory press: Blair was right and Brown screwed everything up. I believe Collins should have the benefit of the doubt here; that he genuinely believes the economic argument outweighs the political imperative. But the people, like Campbell, arguing against this position are those pragmatic people within the Party who see the politics and who have its interests uppermost in their minds, as a conditioned reflex.
To both left and right, the real answer is simply this: we had a generally pretty successful 13 years in government and Gordon was generally a pretty good Chancellor, if not a great PM. End of story. Move on. We don’t need to lose the politics in the economics: we don’t need to criticise New Labour from the right (we have the Tories for that).
Now, it is perhaps of a shame we haven’t been making the economic argument relentlessly over the last 8 months, as it’s essential to establishing a political beachhead against the Coalition, who now have a big head start in winning the economic debate. And certainly Ed hasn’t done everything perfectly since being elected Leader. But, please, let’s acknowledge it when he gets things right.
This article also posted here at LabourList and chosen for the “Ed’s Inbox” top 5 for today, also on LabourList.
I find these arguments about "the economy" a bit odd. Because much of the economy is beyond the direct control of Labour governments, so what we're really talking about is public finances. They too are also beyond the control of Labour governments – running a deficit is a response to the periodic fuck-ups which are beyond the control of elected governments. The Tories do it when they are in office.
The real economic mistake was both Brownite and Blairite – that Labour's abandonment of a critique of capital accumulation was okay, because the house of cards would never collapse.
Afraid I couldn't disagree with you more – given that governments are absolutely responsible for managing interest rates, the whole taxation system, public spending and public investment (about half the economy), they can and should be held responsible when things go wrong, if those things can be shown to be their fault. In this case, as Anthony Painter argues, we did not drive recklessly but we did drive without insurance. We were running a deficit long before the financial crash.
Btw what is wrong with capital accumulation per se?
This is not really about the economy but,
I accept the strategy was to get the 2m former Labour voters back who left us for the Lib dem at 2001,and that in having Ed as a leader, must have resulted ion some coming back and that it is good they are
Some who joined us Laurie penny Sunny Hundal, Darrell goodliffe,obviously want to swing labour far to the left
On the other hand the right of the party has never been so strong, Luke akehurst,Peter watt harry aldridge, Hopi sen,
When the Daily mail launched a scathing a ttack on labour after the 2005 election,it didn't effect the opinion polls at the time
I also accept that some who are defending police action now like working class tory,were't during the fox hunt protests,
And are more critical of the loony left that the Mail criticising labour 5yrs ago.
They were silent then as they saw the police used against their friends the fox hunters
Since the left forced the SDP from labour in the 80's those who remember the Looney left, and don't want them back now ,may want to take action
As they see the hatred ,the loony left had for Owen and co.
So are taking revenge now, Guido takes joy in this and the rise of these loonies as he is getting more coverage than labour who on labour list appear to be talking to themselves
At the same time some labour members frank field
Jon Hutton are writing reports fo rthe tories ,IT was like the person who said We've got our party back , as if ,he wanted to go back to when we lost elections,
Look at the Guardain comment is free, theres alot more pro police bloggers now, rather than those who said the IRA were freedom fighters ,etc.
John, I think you may be right that sometimes we could be accused of talking to ourselves rather than the world outside.
Anyway, tomorrow you'll be able to see my post on LabourUncut which makes, I hope, some constructive criticism on the woollier aspects of thought within the party, also how far we should reach out to the Lib Dems.
Rob, what's wrong with capital accumulation per se? Well, nothing so long as it is sustainable and all those contributing are justly rewarded.
I suppose you read Will Hutton's recent article about the constitution of the firm in the UK with regards BAA and Ferrovial? That's basically what I'm getting at.
I suppose what I wrote seems a bit grumpy. Sorry about that. A bit of nit-picking – the UK government no longer manages interest rates.
That's ok. No, haven't seen Will Hutton's article, do you want to post the link?
And you are quite right about the nit-picking, I must admit I thought there was an ultimate accountability to Government but, having checked, it goes to Parliament. Although to be REALLY picky, technically the Government can intervene temporarily in cases of emergency, so it's not 100%.
Bloody great Labour achievement, that.
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Richard, firstly I'm not so much wanting to discuss the reason's for Labour's electoral failure (a very long conversation indeed) but
I agree with you that the light banking regulation was a large cause of the problem. It's something I've experienced first-hand, as once upon a time I used to work in this sector.
Where I think we differ is that I believe Gordon did go spending money we didn't have, which normally would not be a big deal, but when you have a sudden financial crisis, it is.
I agree with you (indeed say so in the article) that we should stop playing the Tories' game – I understand how people in the Party might attack Labour from the left, this is only natural, but when our policies are already centrist, it is not sensible for us to attack Blair/Brown from the right. We then just do the Tories' work for them.
