Conor Ryan asks why Labour isn’t making much headway in protesting against the loss of waiting list and police targets that matter to voters.
“Why is Labour not making more of such profoundly regressive steps? One reason is the preference of too many leadership contenders for attacking a record they should celebrate more – or at least offer a balanced assessment. Having failed to defend our record over the last few years, it is also harder to revive it now.
But the bigger reason is the failure of the party to level with voters about where it would cut and what it would protect before the election (of course the other parties blatantly lied to voters but they are now in government and getting away with their dodgy reinvention of history).”
Conor is right. Not having an answer to the “so what would you do” riposte will hurt Labour’s campaigning far beyond the narrow confines of fiscal policy.
So to Conor’s comments I append the question I (and more importantly anyone running for the Leadership of the Labour party), should have a good answer to.
“Do you support Alistair Darling’s proposals from before the general election to gradually reduce the budget deficit over the next six years?
If yes, if the coalition were to collapse and you became Prime Minister, what would be your priorities in identifying the £47 billion* in spending cuts that the IFS identified were needed to meet that target?
If no, what would you do instead?”
I’m still working on my own personal answer to that question. However, the very first line would be about the absolute priority of job creation.
Now the government and the opposition join me in not having developed a fully worked out plan yet, so the pressure isn’t to produce CSR 2010 by yesterday.
But even without a detailed, costed answer, it should at least be possible for our next leader to outline some general principles about what would guide a future Labour government under their leadership.
In the mean time, I’ll keep rattling on about it.
* Here’s the IFS on the numbers (Filling the hole p11). Obviously, if the Coalition collapses later rather than sooner, then the amount needed to be found reduces, as they propose to cut heavily and immediately.
“To bring about the 2.9% of national income fall in borrowing that the government is aiming for between 2014–15 and 2017–18, Labour would need to implement further tax and spending measures amounting to 1.4% of national income or £21 billion in 2010–11 terms.
To continue to split these additional measures into one-third tax increases and two-thirds spending cuts would require additional tax measures (as yet unannounced) of 0.5% of national income (£7 billion) and further spending cuts of 0.9% of national income (£14 billion).
This would bring the total discretionary tax increase under Labour’s plans to 1.7% of national income (or £24 billion in 2010–11 terms) and the total discretionary spending cut to 3.2% of national income, or £47 billion. This would see the overall fiscal tightening implemented through roughly two-thirds net spending cuts and one-third net tax rises (i.e. a ratio of 2:1).”
Well, I’m obviously not standing for Labour leadership, but my answer would be along the lines of the following:
Yes, I do support proposals to bring down the deficit although I believe that before we act we need to be certain that the economy is strong enough to absorbing these cuts, we also need to have a better idea of the true size of the structural defict.
I believe that tax rises should play a greater role and that we should aim for a 50:50 balance of tax rises and sepending cuts.
On our spending we should first look to dealing with public sector pensions, the simple fact of the matter is that the current contributions are not even covering the current payouts. This is an issue that must be addressed.
If we are to make cuts I don’t believe that there should be any sacred cows, it would be foolish to say that there are some area’s of spending where savings simply can’t be made. If we ringfence some areas we will have to make harsher cuts in others and the impact of this could be severe. I also think it would be unwise to freeze public sector pay, but we will show resraint in payrises in order to keep the overall pay bill down.
On tax rises, we should, as much as possible aim for tax rises that will not reduce demand, I will therfore rule out a rise in VAT. We should look at increases in capital gains and corporation tax although we should look at increasing investment reliefs to ensure that those businesses that want to invest are not held back.
We should also look at a small increase in basic income tax as well as a larger increase in the higher rate and a lowering of the 50% threshold.
I await accusations of delusion from AB.
Can I refer you to The Observer’s William Keegan, possibly the most eloquent Keynsianian commentator in the UK press, who wrote in April:
“There seems little doubt that shadow chancellor George Osborne excels at wrong-footing the prime minster politically. There was the famous inheritance tax episode, when Gordon Brown reluctantly felt he had to match the Conservatives. And more recently when Osborne struck a chord with his line that the proposed increase in national insurance contributions would be “a tax on jobs”.
But almost any increase in taxes is directly or indirectly a tax on jobs. The widely advocated increase in VAT to 20% would be a tax on jobs. And it is wonderfully cheeky of the Conservatives to complain that an increase in national insurance contributions would harm the recovery when the essence of their macro-economic position for the past two years has been first to oppose the measures which prevented this recession from turning into a serious depression, and secondly to advocate instant drastic action to reduce the deficit – action which would almost certainly abort the incipient recovery (if that is what it is) and might well induce a “double dip” recession.
