Labour needs a better answer on the deficit

By David Chaplin

The Conservative-Lib Dem coalition is tottering towards the largest scaling back of government spending we’ve seen for decades in its first budget this week.

George Osborne has been clear that he wants to be bold rather than be cautious and the right-wing press is egging him on to take the crazed butcher approach to public spending and prove himself as a credible chancellor who wont flinch when the biggest political decisions of his life are staring him in the face.

Osborne’s actions will affect all of us; every single person in the UK will notice the impact of this budget because the cuts are of such scale and in such key areas such as the life changes of our young people. The promised £85 billion worth of “savings” will hit young people where it hurts. The most recent data from the ONS shows that there are currently over 900,000 young people under 25 who are unemployed and one of the first acts of the Conservative-Lib Dem coalition has been to cut the future jobs fund and Labour’s other support measures for unemployed young people who are seeking work.

With unemployment amongst under 25s at 19%, plus a jaw-dropping 23% increase in applications to universities this year compounded by a decision to half the number of new places available, it seems that Tory and Lib Dem ministers really haven’t done their sums. Or maybe they have. Perhaps they’re betting on Labour’s front bench failing to come up with a convincing answer to how they would handle the deficit?

We all felt that on the doorstep during the election campaign, amateur economics served us well when explaining that cuts now could cause a double-dip recession but I’m not sure Labour has thought through the full implications of its current argument.

Alistair Darling has confidently explained in recent weeks that faster and deeper cuts are not the solution to addressing the economic crisis fairly. Labour’s watchword has been fairness and the shadow treasury team are clear that they will apply a fairness test to this week’s budget, already arguing that the budget will fail the test. The candidates for the Labour leadership are also vocally attacking the budget pre-announcements.

But Labour’s message on tackling the deficit is not clear enough and it needs refining urgently before Tuesday. On the Andrew Marr show this week Alistair Darling was finding it difficult to answer the question, “what wouldn’t you cut?” Labour now needs to think clearly about what it proposes to do in order to calm the clear concerns amongst some sections of industry, the markets and the public about the size of the deficit. Some efforts are being made to tackle the miss-selling of the deficit by the Conservative-Lib Dem coalition and David Miliband has gone the furthest of all the leadership candidates to recognise the important moment that this budget poses for Labour and the need to show the party has learned the lessons from the recession.

But the new government will try and re-write history and create a lasting image of Labour as the party who lost control of public finances and put our economy at risk. We know from Labour’s past that this is an old trick of the right-wing press, and in some cases it was a valid argument. But not so in 2010. Labour shadow ministers need to defend the actions taken during the global economic crisis; recognise where any mistakes were made; and set out a credible and alternative plan to reduce the deficit which is clear to people who are worried about our national debt and their family’s futures.

We know that the Conservatives will use this opportunity to put their dogma into action. So Labour now needs to do its homework and confront them in a more constructive way, otherwise we risk allowing George Osborne to silently get away with butchering our valued public services.