The dangers of safety-first

29th May, 2014 1:29 pm

HOLLANDE APPELLE LE PRG ET LE MRC À NE PAS PRÉSENTER DE CANDIDATS

Amid all the attention given to Nigel Farage’s victory in last week’s European elections, the weakness of the Tories’ performance should not be forgotten. For the first time ever, they came third in a national election.

But David Cameron’s political position looks positively rosy when compared with that of Francois Hollande. The French Socialists polled barely 14 per cent of the vote, less than two months after a ‘blue tsunami’ buried the party in the country’s municipal elections. The president, meanwhile, has the lowest approval ratings of any of his Fifth Republic predecessors. Most worryingly of all, the collapse of the Socialist vote has been accompanied by a surge in support for the far-right National Front.

It is difficult to believe that it is barely two years since Hollande led the Socialists to their first victory in a presidential election since Francois Mitterrand was re-elected in 1988, pledging a ‘war’ with the world of finance, to resist austerity across Europe, reverse public sector job cuts, hike taxes on the rich, and lower the retirement age.

The president’s popularity has been swallowed by the gaping hole between pre-election rhetoric and governing reality. Taxes on ‘middle France’ have risen, unemployment has remained stubbornly high, and the constitutional court has thrown out his new 75p tax rate on the very wealthy. In response to his party’s losses in March’s elections, Hollande sacked his prime minister and, like Mitterrand before him, executed an abrupt U-turn and tacked towards the centre-ground.

The fate of the French Socialists has important lessons for Labour. Last week’s local elections suggest Labour is close to eking out a narrow win at the next general election. But the toxic political atmosphere in which Ukip managed to win the European elections, and poll 17 per cent of the vote in the local elections, underlines the need for Labour to treat the quest for victory with the utmost care. As in France, disillusionment, fed by a sense that voters have been sold a false prospectus, could not simply cause immense damage to Labour but help unleash dark populist forces.

In place of the politics of fear offered by Ukip and the European far right, Labour needs to offer a politics of hope. But it has to be one grounded in some hard realities. Take just three. Despite the coalition’s deficit-reduction programme, a Labour government will have to complete the job of balancing the nation’s books; there is nothing progressive about spending more on debt interest payments than we spend on schools. After five years of Michael Gove, Iain Duncan Smith and a flawed top-down reorganisation of the National Health Service, Britain’s public servants could be forgiven for wanting a chance to catch their breath. But, in the face of unprecedented financial and demographic pressures, both our public services and welfare state will need to change the way they work in order to safeguard the principles of equity and excellence that we aspire to for them. And, despite pressure from both the media and large swaths of public opinion, a Labour government will recognise and assert that both the European Union and immigration have critical roles to play in Britain’s future prosperity.

That all sounds like a sure route to unpopularity. But, as the workshops BritainThinks conducted for Progress in four marginal seats last autumn showed, there is a strong appetite on the part of voters to hear some harsh and unpopular truths from Labour. At the end of the sessions, participants were asked to write postcards to Ed Miliband. Many wrote that they recognised that, as prime minister, he will have to take some unpopular decisions. All that they asked, in return, is that Labour level with them now about the scale of the challenge and how the party hopes to surmount it. One former Labour voter, quite typical of many others, simply said: ‘Don’t overpromise and under-deliver.’

A year ago, Progress launched the Campaign for a Labour Majority, which is designed to throw a focus on the seats that Labour needs to secure a majority and the strategy and policies that are most likely to win them. Our annual conference this Saturday intends to move that debate forward. By asking how the party wins a mandate for change, we hope to reflect both the voters’ desire for change, and the necessity of ensuring that an incoming Labour government cannot be accused of having misled the electorate or betrayed its promises.

There are, of course, many routes to winning such a mandate and the range of speakers who are participating in the conference – from Chuka Umunna to Owen Jones, Caroline Flint to Unite’s Andrew Murray, and Stella Creasy to Labour List’s very own Sue Marsh – shows our desire to ensure that all voices are heard in this vital debate. As well as debates on policy – on public services, the economy, welfare, and the role of Britain cities in generating growth – we will also be looking at the rise of the populist right; the Tories’ game-plan for victory in 2015; the divide on the centre-left; and the kind of coalition Labour needs to assemble next May.

There is, of course, an alternative. It’s called the ‘safety-first’ approach. Offer no hostages to fortune. Avoid anything which may provoke unpopularity. Hope the coalition’s unpopularity and the rise of Ukip pushes Labour over the line next May. It’s not only wrong. It’s also ill-named. Nothing could be more dangerous, both to Labour’s chances of victory, and to making a success of the trust invested in it.

Robert Philpot is director of Progress.

Progress annual conference
10am-5pm, Saturday 31 May, TUC Congress Centre, London.

