I seem to be caught between the devil and the deep blue amongst Labour supporters this weekend. On Saturday I wrote a blog in which I explained what I thought Ed Balls was really trying to say in his speeches and comments over the weekend. That's been widely quoted, seemingly favourably by some whilst others in the left really don't like it.
Now let's be clear, as some noted, if it took that much interpretation then the comment Ball's made was not as good as it could have been seems to me to go without saying. I don't have to defend Labour - I'm not a member of Labour or any other party for a start - so it's quite fair for me to say that.
But equally I don't think Balls meant Labour has embraced all the cuts just because it has recognised that like it or not they're happening and that like it or not come 2015 we are still going to be in the economic doldrums as a direct result of Tory policy and will not therefore have the resources to immediately reverse all Tory policies and the harm they've caused. It may even be realistic to say in some cases that he would not wish to do reverse cuts - 2010 after all was not a perfect example of what government should look like and any realist would recognise that.
But that said, being pragmatic about the inheritance does not mean indifference (I hope) bout creating the mechanisms for tackling the cuts agenda so that real growth - in jobs, in pay, in benefits and in much else - can be restored. I'm hoping that the tax haven announcement was an indication that more on how to raise the revenues needed is coming - because if it isn't then there will be real causes for concern because it is by saying how Labour will fund the vital services this country needs, and the pay of those supplying them, that give it the chance to be credible when saying it will change things.
Here, and I am unreserved in noting it, there is a good letter in the Guardian this morning that sets out a great deal of what needs to be done. It says:
It is investment in decently paid jobs that generates income, and thus the tax revenues to pay for credit or borrowed money, not the other way round. Instead of trying to out compete the government in some kind of masochistic virility test to see who can threaten the greatest austerity, an opposition party worthy of the name would be making a far stronger case that austerity isn't working, and offering a genuine alternative.
A combination of more progressive taxation, a crack down on tax evasion and avoidance and, crucially, Green quantitative easing to deliver investment directly in the new jobs and infrastructure the UK urgently needs to make the transition to a more sustainable economy, would do far more to challenge the government than the Tory-lite policies set out by the shadow chancellor.
That's by Caroline Lucas - and I completely endorse that thinking which is (unsurprisingly as Caroline and I have co-authored and as we're both members of the Green New Deal group) quite similar to my own.
And she is clearly indicating what Labour have to do now.
Closing the tax gap of up to £120 billion is an essential part of this agenda. I have written endlessly on this point - and Labour has to embrace the idea that investing in HMRC is about revenue raising - not making spending commitments that are unfunded. If it can't do that it has lost the plot.
And Labour has to do more. Green quantitative easing is possible. If we can spend £200 billion into the economy to save banks we can spend money in to create jobs. There is no reason why not. And remember, right now the government is actually borrowing at negative interest rates - that is how easy this is to fund.
Thirdly, real pension reform is essential. It is ludicrous that £37 billion a year is spent on pension tax reliefs when pension funds refuse to invest the £80 billion a year they get as a result in job creation. If just one quarter of pension fund money was put into job creation, matched by a similar sum from green quantitative easing we could transform investment in the UK and begin to turn this economy around.
Labour also needs to be straightforward and say that since 30% of all government debt is owned by the Bank of England - which is government owned - debt is not nearly as high as the Tories claim and the need for debt reduction not nearly as pressing as the Tories say and even the spending on interest is not nearly as important as they claim - as this debt can just be cancelled, so releasing funding for real projects.
More though than that, Labour has to say that when it is right it will borrow to invest - because investing is a sign of hope, and it does have hope for this country. That investment will create jobs, and will generate tax revenues, and will with the other policies noted, reverse the fortunes of the economy.
That's what Labour has to do: the cuts agenda is a policy by a government that has given up hope and is without idea on how to restore the well-being of this country. Saying that is right, but to put all effort into opposing all cuts when the real issue is not the cuts but the failure of the government to lead economic policy in a way that will lead to recovery that impacts the lives of all in this country would be the mistake. I'm seriously hoping Labour will be saying that and will be focussing on how to deliver change that can then be discussed in detail. If not, well, I despair too. But I haven't yet.
And Caroline Lucas in the meantime has taken the right position - and full marks to her for doing so.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
You really expect the Labour Party, architects of the boom and cheerleaders for city deregulation, these insanely enthusiastic converts to Thatcherism and trickle-down, in the pockets of billionaire funders for decades, to now present a coherent alternative to the economic structure they nailed their clours to for so long?