That Hutton article: http://ownershipcomm.org/news/2010/12/29/will-hutton-we-have-the-oddest-and-most-regressive-constitution-/
Rob-Firstly,the e-mail I sent was to you Personally and not this blog and I did so for two reasons
1)I am fed up of seeing long play arguments on whose fault the failure of Labour was that serve no purpose and did not wish to contribute to that.
2)You yourself are one of the persons contributing to the sense that Labour or Blair/Brown were irresponsible in their spending – you said as much above- and that this only became a problem when the recession broke.
Whilst I accept that there has been some waste in spending mostly down to poor accountability of numerous departments I do not believe they were irresponsible in spending money were it was and is needed.
It seems quite unbelievably miraculous that now under the Tories those same civil service departments can trot out lists of sheer wastage and inefficiencies their departments have been carrying on for years- in some cases decades- when they could or would not speak of them under Labour's tenure.
Whilst the Cabinet and PM share responsibility for the overspend- if that's what people wish to call it-they can not make accurate spending judgments if they are themselves being lied to or misled by the self serving civil servants who enjoy protecting their own little empires within the spending budgets allowed their departments.
Having worked in the civil service in the past I know how they work and very often do anything they can including clever budgetary accounting to disguise they are actually way in surplus of spending and how good their house keeping is to be rewarded with promotion or make out they are hard up and struggling with factors 'outside their control' to attract more income into their budget when the opposite is true.Clever accountants are not just present in the private sector.
Had the finances not become so dire as a result of the recession many of the unpopular decisions like privatizing the search and rescue service cutting the coast guard,NHS changes etc would not have been set into play by Labour and followed through by the present Government.
The blame for that recession lies firmly in the banks of the finance sector the blame for overspending lies with the civil service mandarins who have misled politicians for decades.
I am sick to death of hearing Tory garbage about the wastefulness of Labour and even more sick of so called Labour supporters repeating the same garbage.
This country needs strong directional government and serious government investment and has for the most part got that in the labour years and repaired much of the disasterous underinvestment and cutting in infrastructure of the last Tory administration and has a good record in rebuilding Britain tarnished only by the exceptions of the Iraq/Afghanistan fiasco's and the gradual adoption of Tory policies in some areas.
The Tory elite and their industrialist mates- just like the US Republicans – are happy to ship jobs and wealth over sea's to China while at home blaming everyone- including the genuinely ill and disabled- for the nations recession and for being lazy idle workshy benefit scroungers and cutting to the bone every public service there is.
For the record I do not like New Labour principles, I am on the extreme left but I am happy to credit much of the growth and modernization of this country to the efforts of Brown and Blairs Labour and much much more could have been done had they had the bravery to do it and they could have taken the policies much further to the left too instead of worrying what the Tories might say about them.
Socialism is the only way any country can have a thriving economy AND the massive state investment and 'bigger picture' vision and planning necessary to develop free public services and infra structure for everyone of its citizens.The Chinese may have their faults and problems but socialist/marxist principles in partnership with private companies has transformed that country.
The US capitalist model with 'hands off' government proves itself a failure time and again and what has brought us to this recession now, yet the Tory's and other EU countries have adopted this model….duh!
New Labour departed from it socialist values but was nevertheless successful on the whole. From my perspective Labour seems to have now gone back into the self destructive highly self absorbed blame culture of the Foot/Kinnock years.
What is patently obvious is Labour has lost its core socialist principles at the top,lost its direction and lost sight of effectively dealing with the real enemy- the Condem's
If some members of Labour wish to follow a Tory style agenda of cuts and privatization of public services and curbing realistic vision with the attitude of a depressed defeatist accountant then they would be best served joining the scum in Tory party and leave the rest of us to rebuild a proper Socialist Labour Party that cares for and works with, ALL of its citizens not just a small proportion of them.
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Richard, I think you misinterpret me. I did not say Blair and Brown were irresponsible. However, I did say that Brown made one strategic error on running a deficit, although it was probably his only major error on the economy in 13 years – not a bad record for a politician. I also think we should NOT continue the Blair/Brown who was right or wrong debate and should stop beating ourselves up about these things, which only helps the Tories.
I also agree with you that the evidence that Labour was wasteful is scant and this is mostly rather silly Tory propaganda.
You may be right about the Civil Service not providing accurate information, but I think there is no doubt that Brown actually wanted to run a deficit – it was not an accident.
Where I can't agree with you is that Labour should move to the left – it's abundantly clear that's not what the public wants. Also, on taking China as a model – well, it has grown massively mainly because it was coming from such a terribly low base. It has grown in spite of its communism rather than because of it, and it is still basically a totalitarian state, which I don't feel we should aspire to!
James, that really is an excellent article – I haven't read Will Hutton since "The State We're In" years ago, and I should. I am fully convinced that we don't have good ownership, although I might quibble that tinkering ownership laws might not necessarily be the key. I think we need to change the culture among investors to make them not accept finance-only objectives, and to insist on turning up and hassling the board at AGMs about good governance and, in relevant companies like BAA or utilities, the public interest. Frankly this is good business sense as well as in the public interest, not just to look at short-term returns.