I reiterate that in the present circumstances the deficit is the solution, not the problem. It was the distinguished economist and former Treasury official Wynne Godley who some years ago drew attention to what is known in the trade as the analysis of “flows of funds”. The private sector of the British economy is in huge surplus, and the counterpart of that is the public sector deficit. On the reasonable assumption that we are not witnessing the end of economic history, growth will return – and there are signs of potentially more balanced growth in those latest trade figures. The deficit largely reflects the impact of the biggest recession since the 1930s on government revenues. Measures designed to cut the deficit too soon would, paradoxically, aggravate the deficit. If the economy were at anything like full employment – which it is not – and if industry were operating at anything like full capacity – which it is not – then measures to deal with the deficit would be appropriate and timely. Even so, unlike most commentators, I should put the emphasis on tax increases rather than spending cuts. The private sector needs public sector investment in infrastructure.”
It’s such a shame that Gordon Brown reduced the basic rate of income tax to 20p – it did him or Labour no good politically and almost no one really notices the difference in their net income. Yet it cost the exchequer loads and it’s virtually impossible ever to put the rate back up. So we’re stuck with the options of generally regressive tax increases such as vat and equally regressive cuts to public services.
The evil that men do lives after them.
Mind you one does have to wonder whether the nation really is as hard up as Mr O would have us believe. Frinstance: board rooms have awarded themselves an average 7% increase in remuneration, Christies has had its best ever auction of paintings and a bunch of second-rate footballers have each been paid more in a week that most of their supporters will earn between now and the next World Cup…
I have never met a voter who said that they cared about the health and police targets. i think indifference is a better explanation about people don’t care about the tories scrapping these targets than the failure to defend the new labour legacy or the politically suicidal idea that we need to spell out in detail our ideas about tax rises and spending cuts.
Dan, I’ve some sympathy with your first point – I think people care more about the results than about the targets themselves, and I should probably have clarified that.
But the second… well, if being honest about what we would do (not at the level of programmes, but about principles and priorities and scales) is political suicide, then perhaps we need to address _why_ that’s the case! Certainly it would bode ill for us if we didn’t do so and returned to government.
I know the Tories distorted their way into office (VAT, spending cuts scale etc), but short term
popularity aside, I fear that will be a drag for them. On our side, we will be being measured against a government cutting further than any other, if we don’t have an alternative agenda to promote, we’ll fall into the trap of appearing simply to be in favour merely of the Status quo.
I think Don is not wrong here, although he may be right for the wrong reason (he usually is).
It is a very silly idea for any opposition to set out in detail tax and spending plans, for the simple reason that they have absolutely no ability to (no thousands of clever treasury officials), they would almost always become immediately dated, and they would share only a very vague relationship to what would actually be done in power (see Fink passim).
What you need to do is set out the values that will guide you (and persuade the public that those values are better than the Governments), that is not possible in a discussion on cuts, you need to pick separate fights to illustrate that (usually with your own side).
It is true that Labour does not currently have the minimum necessary credibility on the deficit, but it is not far away; it is also true that no opposition can win on tax and spend details.
What pregethwr said (I am so going to steal the “right for the wrong reasons” tag).
This is about the difference between being in government and being in opposition.
In government, you can put up VAT, and sack police officers and let criminals out of prison, and all the other weird and wonderful things that the coalition are doing. But if the Tories had announced before the election that they were planning to do all this, we would have won.
Imagine how much fun the Tories and their allies in the media would have if we set out our plans for £24 billion tax rises (or, better yet, if each of our candidates set out their own different plans for raising taxes).
Don, I agree on point one, point two, I’m afraid I’ve become convinced that we do at least need to spell out some level of detail.
What worries me is that we are seeing polls showing high approval for George Osborne’s budget and a large portion of the electorate blaming Labour. The impression I’m getting is that theres is not much trust in Labour’s ability to manage the economy at the moment.
The main difference now is that the Tories have put their cards on the table and spelled out their plans, that means that we can compare and constrast anything we put forward with their plans. Since we have not committed to deficit reduction on the scale of what the Tories are attempting we can make it clear that our plans will be far less painful and far less risky.
CA, why will raising VAT reduce demand and yet increasing personal income tax and capital gains tax (thus reducing net household income) not do so?
You’re bang right on public sector pensions though. Depending on how you do it, and I’m very far from being a pensions expert, you should be able to increase confidence in long-term fiscal sustainability while not hammering short-term demand.
Bill Keegan and Wynne Godley’s comments, on the other hand, are the usual confusion between the short and long term. Cutting heavily now is a mistake, but not planning cuts at all is equally so.
AB – Although I think the general thrust of our argument should be that we should aim for taxes that hit supply rather than demand I don’t think there are enough purely supply side taxation opportunities. Income tax would be hit demand, I’ll admit that.
