I have already written about the concerns I have about a majority Conservative government after the forthcoming general election. When doing so I said I would follow up with a blog about my concerns about a Labour administration, and now do so.
The premise of this blog is the same as the previous one: although it seems very likely that minority government or a coalition of some sort will be created after the election I'm assuming for a moment that Labour succeed in securing a majority, however improbable looks to be present.
My concerns in this case focus, as in the previous blog, on the issues that I campaign about, which all have a focus upon meeting the needs of those who are less well off in our society. Labour is by no means a panacea in this regard, although there are significant differences in emphasis when compared to the Conservatives.
What is quite apparent from Labour's manifesto, its highlighted policies and its demeanour is that it has a much stronger bias towards those who are less well off in society than the Conservatives do. That is hardly surprising: historically this has always been the party's purpose, but since the mid-1990s that focus has been less apparent that it was prior to that time. The highlighting of a number of key issues, including the abolition of the bedroom tax, changes in tax for the higher paid, the introduction of the new starting rate of income tax, promises on the minimum wage and the fact that Labour has promised to leave itself room to invest to create real growth in the economy are all optimistic signs that a Labour government might produce better outcomes for those on low income than a Conservative one might do.
That said, there are real concerns about the direction of some of Labour's policies. In particular, its promise that come what may it will reduce the government's deficit year on year over the course of the next Parliament is, if true, and committed to, either deeply mistaken or profoundly worrying policy. As I have explained on this blog, time and again, the scale of the government's deficit is to some degree beyond its control.
Most especially, if the economy crashes again (and it might, whoever is in government during the course of the next five years) the only logical response that any government should then make is to increase the deficit to provide the necessary stimulus to ensure that when everything else is falling apart the government can play its essential role in providing the stimulus the economy needs in that situation to start the process of recovering.
Labour's commitment to cut the deficit, if pursued in this situation, could actually make any economic crash worse, because it would require the government to cut even more heavily in that situation in a vain effort to achieve the goal of a balanced budget, and that would reduce GDP even more severely than any market failure might do by itself.
I have to say that in this circumstance the first, and overriding, commitment of the Labour manifesto is one that I hope it forgets in office. Indeed, it will have to do this, in my opinion, and justify it when that need arises by saying circumstances will have changed and the promise was made against the background of 2015 forecasts. If this is not its real intention then we certainly need to worry about what Labour would do in the face of another economic crisis and those who would need to worry most of all will be those thrown out of work, or on benefits at that time, because, of course, any cuts if there was no change in Labour policy, would fall most heavily upon them.
The second of my concerns with the Labour manifesto is its commitment to TTIP. I'm aware that it has said it will ensure that the NHS is excluded from this Transatlantic Trade and Investment Partnership but that is not enough. This deal with the USA appears to me, and many other campaigners, to provide legal backing to multinational companies to enforce their right to profit (whether or not they could actually make one) from the supply of services to the government or within what we now think to be the state sector. It is my belief that the entire TTIP agenda is wholly misplaced and represents a belief that wealth is only generated by private sector companies and never by the state. As I have argued, including in The Courageous State, this belief is wholly misplaced. Mariana Mazzucato has done more than anyone to prove this in her book The Entrepreneurial State. So in that case the endorsement by Labour of TTIP is worrying and appears wholly contrary to the philosophy I hope it would adopt.
Third, I think Labour is not clear enough about the scale of the problems we face and the need that there is for public spending. The reality is that there are very few cuts that can be made in UK public spending right now without imposing serious harm on the well being of people in this country, or harming UK economic prospects. To suggest otherwise is to deny the need for government investment to transform our economy, improve our productivity, and build the housing, infrastructure and sustainable energy and transport systems that will underpin our futures. The suggestion that cuts a possible also ignores the reality of the situations in which many people live where, despite their best efforts and longer hours at work, making ends meet is nigh on impossible. This is not because of their profligacy, but because of the demands of a rentier economy where exploitation, whether literally through rents, or through oligopolistic pricing and brand exploitation extract increasing amounts from pay that has not, in real terms, increased for many for a decade.
In that case I wish Labour would say that it will invest and make clear what in. And I wish it would defend the right to run a deficit until it can increase the incomes of people in this country by investing in their future. And I wish ti would say it is not going to apologise for borrowing to do this when financial markets are desperate to loan it money at ridiculously low rates to which there is no threat at all at present, or for the foreseeable future. But I think I will have to live in hope for that one.
In summary, my fear for Labour is that it is not willing to state clearly enough what is needed for this country. And that means as a result that it will not release the potential the UK has. And that's disappointing. Worse, by endorsing austerity and TTIP it could harm those prospects and that is worrying. Labour's made half a promise. The fear is that it will not deliver the rest for those who really need it.
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the best summary I have seen. Thank you.
Hi Richard,
Are you concerned about the parties trying to continuously outbid each other in trying to raise the personal allowance? Seems to me like a tax cut for the middle rather than those at the bottom?
Nick
I agree entirely
These cuts favour the middle classes and are dressed up as something else
Which tax cuts, apart from VAT on food, fuel and other essential goods, would favour the poor? Taxing the rich is always going to be popular amongst those who define themselves as ‘poor’, but it’s not a realistic policy on its own unless politics is to become truly and deliberately destructive.
