How Labour lost the debate over the economy

By Sunny Hundal / @sunny_hundal

There’s only one clear point in yesterday’s ICM poll: Labour lost the economic messaging war with the Conservatives. Even worse: the people responsible aren’t admitting their mistake or doing anything to remedy that.

Imagine the scenario. Two opposite parties with different ideas on how to deal with the financial crisis. Labour took the decision to keep spending steady and support the banks to ensure the economy wouldn’t go into meltdown. The message was clear: if we cut spending now or if we fail to save the banks – the recession would be much worse.

The Tories initially played along. Osborne talked about how banks were immoral and needed breaking up. But they eventually settled on a different message: talk up the danger of our national debt (mostly a result of propping up banks) and then later the deficit.

In fact, the Tories did such a good job of scaremongering about the deficit, rejecting any worries of a deep recession, that Labour started doubting their own stance. The Labour Centrists Dilemma (LCD) kicked in.

LCD works like this. The job of Labour centrists is to always advocate the party sticks to the centre-ground. That, they say, will successfully keep the Conservatives out of power. So if the Tories advocate a radical right-wing plan and get some traction for it (like cutting spending massively for example) the Centrists advocate that Labour move right-wards and adopt some of their opponent’s arguments.

This is what happened just before the election. From a position of maintaining spending until the economy recovered, the Labour message machine started spewing out mixed signals. Alistair Darling and co started talking of reducing the deficit to maintain their reputation for economic management. The Tories were winning the battle and they had to move to the centre-ground again.

But in fact the opposite happens (hence the LCD). If voters are hearing a clear message from one party and mixed messages from another party, who are they more likely to believe? Furthermore, if Labour is saying ‘actually the Tories might be right on the deficit…‘ – why would they bother voting for the party that admitted that got it wrong? Why not vote for the real thing?

As the polling above (from Ipsos-Mori) shows, the gap between people who accepted Labour’s argument versus those who bought Tory rhetoric widened before the election, not after.

In other words there’s little point in blaming the current Labour leadership election for this problem – the rot started earlier. So the first Labour Centrists Dilemma is that voters end up deserting to the opposition if you admit they were right all along.

The second is that it forces them to keep shifting right-wards and fall straight into the Tory trap. Labour’s centrists can talk of how they’d reduce the deficit but Conservatives are unlikely to let them occupy that middle-ground. They’ll blame everything they can on Labour (see their press release) and start ratcheting up their rhetoric (“deficit deniers“). That keeps Labour on the defensive and keeps forcing centrists to move right-wards.

It’s a vicious cycle: the more Labour end up on Conservative territory the more their own credibility is shot to pieces. Voters will start accepting the Conservatives were right all along and Labour is not to be trusted on the economy.

Now if only someone could just explain this to Alistair Darling, who still thinks he was right all along and that the public pay detailed attention to policy differences between political parties. Just to be clear: they don’t.

Labour not only needs a coherent message, it needs a message that undercuts what the Conservatives are doing by making a different argument. Of the candidates, Ed Balls has been good on this; Ed Miliband too quiet and David Miliband trying to take the centrist route.

Labour is in danger of making the same mistakes they did just before the election.

Sunny Hundal is editor of Liberal Conspiracy. He tweets here.