My thinking was along the lines of a small increase in the basic rate (say 1% possibly combined with a threshold increase meaning that it only kicked in at say, around 14K) and a larger higher rate increase (say 3%). The idea being to hav high earners bear the brunt since they save a larger proportion of their income.
There’s also a bit of a political calculation in that it is very hard politically to raise income tax. As someone who would like to see a larger state I’d like to see us take the politically difficult option while the electorate is likely to be reasonably sympathetic to the idea.
On capital gains tax (I’ll admit I’m not certain on this) my impression is the majority of it is paid by the well off and therfore not likely to have a huge impact on consumption.
Point taken on CGT – actually my personal pref is to put it back up to 40 per cent, which is where the Tories left it before Gordon Brown started mucking about, and introduce a site value/housing wealth tax. At a basic level the latter could be done by subdividing the current top band into a lot more bands with rising payments. It would mean that foreigners buying property with a partly speculative motive actually paid some bloody tax for once. One sad thing about the coalition is that its best idea, the LibDems’ mansion tax, got thrown out of the mix.
(I’d also triple insurance premium tax and add a 10 percentage point supplement on all marginal tax rates for East Sussex, but that’s just for my personal amusement.)
On income tax, my sense is that the disincentive effects (which are non-negligible though not large) plus avoidance would unfortunately tend to mean not much more revenue from an increase. I think this is what the IFS concluded WRT to the 50 top rate. So I’m not sure how useful that would be.
I think you’re overthinking this.
You, as a former special adviser and politics junkie, both absord loads of information and analyse it through a relatively sophisticated matrix to work out whether or not it convinces you.
The general public, on the other hand, works on basic assumptions and what they read in the newspapers or see on TV (or if they do neither, on the generalised digest of this they pick up from their contemporaries).
Given that we got a pasting less than two months ago because we were disliked for eleventy million separate reasons and because the country had lost all faith in our ability to manage the economy, it’s not surprising that they haven’t changed their minds just because the OBR happens to have decided the budget would alter growth somewhat. They either haven’t noticed this or they’ve received it through a news source that accepts the Tory spin for this.
We can and should keep opposing. But we won’t make much headway until either a) we’re perceived to have changed, which essentially requires a new leader (the fact that he served in the Brown cabinet is unlikely to be relevant here – the illusion of freshness is enough) or b) the coalition screws up massively and this becomes noticeable. This is unlikely to occur for a few months – it’s very difficult to completely atomise an economy within three months and a degree of lagtime is inevitable.
This is not to say we shouldn’t have deficit reduction plans – obviously we should. But most people aren’t policy wonks and even those who are don’t decide voting intention purely on policy; they assess policy in light of pre-existing political and policy inclinations.
For the time being, Labour is preaching to the choir of firm Labour supporters and those who used to be, were repulsed by some action of Blair/Brown and are now considering whether to start supporting us again.
There’s very little we can do to get through to the rest of the population until unemployment goes up by half a million, we go back into recession or George Osborne is caught on camera performing an unnatural act with a swan.
Yes indeed. Keeping the powder dry whilst watching and waiting is the best strategy. Fewer than one adult in four voted Labour in May and the coalition parties together are supported by more than 50% of the electorate according to the latest opinion polls.
Labour faced a similar, although rather less dire in terms of popular support, situation in 1979 (and had in 1970 but I’ll spare you my reminiscences of Grocer Heath’s first months in no 10). The incoming Thatcher government was distressingly popular and rapidly became more so. But a couple of years later it was the most hated thing since sliced bread. Unfortunately by then Labour had disintegrated and shortly afterwards Mrs T became a national hero because of the Falklands.
Unless Diane Abbott or Ed Balls get the top job, there’s not much chance of the former happening this time and the public seems to have lost its taste for war.
So Labour may yet have a chance in 2015 but nothing it says now will have any real influence on what happens then…
First of all, I’m not a former SpAd – Like E L Wisty, I never had the latin for the rigorous spadding exams. Renowned for their rigor they are. People would reel out of them saying “My goodness, that was a rigorous exam”.
I worked for the party instead. Less rigorous exams in the party, there was only one question and that was “What is your name?”. I got seventy five per cent on that one, so they let me join the party staff….
You are of course right that having deficit reduction plans will not lead to a marvelous upswing in support for the Labour party – as you say, events, time and freshness will be more important.
But having deficit plans will do two things:
First, they will allow our opposition to the Coalition to be taken more seriously by those who filter the coverage of politics. If we are seen to be credible and thoughtful, our attacks will resonate more greatly.
Second, it puts us in the position to make the most of the opportunities you mention that will come along with time. When the Tories are in trouble, their reaction to our attack will, quite reasonably, be “so what would you do then, eh?”. if we have a credible answer to that, life gets much more hard for them. If you are prepared to be an alternative government, you have a better chance of being an alternative government.
