Ken Clarke, Gordon Brown – and why Balls and Miliband are wrong to back Tory spending plans

June 26, 2013 7:10 am

Shortly after Labour’s landslide victory in 1997, for some perverse reason I invited Ken Clarke to attend one of our monthly Tribune dinners in the Gay Hussar restaurant, that old canteen of the Labour Left, in London’s Soho.

Clarke professed himself baffled by the assembled journos, cartoonists, MPs and trades unionists asking if we spent all of our time arguing with one another – or rather not listening to him. He then said something that did make us all prick up our ears and listen. He said of the new Chancellor Gordon Brown, “We all knew why he promised to stick to our spending limits to win the election, it’s just that we didn’t expect him to actually stick to them in power”.

I later related this tale to Gordon Brown, whose brow furrowed as he explained just how difficult it was to have to justify what he saw as necessary pain, in order for Labour to prove to the markets its fiscal responsibility. Labour’s first period in office was dominated by Gordon Brown’s decision to stick to his predecessors spending plans, and his decision to grant the Bank of England independence. I didn’t agree with the former and I could never get that excited about the latter. That said, Gordon did go on to develop his five tests for Britain joining the Single Currency – a shrewd move on his part because fortunately for us he knew damn well that Britain was unlikely ever to meet them.

The point about Gordon Brown’s controversial – and unpopular decision on the Left – to stick to Tory spending plans, is that the pledge was made at a time of relative economic growth. And Brown also had a plan for a range of labour market and positive benefit reforms, alongside the promise of the minimum wage, to sugar the pill.

Scroll forward to now, and Ed Balls has made a similar promise to keep to Tory spending plans by not reversing the cuts. He is doing so, like Brown, well in advance of the General Election. At the same time, both he and the Labour leader, Ed Miliband are calling for investment in major infrastructure projects, particularly in construction. The trouble is that Labour’s Shadow Chancellor had made his promises about sticking to Tory spending limits after six years and counting of deep austerity, falling standards of living and a quite brutal assault on the welfare state. The powerful Keynesian arguments and critique that Ed Balls advanced at the Bloomberg lecture could not be demolished, even by Britain’s notoriously parochial conservative media, but the prescription now on offer does not offer an alternative to austerity.

Austerity is slowly throttling Britain’s economy. Even the IMF says it is failing. If the Tories are re-elected the Institute of Fiscal Studies says that there will be further cuts of £23 billion for 2017-2018. Falling living standards, reduced services and even greater inequality is what is on offer to an increasingly jaded electorate nationally. The real risk is that very many voters will reach the conclusion that if continuing austerity is all that is on offer, and from Labour too, what will be the point in voting?

There is another deep concern also with George Osborne now promising to spend money saved from public services to invest in the infrastructure projects that the IMF told him there needed to be. So to the average voter who doesn’t follow the nuanced World of Westminster politics, both main parties appear committed to austerity, not borrowing and spending re-allocated money on infrastructure projects.

This may seem deeply unfair to Ed Balls, whose instincts are usually good, is at heart a Keynesian and who stands head and shoulders above George Osborne. Committed Labour supporters won’t be swayed by the argument that ‘they are all the same’, because we know that isn’t true.

But Labour does need to be offering real hope and putting some serious flesh on the arguments rehearsed by Ed Miliband at the weekend. By invoking Clement Atlee’s Labour Govenrnent, elected as it was in deeply austere times, the Labour leader needed to tell us how, if ‘socialism is the language of priorities’, he intends choosing his priorities and what they would be. In this he needs to shrug off the incessant carping of the Tory media, go over the head of the Tory and Blairite political establishment, and say for instance that renewing Trident is not a priority, but that it is a priority to increase direct taxation on the super rich. He could say that it is not a priority for British tax payers to continue to pay massive indirect subsidies to corporate giants who in turn then do not pay their taxes, but that it is a priority to restore the railways to public ownership with their profits being reinvested in our crumbling transport infrastructure.

Over the next two years we need Labour’s leadership to look and sound confident, and not be blown of course by the media. We need to hear them provide a stronger moral lead against the seeping corruption that has entered the police force and has elements of the security services now out of control. We have to hear them telling us how they intend to restore good, honest and accountable government, and how they intend to make Britain a more equal, tolerant society in which to live.

Clement Atlee’s Labour Government did indeed transform Britain for the better and from the ashes and ruins of the Second World War came the National Health Service and full employment. It did so at a time of austerity, and because it had a plan. This is what we need now.

And not forgetting, Labour needs to abolish the bedroom tax and the whole raft of Tory punishments, dressed up as ‘welfare reforms’ currently being meted out to the poor. This is surely priority number one.

  • JohnPReid

    I’m sure you say half this stuff for comedy affect, I know the tory press have a field day when they read it, but you can’t seriously mean this can you?

  • http://twitter.com/waterwards dave stone

    “very many voters will reach the conclusion that if continuing austerity is all that is on offer, and from Labour too, what will be the point in voting?”

    This is where I am, and I follow politics quite closely yet find it difficult to spot the difference between the main parties, and don’t trust them anyway.

    I’ll only be voting in 2015 if there’s a party that is presenting an alternative to the current ongoing disaster. Abstaining isn’t going to achieve much but at least it’ll feel better than giving my vote to a party that can’t be bothered to present an alternative.

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  • Robin Thorpe

    As I understand it Ed Balls has only promised to follow the spending plans for the first year. After that he has made no promise and would, I am sure, plan to re-evaluate spending priorities within that year. This is an entirely sensible attitude; it may not ally with the ideals of the Labour left but Ed is trying to be pragmatic and work within the constraints of real life.
    Businesses depend on forward planning to effectively budget; sharp changes in spending plans make life difficult for businesses to meet their budgets (remember approx 45% of economic activity in UK is by government). Like it or not most people in the UK are employed by businesses of varying sizes and depend on these businesses for their livelihood. Overnight changes like the changes in tariffs for solar energy and removing the National Curriculum caused havoc in the energy sector and schools respectively.

  • MrSauce

    There was a bubble based on unsustainable public and private debt, it burst, deal with it.

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