Crisis? What crisis?

By Colin Challen

Never mind that Jim Callaghan never asked ‘Crisis, what crisis?’ or that Gordon Brown only really meant he thought he had ended Tory ‘boom and bust.’ The implication is that our leaders are often found complacent when caught in the heat of the moment. Now it’s the coalition’s turn, and Vince Cable this weekend claimed that the UK economy – thanks to the government’s austerity package – was an ‘oasis of calm.’ I fear this demonstrably idiotic claim may gather some traction as the media talks up the sovereign debt crisis. And that’s a real problem for us, since the electorate may look at the seemingly inevitable train crash in the US and the Eurozone, and think that our condition is exceptionally better – and they may reward the government in doing so.

Our response so far has been quite singular, which is to say that the coalition cuts programme has been implemented on a scale too fast and too deep, which in turn threatens growth and illustrates the lack of a Plan B. Clearly, a massive contraction in one sector of the economy is bound to have an impact on every other, and we will increasingly see that ultimately impacts on the rate the government is able to reduce the deficit because of reduced tax returns and so on. So we are right to criticise a plan which seems more based in neo-liberal ideology than economics. But where is the alternative?

Next year we will be in the classic mid-term period of a government (should this government go the whole stretch, and I am fairly confident it will). This means we may be flattered by better – and possibly misleading – polls. Our current lead of 5-9% still rises and drops with too much volatility for my taste. But it is the point when people start to ask ‘is this a credible alternative government?’

My response would be – not yet we aren’t. And more so than ever, it will be the economy that determines the outcome. I would have thought that people are going to have to actually feel better off, or at least think themselves likely to be better off a year or so before the election takes place. The coalition by mid-2014 will have to get across the message ‘we secured it,’ ‘we’re through the worst.’ Whoever wins will do so not on a platform of fear, but relief. At the moment of course, our attack line still rests on the premise that this government will – is – making things worse, and that that cannot change. Whilst probably true, it’s not a vote winner.

On past reckoning, three years would be long enough to turn things round. But this is not a Tory boom and bust of the sort we’re so familiar with from the 1980s and 1990s. Former member of the Monetary Policy Committee Danny Blanchflower has said that we could be in a 20-year recovery. Surely then, this is a time for a genuine left response? As opposed, that is, to taking any more lessons from city folk, and their ‘trickle down’ approach to equality, fairness and justice. One only has to glance at books such as Nicholas Shaxson’s “Treasure Islands: tax havens and the men who stole the world” to understand that there has been a consistent level of shafting going on which sad to say New Labour played patsy with for far too long. The striking lesson from “Treasure Islands” is that London itself had become a tax haven of such proportions it made the Cayman Islands look like a small out of the way place of little consequence. New Labour was complicit in this development, although by no means starting it.

How do we demonstrate this love affair is over? In my opinion, right now at this minute we do not need to have a fully sorted series of policies for the city and the financial sector. But our reaction to current events should be informed by a far more detached approach, which could blossom into the kind of distance that Ed Miliband has placed between Labour and Murdoch. The financial sector is being found out, and as we travel down this road Labour has to be in the lead.

This incidentally calls for quite a few mea culpas on our part if we are to be taken seriously.