Hopi is spot on. Does anyone seriously think that the early 80s is a model to follow in any sense whatsoever? In 1979 Labour lost power and lurched away from reality rather than towards it, as though insufficiently yawning deficits and not enough nationalisation was what had gone wrong in the late 1970s.
I’m not saying Labour are doing quite that mad charge now, but it’s kind of surreal to watch the leadership candidates for a party which just helped to create a huge underlying deficit spending their time apologising for revenue-raising measures (tuition fees) and creating yet more spending commitments (living wage).
Fair enough on the SpAd thing. I still think the general point holds true – you’re a wonk, you know what the policies of the different parties are, whereas all the polling suggests that the public doesn’t have the faintest idea who supports what.
As far as the filters go, they’re also politically aware. This means they have political opinions. Nobody who pays attention is really apolitical, and much of the press just isn’t interested in supporting us. Taking your line might win us back support from the Guardian and Independent, but they’ll come back to us anyway, the Times is as pro-Cameron as they come and will remain so until unemployment hits 5 million or the editorial staff is fired, the Mail, Telegraph and Express just don’t care what we think and the Sun isn’t going to switch until Rupert gets media ownership law relaxed, Labour comes out in support of it and it’s obvious the Tories are going to lose the next election heavily.
That leaves the FT. And whilst the FT is a paper whose support we do need to get back, they’re quite amenable to quiet chats. We can phone them up and tell them our deficit reduction plans. We do not have to shout about all the hospitals we want to close until it’s the top item on the 6 O’Clock News.
Similarly with the opportunities to come. We can develop rough plans, we can announce policies and we can reference them when we’re questioned on them. But I see no evidence that that will be a particular boon. In January we were destroying every Tory policy in 15 minutes flat. It didn’t much harm them, because the tide was against us. We won’t make any more headway with our policies until that tide turns.
Yes, have an alternative plan, but when you opponents are putting forward economically illiterate and frankly mendacious economic polcies, you’re better off just making them look silly.
I think there’s probably not too much difference between the two of us here, except in terms of emphasis. You want to use the criticism as a launchpad for your alternative policy prospectus. I think that’s something that works in government, but in opposition we need to oppose and only segue into our alternative plan when we’re asked “What would you do instead?”
I think the first and more deadly attack is “ Why would anyone trust anything you say” ? Darling`s plans were based on risible predictions of growth for example and he is perhaps the most respected Labour Politician , having allegedly opposed Gordon Brown . The immigration figures are rubbish the budgets all a pack of lies and never , not once did revenues match predictions. You cannot spend ten years in government claiming that capitalism was predictable and uniformly benevolent t and then the second it shows it is not shout ‘Keynes‘ !. He was all about the booms and busts you know hence the need to build and surplus and well you know the rest ….
Establishing trust or gaining traction and Hopi would probably put it, is the key . People who do not follow these things intimately are not stupid they rely on a sophisticated and hierarchical series of judgements passing opinion through a trust filter .
I am not sure that New labour have realised how badly they have lost this magical substance , my belief is that Hopi is talking as gently as he can to the sulkers of his own marginalized sect trying to spoon feed political reality to a recalcitrant child . Its not just what is being said , its who is saying it and if its the people who dropped the country in the Brown stuff then busy people who are not stupid will not listen
Hopi, you may be confusing two separate issues together. The ConDems have claimed that the NHS & police targets led to poor performance, rather than citing cuts, as the reason for their removal. Similarly, the new No More Jail policy.
What’s required is competent management of public services, and Labour needs to learn how to manage competently. For example, I posted here on the Social Services problems a few days ago.
The media and service workers have cited targets as the root of all problems (rightly or wrongly). Now, targets, and quality systems, are how the private sector manages, but they have to be applied intelligently.
I’d suggest Labour talking directly to service workers, maybe together with the unions, to learn how the services really function. Maybe this was already done, but it needs to happen constantly. If the targets are found to be right, then there’s the sales pitch.
The cuts are a separate matter.
(Yeah, every service is under resourced and cuts reduce resources, but I still see them as separate issues.)
I agree with you up to a point. But the two are related in some ways, despite what the coalition government gives as their reason for removing targets.
Removing waiting times targets means that hospitals will be able to put off activity and defer short term costs at a time when their finances will be under pressure. The result will be that people will have to wait longer as a result.
NHS partners which represents private sector providers has already said people will have to wait longer or go private as a result.
Ultimately, letting waiting times increase is not a very effective way of the health service making ‘efficiencies’ either. People get sicker the longer they have to wait for treatment and their treatment then ends up being more expensive in the medium to long term. We should really be shifting resources into early diagnosis, treatment and prevention of disease.
This is Hague Mark One territory.
Which member of the leadership line-up will be first to put on a baseball hat, I wonder?