When the highest taxed states in the world are also very largely the most successful, innovative, productive and happiest what evidence of any sort do you have to back up your claim?
I asked a question to which I’d like an honest answer, please. My only ‘claim’ is that on its own, taxing the rich is not a reasonable policy. Taxation should only ever be raised for specified purposes (that is my belief anyway but let’s focus on which tax cuts would most favour the poor).
One of the major reasons for tax is to redistribute income and wealth which is otherwise inefficiently allocated by markets to the point that demand would be suppressed by the inability of most to participate in market activity
Taxing those best off is then a condition of effectively functioning markets existing
Your logic is very simply wrong
It also ignores the need for fiscal policy and depriving market failure
As a theory it is fundamentally flawed
http://www.telegraph.co.uk/finance/economics/11550540/A-lesson-for-Britain-as-Swiss-populists-drive-off-business.html
This article shows some of the myths that drives social desire for more tax increases on people and business..
No, it just shows the nonsense the Telgraph is willing to print
Labour still carry the taint of commercial interests in policy making; Alan Millburn’s commercial links with Bridgepoint Capital are properly-declared and perfectly legal – there is no actionable hint of any impropriety – but they raise a question over Labour’s commitment to the funding and public service ethos of the NHS.
http://www.theguardian.com/society/2015/jan/29/alan-milburn-labour-health-secretary-am-strategy-private-healthcare
In fairness, Andy Burnham – Millburn’s likely succesdor as Secretary of State for Health – has a commendably clean record in the Register of Members Interests.
Other former ministers have interests of note: privatisation has been profitable for some, and continues to be; who will reassure me that neither they, nor their money, continue to influence the policies of the Labour Party in opposition and in government?
There are good reasons for voting Labour in May, but it’s probably not a vote against a continuing commitment to privatisation.
Are you also concerned that unemployment will be higher at the end of a Labour administration than it was at the start (as has been the case for every Labour government in history).
Because that is of concern to many families I know.
I do not believe that will be the case
I suspect your belief is about as sound as the beliefs expounded by David Blanchflower, i.e. strongly-held and no doubt researched with evidence that fits your predetermined conclusion, but about as likely to occur as the Second Coming. Nobody really believed the coalition could deliver an economic recovery and cut unemployment, but they did exactly this even if many of jobs are low-paid.
My belief is that if the recovery continues, availability of higher-paid jobs will follow suit.
I would be genuinely concerned that my friends and family who have finally made a start in the working world, will find themselves out of work altogether and back to square one, depressed and reliant on the state rather than themselves.
I’m always happy to be linked to David and his work
And am pleased to say he reciprocates the sentiment
What we have shown us that you are wrong but I note you prefer belief to evidence
Good point. Unemployment is an issue under a Labour government.
Actually it’s an issue under any government
Just as underemployment is under this one
I think you’ll find unemployment as a percentage of the working age population is far higher now than it ever was under Labour. Duncan-Smith’s a lot less concerned with ethics when it comes to fiddling the figures, that’s all. It’s been shown by the DWP’s own figures that the work programme is worse than useless when it comes to getting people into work yet when this knowledge was made public Smith’s reaction was to greatly increase use of it. People on it aren’t counted as unemployed is probably the reason why. Similarly, people who are sanctioned – record numbers are, for the most trivial of offences or, it is suggested, because they’ve been deliberately set up by the DWP, are sanctioned and so don’t appear in the claimant count. Again, many claiming to be working self-employed appear only to be doing so to escape Smith’s punitive JSA regime and aren’t counted as unemployed.
Smith went on tv early in this Parliament’s term to assure viewers that work programme providers weren’t paid a penny of public money until they’d got claimants into sustained work. This was outright rubbish. I did an FOI request to establish the truth which is that the WPPs were at that time being paid hundreds of pounds – from the taxpayer – just for signing claimants up. The web site I used is https://www.whatdotheyknow.com/ and you can still look that fact up on there. In my experience not a word Smith says can be believed. The unemployment figures will not be what he says they are.
The economy was recovering due to Labour’s efforts but this recovery was destroyed by the Coalitions’ policies of austerity which every man and his dog now knows did more harm than good.
I don’t remember a Labour administration running up an unemployment total of 3.5 million. This was the official number the conservatives were willing to admit to, so the figures were likely as not higher then that.
Those with an interest in military history will be aware that normally managing a retreat is a lot harder than when you are advancing. What can happen is that it might start as gradual with a few control systems working but then, maybe slowly but often cumulatively quickly it can turn into a rout and a shambles. I recall the saying when things were going badly “The biggest shambles since Mons”. I fear that none of our parties and especially potential coalitions are anywhere near up to the job of managing the next phases of our retreat.
Retreat from?
I can think of several suggestions
What have you in mind?
