The long, slow and necessary march to economic credibility

By Mark Ferguson / @markfergusonuk

Today Ed Miliband has been accused of “love bombing” middle England. At the same time Ed Balls has been slamming the government over fuel prices in the Sun. Both form separate parts of a strong cohesive strategy. But the road back to economic credibility is long, hard and necessary – and we have much further to go.

After thirteen years in government we’d lost our hard won reputation for economic credibility. The sense the Labour couldn’t be trusted with people’s money was poisonous on the doorstep, and responsible for more doors slammed in the face of canvassers than anything else. “You’ve ruined/bankrupted the country” came the jibes, and they hurt. Because in one area at least Labour deserves the blame.

“Light touch” financial regulation may have strengthened the British economy and made the City of London the premier location for international capital, but it also left us open to vast damage if (or more accurately, when) the global economy shuddered to a halt, as it does from time to time.

In this financial wild west – where the banks were neither restricted nor controlled – Labour was happy to keep the show on the road, because in the absence of manufacturing post-Thatcher, high finance was what kept the economy ticking over. And besides, why interfere with something that was working so well? To interfere and increase regulation might have spooked the city and brought about a different sort of economic decline, as businesses fled abroad to avoid regulation.

Regardless though, Labour still had a choice. That choice – to continue to allow the financial sector to operate without firm regulation and oversight, whilst simultaneously being reliant upon it – is what Labour should apologise for. It was what left our economy stretched and with limited protection from the financial earthquake that came. That is the blot on our economic reputation. It’s also what makes our (otherwise accurate) claim that Labour wasn’t responsible for the recession less credible and distracts from the credit that Labour should receive for steering the country through the early days of financial crisis.

Yes, the stool our economy was leaning on was kicked away by someone else. But we were the one’s resting our weight on it.

By going through with such a mea culpa, which Ed Miliband began to do back at the start of the month in Gateshead, Labour can then regain the reputation for economic management (dare I say prudence?) that propelled the party into power back in 1997.

Better still, this critical self-assessment of our past errors need not hand an open goal to this economically reckless government. Not once did Cameron or Osborne push for further regulation of the financial sector – quite the opposite. By apologising we show the country that we have learned from our mistakes while noting that the Tories urged us to make even graver ones.

Love bombing middle England, and using the Sun to attack the government are both good short-term tactics and should cause the British people to look again at our economic record and our ability to deliver on jobs and growth.

But only through acknowledging that stain on our record can be really begin to be trusted on the economy again – and that’s what’s need if we’re going to turn good polling into good election results come 2015.