Saturday, October 23, 2010

Despite the cuts, it is Labour that has the harder task

In the normal course of political events, any government that announced the largest cutbacks in public spending for more than thirty years would be seen as batting on a particularly sticky wicket.

And it is true that there has been no shortage of criticism of the £81bn cuts programme unveiled by Chancellor George Osborne on Wednesday.

Already, the coalition’s attempts to present the package as ‘fair’ have begun to look somewhat threadbare, with think-tanks such as the Institute for Fiscal Studies claiming it will hit the poorest hardest.

Given that public spending is of necessity higher in the worst-off areas of the country, it seems to me that the IFS is making not so much a contentious political point as a statement of the bleeding obvious.

Yet for all the sound and fury directed at the coalition this week, it is my belief that the spending review – and the wider question of how to tackle the deficit - actually poses a bigger problem for the Labour Party.

Why? Because like it or not, the government has succeeded in creating a consensus that, irrespective of whether or not the cuts are fair, they are certainly necessary.

The general election in May was essentially decided on two issues: whether the public could stand another five years of Gordon Brown as Prime Minister, and how fast the deficit should be cut.

It is because Labour lost the argument on not one but both of these issues that it finds itself out of power today.

So on the question of the £18bn cuts to welfare benefits, even allowing for the undoubted human cost, there is actually a broad consensus that this is something that needs to happen.

If the coalition can succeed in reforming the welfare state – something Labour really should have done from a position of strength post-1997 – the political as well as the economic dividends will be huge.

Likewise, there is also a broad consensus that the last government created too many ‘non jobs’ in the public sector that are now having to be shed.

If as the government’s own documents appear to confirm, the cutbacks do lead to 500,000 public sector job losses, many of those not personally affected will see it as a necessary re-balancing of the economy.

It has become almost a cliché over the past week to say that Mr Osborne’s spending review will determine the result of the next election, but it is true nevertheless.

If his great gamble pays off, and the economy recovers before 2015, the coalition will have succeeded in constructing a political narrative that will be well-nigh unbeatable at the polls.

It will be the well-worn cry of Tory governments down the ages - that Labour turned the country in an economic disaster zone, leaving the coalition to clear up the mess.

However good or bad a leader Ed Miliband turns out to be, it is inconceivable in those circumstances that the country would then turn back to Labour after just one term out of office.

Yet for Labour, the alternative scenario in which Mr Osborne’s cutbacks plunge the country into a double-dip recession is almost equally baleful.

Messrs Brown and Balls would then be powerfully vindicated – but at the cost of millions of lost jobs, repossessed homes, failed businesses and shattered lives.

Hence many Labour supporters who might ordinarily hope that the Comprehensive Spending Review proves this government’s undoing will instead be praying that Mr Osborne is proved right.

It may condemn their party to a decade of opposition. But at least they might still have their jobs by the end of it.

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Stephen Rouse said...

You pose the dilemma facing Labour-supporting public sector workers very neatly.
I would, however, question the claim that Labour "lost" the argument over the pace of deficit reduction at the last election. Most people voted for parties supporting a slower programme of cuts. Clegg and Cable's volte-face should not be allowed to establish the Conservative narrative as retrospective accepted fact.

Anonymous said...

'If as the government’s own documents appear to confirm, the cutbacks do lead to 500,000 public sector job losses, many of those not personally affected will see it as a necessary re-balancing of the economy.'

With a public sector workforce of around 6 million,500,000 job losses over 4 years represents 2% a year.This should be easily achievable by natural wastage,early retirement and not filling vacancies.

Whether it be jobs,short time working,pay freezes or pensions, the private sector has been hammered over the past few years,long overdue that the bloated public sector shared the pain as well.

john problem said...

When the cuts cut, the whole scene will change. There is no way labour won't get back at the next election unless their leader makes a big boo-boo somewhere on the way. When I'm out of work, my kids also,and can't afford the utility bills and the banks won't help, whaddya think I'm going to do? Call Nick and Dave and say, 'Oh thank you, thank you, thank you, most worthy millionaires and my superiors.' Nope. I'm going to France to learn how to complain. In fact, I'm leaving tomorrow.

Ben said...

And just why is that cry 'well-worn"?

It's because the Labour party unfailingly leaves an economic mess for someone else to clear up. Whenever the electorate accumulates enough collective amnesia, they allow these misguided control freaks into the seat of power so that they can do it all over again.

That's why people need reminding so often of what happens to our economy every single time we have a Labour government.

Anonymous said...

'When the cuts cut, the whole scene will change.'

Keep clutching at those straws!

No doubt at the next election New Old Labour or whatever it will be called by then will come up with the usual list of goodies e.g benefits thrown around like confetti plus the usual massive spending program.

Even if there are not significant tax cuts prior to the election,the prospect of increased taxes and more waste coupled with a return of mass immigration and an authoritarian state,plus the odd war thrown in, will be about as appetising as a cold bowl of sick.