You are (and this is an understatement) an optimist. As a socialist, I am going to keep on votong Green, as right now they’re the only party that presents a real, thought-through alternative to finance-capitalism
And as I note – I’m not a member of the Labour Party – and as I also note Caroline is on the ball – and as I also note I’m saying that my interpretation is conditional on the next steps being taken. If they aren’t it’s obvious I’m not going with them
“It may even be realistic to say in some cases that he would not wish to do reverse cuts — 2010 after all was not a perfect example of what government should look like and any realist would recognise that.”
I’m not sure I understand the above comment. In which cases would he not want to reverse cuts?
Cuts during a recession are insane. They are counter-productive. I may of course have failed to understand your meaning entirely, but I fail to see why keeping spending under control in some areas would be advocated.
Also, I don’t see why it woud be too much of a problem for Ed Balls to say at this moment in time he plans an agenda for growth rather than cuts. Anybody who’s being realistic knows he won’t be able to overturn cuts overnight, so surely announcing clear, well thought out plan for growth, growth we desperately need, would have put clear blue water between them and the tories and be a clear vote winner.
A promise to severely tighten up regulation of the financial sector would probably go down well with Labour voters as well.
Why is it so hard for them to portray thenselves on the side of ordinary people? I still say the mans scared of big business and the mediia. To say he couldn’t make any spending promises this side of the election is clutching at straws for me quite frankly.
I’m saying that by 20-15 there may be better ways toi spend money than were known / done in 2010
Nothing more than that
And I agree that Ed B should be saying he’s planning an agenda for growth – and I wish he had
I really do wonder why it’s so hard to offer conditional support – which is what I did
For whatever his own reasons he made a statement – that could undoubtedly have been better spun
He repeated he’s committed to growth and jobs – but he did not say how
If he delivers growth he can deliver new spending. I’d argue he can do so anyway – but if he can’t win the election by saying that I’d argue do it this way and deliver the growth anyway
But I also said if he does not follow through I withdraw support
I admit I remain baffled why that was so hard to follow
And look at what Caroline Lucas said today – lifted almost straight from this blog – that’s what I also want Balls to day – that’s my price for support. Could I have been clearer? I just hope he gets the message – and let me assure you – I’m trying my best to make sure he does
Don’t get me wrong. I hope I have got it vrong on the interpretation of his speech, namely that he apparently intends to deliver growth, but ‘can’t make promises outside of this parliament as we do not know what financial situation we will be in by, say, 2015’..
However, experience of comments by politicuans leads me to think that this isn’t the case. Sadly, I believe it is a softening-up excercise to convince Labour voters that there really is no alternative to cuts and, therefore, they will have no choice but to continue spending restraints. There has also been noises from the shadow cabinet in support of Gove’s odious “free” schools and academies policies.
Until they stop dithering and push themselves forward as the party of growth and social justice, then they will continue to lose Labour voter grass roots support.
They need to earn people’s trust. There is any number of things they could do (announce a massive social housing programme for a start) that will kick-start the economy and quickly create many much needed jobs.
Announcing that he is on the side of cuts, even though it might have been wrongly spun, is entirely self-defeating!
And if that is the agenda I will be roundly condemning it – I assure you
I didn’t see or hear Ed Balls but I did see and hear Ed Milliband on the Andrew Marr show yesterday morning. I could discern a similar path of travel but only if I interpreted EM’s comments. Both Eds seem to be heading in the right direction but also to be so afraid of saying something that might scare the horses that their messages become unnecessarily convoluted. They need a simpler, clearer, less equivocal message.
I have also to say that Andrew Marr, someone I thought better of, rather disgraced himself with his questions, questions that betrayed an unthinking acceptance of seemingly all the spin the coalition presents as statements of fact. But the two Eds need to be ready for that as well as the general rough and tumble they have to face.
In summary, there are two problems:
1 Do the two Eds have the right policies to appeal to the electorate? If not, they should be talking to Caroline Lucas.
2 Do the two Eds have the skills to communicate their policies clearly? On present form, quite clearly not. They need to be able to articulate their position much more clearly and not to deviate from their message when under fire.
Come back Aneurin.!
Only when presentation has been perfected is there any real chance that any alternative to the government’s simplistic and hugely damaging economic approach will be heard by the electorate, much less accepted.
Spot on
Marr was awful – infuriating – especially after letting Lansley off
And the messaging is dire
I am baffled as to why that is so hard for them – I can only assume it’s fear, but that is undermining them anyway so why they’re frightened defeats me
If onloy they could say what they mean and mean it – or be Courageous Politicians calling for a Courageous State!