My old boss at the Labour Party, David Pitt-Watson, was involved in the Co-op Commission and works for Hermes, which is big on ethical investment and shareholder activism.
http://www.hermes.co.uk/ I think there could be a decent way forward on this area even without changing our company structures too much.
Anyway, thanks very much for the article.
Hutton is chairing the Ownership Commission which was set up last year to look at how co-operative enterprise could be promoted across the economy, something welcomed at the time by Labour's cabinet office minister Tessa Jowell. Should be a good challenge to the coalition's thinking, especially with regards the future of UKFI's holding in various banks.
Of interest is a new ebook, Revisiting Associative Democracy, which has interesting chapters on industrial policy and capital markets: http://www.lwbooks.co.uk/ebooks/RevisitingAssociativeDemocracy.pdf
Rob -If you mean by your assertion that the public does not want left wing policies you mean the public had become more selfish and self centred you are right,they had-thanks mostly to the indoctrination of Thatcher and her private ownership principles- and that socialism in the UK was dead then I would have agreed with you, at least at one time -indeed that's how Blairites managed to get the Labour party elected in '97 by swiftly converting it into a second Tory party of the centre right with largely Tory policy..the electorate too stupid to realize the confidence trick being played on them but desperate for any change from Thatcherism no matter what.
For the most part the Liberal Dem' party occupied the left at least far more left wing than New Labour – a sizeable number of voters at that- yet denied proper representation by the electoral system.
Voters across the EU had become more right wing altogether, since 1980.
However, I do not think this will last and as things degenerate -which they will- undoubtedly demand for left wing policy will revive, as it is already right across Europe and undoubtedly more polarization to the Right too.
The British people may not want full blown socialism, Chinese style- who does? but it is clear a sizeable number of Labour party supporters want more traditional Labour social policy as do a majority of the LibDems, who are now at odds with and disaffected by their leadership.
People have palpably become more socially aware and less selfish in their attitude, more conscious of environmental issues and a huge disgust with capitalism,globalization and industrialist corporate indifference.The people of the UK and other EU countries are voicing great anger at the tearing apart of publicly owned bodies and state institutions which are being replaced by private ownership entities and this anger does not simply extend to a few militants on the left its a far more widespread base and to ignore that is to the party's peril.
But, I guess what ones perceptions of what the electorate wants is largely subjective and influenced by ones own social circles.
I think the Labour Party members-just as much as the LibDem party members- are patently aware their respective leaderships policies are poles apart from their own memberships policies and ideals.
Certainly from a personal level,the dominance of politics of the right irrespective of party is the main reason I am leaving England.
James, ok will take a look.
Richard, think I have to disagree on Labour being no different from the Tories under Blair and Brown. And also on the Lib Dems – they are a divided party with no clear overall direction, and if the Coalition has proved one thing it is that it has killed the idea that they are more left than Labour.
Across Europe the left is – on the contrary – on the back foot, rather than having increased demand for left policies. That is not to say we shouldn't pursue a left agenda, just to be realistic about what the public will and will not accept (see my post here "End of a decade"). I see it as a challenge for us to seize the agenda and fight for an alternative to the awful present government.
Rob -If you mean by your assertion that the public does not want left wing policies you mean the public had become more selfish and self centred you are right,they had-thanks mostly to the indoctrination of Thatcher and her private ownership principles- and that socialism in the UK was dead then I would have agreed with you, at least at one time -indeed that's how Blairites managed to get the Labour party elected in '97 by swiftly converting it into a second Tory party of the centre right with largely Tory policy..the electorate too stupid to realize the confidence trick being played on them but desperate for any change from Thatcherism no matter what.
For the most part the Liberal Dem' party occupied the left at least far more left wing than New Labour – a sizeable number of voters at that- yet denied proper representation by the electoral system.
Voters across the EU had become more right wing altogether, since 1980.
However, I do not think this will last and as things degenerate -which they will- undoubtedly demand for left wing policy will revive, as it is already right across Europe and undoubtedly more polarization to the Right too.
The British people may not want full blown socialism, Chinese style- who does? but it is clear a sizeable number of Labour party supporters want more traditional Labour social policy as do a majority of the LibDems, who are now at odds with and disaffected by their leadership.
People have palpably become more socially aware and less selfish in their attitude, more conscious of environmental issues and a huge disgust with capitalism,globalization and industrialist corporate indifference.The people of the UK and other EU countries are voicing great anger at the tearing apart of publicly owned bodies and state institutions which are being replaced by private ownership entities and this anger does not simply extend to a few militants on the left its a far more widespread base and to ignore that is to the party's peril.
But, I guess what ones perceptions of what the electorate wants is largely subjective and influenced by ones own social circles.
I think the Labour Party members-just as much as the LibDem party members- are patently aware their respective leaderships policies are poles apart from their own memberships policies and ideals.
Certainly from a personal level,the dominance of politics of the right irrespective of party is the main reason I am leaving England.