I absolutely agree on the deficit. I watched a conference recently which showed a dabate between Yanis Vakoufaris and Joseph Stiglitz. Joseph Stiglitz asked Yanis about the Troikas imposition of a 4.5% surplus. He stated that this would destroy the economy, and the private sector, at 47 minutes.
https://www.youtube.com/watch?v=OY3Qxm6BoUI
It is unbelieveable that Ed Balls is even saying that he wants a surplus, in a country that has a trade deficit, and massive (real) unemployment and poverty. his treasury staff are repeating this nonsense, and even Chris Leslie told me that money creation would cause inflation.
It is odd that they do not recognise that they will be forced once again to create money to bail out the banks if they shrink the economy and let household debt rise again. What have they learned from the last crisis? If they spend into the economy bank debt would go down without a crisis, especially if they wrote some of the debt off this way.
The TTIP treaty is very worrying. My local Labour MEP has stated that he would not vote for it if it included ISDS, or did not have protection for public services. The main problem in the Labour Party is a lack of knowledge among the grass roots.
The problem with TTIP is that it is FA to do with trade and everything to do with investment – and that means investment in our public services. There are very few tariffs now to abolish and those that remain are probably beneficial. Harmonisation of standards should be negotiated carefully and separately for individual tradables.
In my view TTIP is really American financial expansion into Europe and it should be resisted at all costs. Because that investment will come at a huge cost.
Bliar used to tell us that the British turkeys….sorry…….people did not care who provided their public services as long as there was a service.
Since hardly enough us know that American investment is only coming over here because it is running out of things to asset strip in the USA, they/we are bound to find out the hard way – through increased costs, more privatisation and less say in how these services are delivered.
The current crop of Labour politicians are a poor bunch who just want the investment through TTIP in the short term because they hope it will prevent them putting up taxes or NI in the long term to make them more electable.
This is why people have problems with Labour: they are now part of the establishment and seem no different to any other party; they are not really saying anything new. They are a party of failure who cannot even mobilise the disenfachised (clobberd by welfare cuts) or those who drive white vans and have union jacks displayed on their premises.
I’m voting Green from now on instead of this tepid Labour crap.
My review of the Labour manifesto is now up at the Compass website: http://www.compassonline.org.uk/britain-can-be-better-but-by-how-much-a-review-of-the-2015-labour-manifesto/
And I admit it had some influence on what I wrote here
Thanks!
This is why I will not be voting Labour – even with my head. The apparent consensus concerning Trident, the ‘deficit’, TTIP are all too close to the Tories and Lib Dems.
I want something new.
To Matthew, over the years the left have created more jobs than the far right ever have, simply they put more money in peoples pockets.
Howard Reed’s summary is on the nail for me:
“To sum up, the Labour Manifesto does succeed in differentiating Labour from the Tories. However, an unfortunate political asymmetry has established itself in the last two decades in Britain and many other advanced industrialised countries whereby right-of-centre (and even some allegedly left-of-centre) governments are transformative, advancing the neoliberal agenda while systematically dismantling the welfare state, the social safety net, public services and the regulations which were built up over the 20th century to protect working people and the poor from the ravages of unfettered market forces. By contrast, recent left-of-centre governments are almost never transformative; instead they are at best a holding action, ensuring that things don’t get any worse (until they are voted out in favour of a right-wing government which continues the neoliberal onslaught). In order to establish the fairer capitalism which Ed Miliband claims he wants to see, Labour needs to be a transformative left-of-centre project. And, sadly, the 2015 Labour Manifesto in many cases falls short of being transformative.”
In Greece, this ‘assymetry’ was finally broken but there are no signs of it happening here (UKIP is a sort of neo-lib magnet pulling the protest in the wrong direction). We need Syriza here and might as well keep the name.
Howard’s article was very good
Glad Compass put it out
Yes – there is very little to disagree with here. THe Blair/Brown years certainly under achieved. What a sad prospect though.
Looks like someone is hedging their bets in saying Labour is not perfect so room for criticism in case of a Labour win ………………….!!!
Joking aside I do think your Green New Deal has some interesting features.
But I would to see some practical testing say by pilot schemes for starters.
Believe it or not, you just might be barking up the wrong tree and would not want the fate of a nation dependent on a pipe dream. And I would have much more confidence in it, if you gathered the support of some industrialists rather than a few Economists, especially I don’t trust any Economist of any persuasion.
To the old saying, Can’t Do, Teach, add Can’t Teach, become an Economist.
Sorry Stephen
That’s just another of your insults that mean I can’t take you seriously
aye, those post-crash austerity cuts really helped Greece didn’t they, wiping another 25% of GDP and increasing total debt.
A very worrying Labour policy, this defecit = always bad idea.
Again, after World War II, despite being broke, the Labour government kept up a war debt and applied it to rebuilding the country, creating the NHS, giving us social security, state pensions and free education. They did it running a record national debt of 250% – even bigger than Japan’s is now.
It didn’t mire the country in hyperinflation nor did it bankrupt the country. The resultant growth from government investment in the economy gave us the best period of prosperity that we’ve ever seen.
Following classical economic theory, the colossal amounts of state investment in China should have been buried under massive hyperinflation. It isn’t of course – it has inflation under control and is the second most productive economy on earth.
For economic success, it is usually a good rule of thumb to do exactly the opposite of what neoliberal dogma dictates.
Yes!