Labour’s economic recovery

By Sarah Hayward / @sarah_hayward

“For a while, the world economy seemed in danger of ending up in a slump like that of the 1930s. That it did not was largely the result of government intervention on a massive scale.” (Introducion, p. ix Economics: Making Sense of the Modern Economy, 3rd edition, Published by The Economist)

Every now and I again I find it helpful to remind myself that it isn’t just my one eyed, swallowed the party line view. It was the right to bail out the banks and therefore to add significantly to the public defecit. Serious people, economic experts agree. And not all of them, like for example the editorial staff at The Economist or those named by Polly Toynbee yesterday, are natural Labour supporters.

I find it particularly helpful in the face of the pre-budget poll from Ipsos Mori poll that showed 49% of people blame the previous Labour government for the current level of spending cuts.

Despite regularly polling above 40% and sometimes polling better than the combined figures for the coaliton parties, the figures for blame on the economy must be of huge concern. It doesn’t automatically follow, but economic competence is a key factor in getting people to actually vote for you, as opposed to telling a pollster they will and some point in the distant future.

Clearly Labour has a big job to do on the economy.

In light of the poll, and ahead of today’s budget there’s been a lot of economic advice for the two Eds floating around. Hazel wants a plan. Margaret Beckett doesn’t. And pretty much every view in between.

But I think they’re asking the wrong question.

People support us in voting intention polls, to a very high degree given we lost an election less than a year ago. People overwhelmingly think the cuts are happening too quickly and even fewer believe ‘we’re all in this together’.

How can we have won all those arguments but still be blamed by half the electorate for the cuts? We must understand this before we develop our position and strategy on the economy.

Last summer’s leadership election essentially let the coalition get a head start on the blame narrative. We didn’t put a strong enough counter attack out, both on the Conservative economic analysis and the Lib Dem volte face in front of ministerial limos. Their repeat to fade messaging tactic has simply slipped through in to the public conscious and voters are parroting back their lines to them. This is the holy grail of any communications strategy.

If this is the case then we need to start making the case for pre-election investment, including the bank bail out and tie it specifically to why the current economic approach is wrong – rising unemployment & inflation, set against very sluggish growth – all getting dramatically worse since last June’s budget and October’s CSR.

The difficulty is, that talking about what we did in power needs to be nuanced so we don’t look like we’re living in the past. And tying it to why the Conservatives are wrong now runs the risk of us also ending up with the blame for unemployment, inflation etc etc. Although I do think that Alan Johnson started the job well with his response to the CSR.

The second possible reason could be, that while the electorate hate what the coalition is doing, and are suspicious of their both their actions and motives – evidenced in the voting intention figures – they haven’t forgotten why they voted us out last may. So while they’re quick to turn against two parties of government they flirted with (rather than fell in love with) they aren’t ready to properly forgive us yet. On the face of it this challenge is rather more simple. So long as we’re competent, coherent and relevant, the unpopularity of the coalition will eventually be their destruction – we can help it along with our campaigning – and we’ll be ready to sweep back to power in 2015. But as I blogged last month this path is rather more fraught with danger than it may first seem. And if this is what we’re pinning our strategy on we better be bloody sure our analysis is right. I’m pretty sure this isn’t the case, but worryingly I still hear it from the odd Labour person from time to time.

Lastly, it’s possible, or even probably, that at least some of the electorate (if not all) have looked at the issues, read the newspapers, listened to the debate, done their own research and come to the conclusion that we are in fact to blame – hard as it seems for some people to swallow this, we will need to deal with it.

But there are two sides to this coin and each requires a different response.

They blame us, but think running up the deficit was right. In which case our challenge is how we convince the electorate that we are the ones that can create an economic framework that harnesses the positives that banks can bring, interest rates for savers, mortgages, credit for business, pensions for people not covered by an employee scheme (however laughable these ‘positives’ might seem at the moment) without letting them run free to cause another catastrophic financial collapse in a few years or decades time. At some point this will require serious thinking on tax issues both on individuals who are at the super wealthy end of the income spectrum and corporate profits.

The flip side is they blame us and think we were wrong to run up the deficit. The first question here has to be understanding how many, if any of these voters we need or can persuade to vote for us in the future. If all of the people in this camp are actually just died in the wool Tories, then lets not waste our time. But lets not write them off without making sure we understand this first. Because if it turns out people in this camp were 97, 01 and particularly 05 Labour voters then we really need to understand what it would take to win them back.

It’s actually likely we’re being blamed for a mix of these reasons and possibly more. So we require a nuanced response that slowly and meticulously rebuilds our economic credibility – whether it’s plugging away at the message or reconstructing policy that both responds to our new economic reality and learns the lessons of the past.

But if we haven’t put in the effort to properly understand why we’re being blamed for very obviously dogmatic Conservative decisions, that use the economy as cover for destroying valued public services and in the face of mounting evidence that these deicsions are leading to further economic strife, then we’ll always be a step behind on the economy.

And that isn’t a position it’s easy to win a general election from.

Sarah also blogs here.