Labour is in a better position on the economy than many think

19th April, 2012 7:55 am

The political-media establishment consensus is Labour will have a hard time establishing credibility on the economy until it gets to grips with deficit reduction.

The first part of that equation is true, the latter part not necessarily so. More likely than not, it is the government that will lose support of the electorate and push more people to give Ed Miliband a chance. As the saying goes: governments lose elections, oppositions rarely win them.

Let’s be in no doubt: Labour has a long hard slog ahead. But recent trends show this may not be as difficult as some think.

I won’t get into how Labour could improve its ratings on the economy here, but there is one key metric Ed Miliband has to get to grips with.

That metric is whether Ed Miliband can be trusted to take difficult decisions. To show he is capable of doing so, he has think big, symbolic and unexpected. He also has to take decisions that throw up a national debate not just a Westminster-centric one.

Without the trust that he can be bold to do what it takes to sort out the economy, voters won’t put their faith in either of the Eds.

But a bigger part of the equation is dependent on what the government does. And this is where they’re in serious trouble.

The chart below tracks voter sentiment over the last year. Even before the budget it was heading in the wrong direction.

Osborne had to introduce stealth taxes and annoy a large chunk of the electorate for good reason: the economy isn’t growing. He has to find the money from somewhere, and he’s cut spending for the poorest as far as he can without inviting riots on the streets.

He has been criticised vociferously by Conservatives for the cack-handed way he introduced the granny and pasty taxes, but they assume such debacles can be avoided in the future.

But they’re living in fantasyland. Every projection says the British economy won’t grow over the next few years. Worse, real incomes are going to decline as Osborne relies ever more on consumer spending to resuscitate the economy.

To be blunt: short of an economic miracle, the Labour party leader won’t face a shortage of material on the economy to attack the government over. The Coalition itself is also likely to get more strained as they fight over a shrinking pie to appease two different sets of voters.

Ed Miliband has more room to be bold and maneuver on the economy than many think.

  • Anthony Painter

    The Tories being in a bad place and Labour being trusted on the economy are two entirely different things.

    • Jeremy_Preece

      And there Anthony, you have hit the nail on the head.
      For a start, it is not going to simply go our way by default even if it worsens for the Tories.  So if Ed ever reads this (or any of his friends)… you need to step up and rise to the challenge. 

    • Sunny H

      I don’t disagree with this – and I’ve said this in my piece. But there are two questions that arise.
      1) At what point does the Coalition lose so much faith with public on economic policy that an alternative becomes desirable? This is why Obama is only competitive with Romney, not way ahead.
      2) What exactly helps give Labour credibility? As I briefly say – the issue is less about specific policies and more about whether Labour is seen as willing to take tough decisions.

      • ThePurpleBooker

        But policies must be shown. We can’t say we would have no cuts otherwise we’d look like idiots. We have to show we are fiscally responsible and that we embrace tough fiscal discipline because people think that we spent too much money because of George Osborne’s strategy. We didn’t create the deficit by spending money on investing in public services, but we did make mistakes and we didn’t spend every penny wisely. We have got to start saying where and how we’d cut rather than making spending pledges without being seen to have plans to cut the deficit.

  • Johndclare

    Labour’s message on the economy is incoherent and inadequately distinct – most people simply think Labour’s economic  policy is Austerity-Light.   We need a message which is much clearer, much less specific and whuch puts space between us and the Tories.

  • Janet Keene

    Can we stop using the term “difficult decisions”. The decisions are easy, it’s just that they are likely to be unpopular.  We need to get the agenda on to taking the right decisions.

    • treborc1

       Come on the tell us what would these be, whom would the people hit

      • dave stone

        Nail on the head, treaborc1.

        The idea of the electorate as a group unable to identify their own interests, and therefore need to have their medicine/punishment rammed down their throat, is a symptom of the elite’s isolation.

    • Jeremy_Preece

      Why do the decsions have to be negative? Rather then simply making cuts, how about raising revenue. Making so many people unemployed hardly helps. It would be better to have those people working and paying taxes. That is a matter of protecting and creating quality jobs not a matter of bashing the individual unemployed in order to divert public attention.
      I can’t see how we can grow the economy without stimulating growth.

      Many of the government cuts have not only failed to deliver real savings, but they combine to choke off growth and therefore worsen the situation and not make it better.

      I also think that the transaction taxes that were being proposed in the rest of Europe, would take a tiny tiny fraction from the super rich and chanel it directly into where it is most needed.

  • Steve Jennings

    Be bold call for the railways and utilities to be nationalised.

    • jaime taurosangastre candelas

      That is brilliant.  The market valuation of the utility companies is about £50 billion, and collectively they need to raise £110 billion for the next generation of power stations.  

      Do you feel we as taxpayers can afford to spend £160 billion in compensation and building new power stations?  Would you prefer not to build new power stations?

      Or would you rather we nationalise these companies without compensation, and watch everyone who has a private pension face decimation in their pension scheme, as well as be placed onto an investment blacklist by companies, governments and international organisations the world over?  Look at what is about to happen to Argentina if the lunatic president there proceeds with the nationalisation of YPF.

      • ThePurpleBooker

        No it wouldn’t! We could mutualise the railways.

  • Bill Lockhart

    What would Labour cut?

    • ThePurpleBooker

      We would cut the defence budget by £5bn.
      We would have made efficiency cuts the schools budget by £2bn.
      We would have cut the transport budget by £6bn.
      We would have made savings in the health budget, by reversing the Health and Social Care Act, saving £3bn.
      We would have cut the policing budget by £1bn, which would not have affected frontline police numbers.

  • Jeremy_Preece

    I certainly would agree that we need to see some bold policy direction. I think that the Labour leadership has tried to play too safe by not actually doing or saying anything in the hope that this will prevent us either having to update our posistion later, or prevent us from upsetting anyone. The result is that by saying nothing we simply vanish.

    While it is true that a really bad economic crisis under this government would damage the Conservatives, and that governments loose rather than opposistions win there is the issue of protest votes.

    Typically the protest vote is at its strongist mid term between general elections and also manifests itself more in local elections. However at a general election a party that simply says that “we are not the other lot”, is not going to win if it has not established its own credibility.

    Winning back the reputation for being good with the eceonomy (which gave Labour three successive wins), depends on defeating the myth (no lie) that the present situaion is Labours fault and that the Conservatives would somehow have been better. It also depends on Labour showing how the cuts have choked off growth, and of course it needs the bottom line of what is Labour going to do which is better.

    If Ed M is going to lead Labour to the next election then he needs to up his game on these issues.

  • madasafish

    So what would Labour do in a low growth environment?  Well according to Balls borrow a lot..

    Which is frankly incoherent .. because anyone looking at the current markets knows what would happen to UK interest rates and the pound. Bang goes inflation, bang go fuel and food prices and Balls would be looking rather like I suspect the new French President will do  – if they enact the policies they promise.

    Since the above article fails to even mention the Shadow Chancellor and his proven incompetence.. I would compare it to Neil Kinnock: no-one trusted him when it came to vote .


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