At last the Tory-led coalition have accepted the merits of Keynesian economics, and have begun to draw up plans for a £50 billion stimulus, concentrating on roads, housing and national grid improvements. Unfortunately, they want someone else to pay. According to The Times, “government hopes private investors… will be tempted to pour cash into the infrastructure schemes. In return they will get the proceeds from tolls, rents and energy bills.” I’m not sure if this sounds like The Big Society or PFI, but the gushing copy of The Times would suggest that the Tory-led government has remarkable foresight in economics.
It’s been over 18 months since this government came to office promising to stimulate the economy by slashing the state. As a policy for growth, this was risky, untested, and has proved to be wishful thinking. To finally come around to the orthodox policy of creating demand through stimulating the economy is a welcome development, especially since the Times report speaks of social housing being a part of the package. House building ground to a halt partly due to the confusion over the Localism Bill, but also due the abandonment of regional targets as a Labour gimmick. It will be helpful to have something positive for this sector from government.
We won’t know the full details of their intentions until the autumn statement on November 29th. Normally a government would want to make a splash about a £50 billion spending spree, but in this case, I think it’s fair to say that they are not expecting an easy ride on their lack of consistency, so perhaps that’s why they’re publishing early, preferring to spread out the story, rather than encourage a splash, where they would be made to bask in their own infamy.
Mark Ferguson argues that we should avoid gloating over the failure of the government’s economic policy. He has a point. Politicians tend to react on different levels to events. When the economy flat-lines we’re pleased to see the Tories failing, but concerned that people are losing their jobs. There isn’t a contradiction in this. The Tories didn’t enjoy seeing the Iraq war go wrong, but they enjoyed the fact that it damaged Tony Blair. We tend to compartmentalise the differing aspects of the issue. However, the public don’t understand that, so we do need caution.
I think our approach should be to criticise the slowness of the stimulus policy to catch up with the slowing economy. There is no lack of “shovel ready” projects, as the shelved Building Schools for the Future project could be restarted with immediate effect, but they won’t go there. Expect the government to bundle lots of existing projects into their numbers, perhaps announcing CrossRail as part of their stimulus.
For the last year we’ve seen almost weekly examples of Tory incompetence. In my life there’s never been anything like it. John Major had scandals rather than incompetence, and Labour were never like this lot, even when we were a dying a slow death. But regardless of the constant hopelessness of this government, the polls have simply not shifted in ages.
The last time Cameron defended good polls (comparatively), was Nov 2009, when he was on course to gain a parliamentary majority of perhaps 70-100 seats. Suddenly his lead collapsed as his billboard campaign was ridiculed online. It was similar to what the military call the “tip effect” where no progress seems to be happening in the battle, then suddenly the enemy collapses.
Perhaps what we’ve been seeing is a strong desire by the electorate to be against Labour, rather than for the Tories. According to Luke Akehurst, in many parts of the south people consider the previous Labour government to have conducted a major spending spree in London, while leaving everyone else to pay the bill. If Luke is right then this view will take time to shift, and may explain the stubbornness of the polls.
However, if the Tories continue to be so incompetent, then perhaps it just has to reach the point where the goodwill of the south is simply worn out, and they give up on Cameron et al. If that’s the case, then that’s the moment we need to work towards.
As leader, Ed Miliband had a slow (and bad) start. He tried to define himself by what he’s not, rather than what he is. Even a simple bit of fun, such as the press creating the “Red Ed” nickname, was met with prickly rejection. While he tried to buy time – with navel gazing initiatives such as “Refounding Labour” – the public began to conclude that he was irrelevant. But then he had a good riot debate and a good phone-hacking scandal. It seemed as if he could be defined by events in spite of himself. But the negative perception of the public will need to be undone, and this will take time.
For me, the turning point was when he explained his thoughts on predatory companies, which is something that I – and the rest of the country – have been frustrated about for a long time. However, there needs to be more clarity in Ed’s argument. It’s not correct to describe one company as a predator, and another as a producer. It’s more to do with a lack of ethics thanks to the way that law is applied in this country. For example, a local authority is a good thing, but if they sent bailiffs after people for a measly £10 owed, then they are predatory. At the same time, the bailiff is not a predator if he conducts himself with integrity, but if he accepts the job of pursuing the £10 debt, with fines of many hundreds of pounds, then that is the moment that he becomes a predator.
I’ll speak more about predatory business another time, but my point right now is that we have to throw ourselves behind Ed Miliband, because he’s the only one who can make the Tip Effect happen. I’m not saying he is the perfect leader; there is lot of work to be done. But just imagine the day when that Tip Effect happens in the polls, and the Tories begin their slow dive to oblivion. On that day, for us, it will be party, party, party.
And Ed Miliband will be our hero.