Speakers include:

David Aaronovitch, Diane Abbott, Andrew Adonis, Hilary Benn, Chris Bryant, Liam Byrne, Vernon Coaker, Philip Collins, Stella Creasy, Angela Eagle, Maria Eagle, Charlie Falconer, Simon Fanshawe, Caroline Flint, Margaret Hodge, Owen Jones, Peter Kellner, Chris Leslie, Sue Marsh, Deborah Mattinson, Andrew Murray, Jacqui Smith, Stephen Twigg, Chuka Umunna and Stewart Wood.

See the full agenda and book your place now.

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  • ” Despite the coalition’s deficit-reduction programme, a Labour government will have to complete the job of balancing the nation’s books; there is nothing progressive about spending more on debt interest payments than we spend on schools.”

    Look, base interest rates are totally within the control of government. If it wants 10% it has 10%. It if wants 0.5% like now it has 0.5%. That’s less than inflation. If anyone is happy to lend me money at 0.5% interest please let me know and I’ll post up my bank account details! No-one should worry about borrowing money at less than the rate of inflation. If its not a good time to build schools and hospitals when interest rates are so low when would be a good time?

    The government doesn’t even need to borrow money to get it for spending. In fact it cannot borrow money. Money is just an IOU of government and no-one can borrow their owns IOUs. How is that possible? All they can do is swap one form of IOU ( a gilt or a bond) for another type of IOU (cash).

    The books are already balanced if sales of government gilts are included on the balance sheet. If governments want to stop selling gilts then stop selling them. The £ would fall. The cost of living would increase but the books would still be balanced. It’s probably a very stupid thing to do though!

    I thought Progress was supposed to be in favour of economic competence!

    • Tokyo Nambu

      Look, base interest rates are totally within the control of government. If it wants 10% it has 10%. It if wants 0.5% like now it has 0.5%. That’s less than inflation.

      Central banks can only set the base rate at which they lend to other banks. But in order to raise money for government spending, you need to draw money into the system from outside. Base rate has nothing to do with that: you will have to pay the interest rate at which people are willing to lend to you. Borrowers don’t get to set the interest rate at which they borrow, lenders do that: a government can no more mandate the rate it has to pay to borrow than you can mandate the rate on your mortgage. That rate at which people will lend to a government includes, amongst other things, a premium for risk of default and a premium for the risk inherent in accepting repayment in the borrower’s currency.

      The Greek base rate is 0.25%: Greek bond yields are currently 6.26% (ie, Greece is paying at least 6.26% on new debt) because that price includes a substantial risk of default. The British government can’t borrow at 0.5%: 10 year bond yields are between 2.5% and 3%, because there are other borrowers willing to pay that rate: it’s very hard to borrow at a rate below that of 10 year US Treasury Bills.

      • But in order to raise money for government spending, you need to draw money into the system from outside.

        That’s just not true. You can’t compare Greece which is a user of the Euro, not with an issuer of the Euro, with the UK which is an issuer of the £.

        Greece needs to get its money from the ECB in Frankfurt. Big mistake to allow the Germans that level of control on the part of the Greeks!

        The pound is a monopoly within the total control of the UK government. It doesn’t come from China. Those pictures of the Queen in your wallet or purse were created in Britain and deficit spent into the economy by the UK government.

        • Tokyo Nambu

          “The pound is a monopoly within the total control of the UK government. It doesn’t come from China. Those pictures of the Queen in your wallet or purse were created in Britain and deficit spent into the economy by the UK government.”

          The same’s true of the Zimbabwe Dollar. How do you think just printing more of them is working out for them?

          • “As an online economic discussion grows longer, the probability of a comparison involving Zimbabwe or the Weimar Republic approaches one.” 🙂

            Google {Zimbabwe 3spoken}

          • John Armour

            It’s the “Godwin’s Law” of economics.

          • John Armour

            I just googled “Zimbabwe 3spoken”

            Neil Wilson beat me to the Godwin’s corollary by only 3 1/2 years.

            : (

          • @John and Tokyo, Yes. Hyperinflations do happen, but in nearly all cases the root cause is a severe dysfunction in government itself. Conventional inflation of the kind experienced in the 70’s is the potential problem of governments ‘putting their foot on the accelerator’ (ie spending more).

            But there is a brake pedal too (reduced spending and increased taxation) to be used if and when inflation does start to be a problem.

          • John Armour

            Printing “more of them” only happens after the destruction of the productive capacity of the economy (like Weimar).

            You seem to have the process arse about.

  • robertcp

    I notice that Progress still want public service reform rather than giving public sector workers a rest from the latest load of rubbish, which usually contradicts the last load of rubbish.

  • pinkgunnergirl

    Progress is nothing but a Blairite front organisation.

  • MikeHomfray

    So, we should know the outcome of this event – in order for us to take the exact opposite path. Anything this putrid entryist organisation has to say should have no influence on any party claiming to be left of centre.

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