“Do the two Eds have the skills to communicate their policies clearly? ” Well certainly EdM does not. It infuriates me that he put himself forward as a leader when he surely must have known this. It was always clear to some of us that he would never be able to stand up to the likes of Cameron in the House or Naughtie on Radio 4. He can’t cope with hostile questioning. He should have been tested beforehand. Last week when Naughtie asked the awkward questions (actually he was bloody rude) Miliband started to talk too quickly and thoughtlessly – he was bumbling.
He really has to go, but it’s too soon now. If this Miliband had not stood his brother, with far better communication skills, would have won – and we would not have been able to shift him. So perhaps we are better off with Ed for the moment.
And once again Caroline goes that bit too far.
I’m ex Green Party, and now a Croydon Labour advisor. And I assure you this is not Tory-lite. What this is is simply an acceptance that we cannot promise to spend what is not there, and that we have to build growth first BEFORE we then invest in the much needed Public Services. As Osborne et al have crushed growth, and have not succeeded so far in getting it going again.
We are faaaaar from happy about this. But to promise to spend money that is not there is simply not an option. And, even with 30% of our debt written off, we’ll still owe a small mountain of cash to people. So we have to be VERY careful in what we borrow and where it goes.
Caroline seems to be indicating we can just borrow and get on with it. The Public rejected this idea at the last election, and no doubt will continue to reject it. Even Ali Darling suggested we could not borrow forever, and that some cutbacks were required.
Caroline is part of the ‘no cuts’ brigade. And that lot simply have no credibility. They honestly believe the money will last forever, which is simply not true. Much as Labour would cut less ( would love to cut less as well ), we would still cut some things to bring the economy back to health. Caroline et al would not cut anything really. They’d just spend and spend and spend.
The Labour answer is sort of half-way between The Torys and The Greens. And, much as Caroline is right on Green investment, she is wrong on the ‘Tory-lite’ tag. She really should be paying more attention on this one.
I’m sorry – but you are clearly no economist
Read some Keynes – spending generates growth, not vice versa
Caroline gets that – and is well advised
Labour has to present how that’s possible to a disbelieving public – hence read what I say
Follow your path and we’ll never see growth – because cutting will nenver, ever deliver it – so ultimately Labour’s only choice is go for growth first – and I show how to do that
Unfortunately spending has yet to produce the growth it intends to produce. Even tipping 200bn into the economy will not produce the growth required to pull us somewhere close to structural equilibrium.
I think at the moment any borrowing has to be watched incredibly carefully. Whilst the ratings agencies may be full of it, they do have an appreciable effect on borrowing rates. We are already spending more than 30bn a year on interest re-payments. A down grade at this point would be very damaging, and whilst I would love to be able to say that it is as easy as spending in the economy to produce the results we need, I think that would be the wrong move at the moment.
I’m sorry – but that’s just voodoo economics
The rating agencies are discredited – and we and the US can borrow at negative rates right now
Get real and open your eyes to the real world – not what happens on neoliberal blackboards
I’m soprry – I’ve got no time for such stupidity anymore – because that is what it is
100% agree.
Labour has every intention of spending. They wish to spend more than The Torys. But borrowing huge to spend huge is what got us into this. It failed. It’s just not that simple.
I know my economics enough to know you can’t just go crazy on the loans. Especially with growth in jeopardy. Growth is your repayment money to keep your AAA rating ( those negative interest rates ) for a start.
Growth is not just about spending. It’s about Tax breaks as well to make it easier for people to get business going in tighter times. And tax breaks will reduce State Income in some places.
It’s a balance between borrowing to invest in places, and cutting taxes ( sacrificing income ) in places, to encourage Joe Bloggs to part with his cash ( the majority of the economy being the High Street and spending there ). In the hope the net growth is enough to cover the sacrificed income.
I still think Caroline takes it too far on her borrowing stance. You can’t have ‘no cuts’ in what is ultimately a debt crisis. That debt has to be paid off after all. Even if we did get back to 2007 levels ( pre crash ) our debt level is higher now, so our repayment instalments will be higher. So we’ll have less to spend elsewhere. That is simple math for anyone who’s had a personal loan. If the debt goes up the instalment goes up.
Caroline doesn’t seem to get that.
She clearly rumbled you – neoliberal dogma and being green doesn’t mix
Being a believer in the ratings agency confidence fairy doesn;t become anyone serious about Labour either
If you were right then the US should have a real interest sky high now. It hasn’t. It’s ;ower than us. Explain that
Or just admit that you’re talking baloney – because you are
Borrowing did not get us into a mess – banks did
And borrowing is the only way out of it. Period.
Just go and do some Keynesian economics
Or read Martin Wolf, Sam Brittan. Paul Krugman et al
Why would Labour (or any party in power) be having to borrow to invest? Why can it not simply exercise sovereign powers of money creation to create money to invest, money bought into existence at no interest? A lot cheaper than borrowing it from banks who only use their power of money creation (licensed to them from government) to create legal tender out of nothing anyway (on production of a signature from the borrower) which they then lend to government at considerable interest – interest we the electorate have to pay. This is a game of soldiers an informed electorate would be unwilling to play – so why suggest it?
It could, and it would probably save the country more than £50 billion in the process! But of course the spectre of Weimar will be brought up again (without going into the context of how or why Weimar happened) HYPERINFLATION will be screamed from the rooftops and the idea will be buried again.
Of course, massive house price rises and sky high bank borrowing helped cause inflation as much as anything else, but of course, we don’t talk about that!
LEAP just tweeted:
LEAPeconomics LEAP
Solidarity with @PCSRCGroup members fighting against privatisation of #HMRC today. #taxjustice too important to risk in private sector #pcs
I completely agree. Tax justice is too important to risk in the private sector and Ed Miliband could indicate his seriousness by backing the PCSRC action.
“I’m soprry — I’ve got no time for such stupidity anymore — because that is what it is”
Have you read George Orwell’s depiction of the far-left meeting in Coming Up For Air?
If you want to close down debate and talk amongst your chums on the Left forever more, fine, that’s your prerogative.
But don’t expect the rest of the political world to take any notice of you and don’t be surprised when genuine Left-wing ideology gets thumped at the ballot box.
Respectfully – if that’s the best you can manage in response it justified my original comment
Since oppression is all by the right now – we’re more than happy to debate without you, and it saves us a lot of time
“Borrowing did not get us into a mess — banks did”
And what did banks do? Lend. And if someone lends, what someone else, by definition, do? Yep, borrow.
You obviously deny that there was a debt bubble that was always going to explode? You don’t accept that there can possibly be a phenomenon such as overheating? Ever?
You clearly live in a world of micro economics
Learn a little macro
Then comment again
The rules for government are utterly different than for everyone else
It’s your ignorance and that of people like you that is driving us to recession as it did in the 30s
I can’t reply to your ‘baloney’ comment, so I’ll put it here.
The US have only just lost their rating. It’ll take time for things to creep in.
And considering your line of work I am shocked how little you know. No-one will lend to you if you cannot pay off.
Very worrying indeed.
Hang on – markets price in all known data
And last week the States borrowed at negative real interest rates
Either the markets are stupid or your claims are
Maybe both – but the fact is the UK and US are being paid to take money right now – money they could use to solve the financial crisis and are refusing it depsite the fact that people think this is the safest, best, most secure, most certain place to repay money that there is – which is what the negative interest rate says
That’s called negligence by politicians
And it really does say it’s time those spouting nonsense about we can’t afford to borrow or repay need to pay a little attention to the facts
I’m not disputing that we can borrow. I’m disputing the scale of the borrowing Caroline wants.
That debt has to be paid off after all. Not just ‘managed’ ( paying off the interest only ). And with our National Debt at a Trillion quid ( predicted £1.4 trillion final ) we’re already looking at a 40 year repayment period to get rid of it. Think of your kids.
Whether we like it or not we have to borrow less. The ‘no cuts’ brigade are simply not viable.
Osborne has borrowed as much as Labour would have ( HM Treasury figures ), but has spent it on the Dole Queue. You would have had jobs and skills with Labour. But the public chose The Torys, and the rest is becoming an uncomfortable reality. High unemployment, low tax income due to this, and high benefits bills due to this. What does this tell you?
Bog all growth ( due to Osborne ) means we are stuck with these cuts. It’s just how it is. You can’t spend what is not there.
I do think of my kids
I think of the fact that those who won’t invest when the money to do so is available more cheaply than ever in history are refusing to do just that
And I’m mighty angry on their behalf about people who refuse to provide them with any hope for their futures because you can’t be bothered to learn some basic economics
I misread that last titular word, to very comic effect. Although of course Labour does need to take care of *them* as well. 😉
[…] http://www.taxresearch.org.uk/Blog/2012/01/16/how-labour-has-to-tackle-cuts/ […]
[…] annually for investment in job creation in the UK. There’s some elaboration here and here and a lot more in the Courageous State. If Labour had done that it would have an economic policy. […]