Reading the press coverage of the revelations of Alistair Darling’s rows with Gordon Brown over the need for spending cuts, I am torn between sympathy for the former Chancellor on a personal level, and relief that he lost the argument.
Alistair seems to have been doing what most Chancellors do and promoting the Treasury orthodoxy on deficit reduction.
Gordon was pushing both a more Kenynesian economic line – that we should use government spending to keep the economy afloat while the private sector was in crisis. He was also as PM looking at the wider political objectives of the Labour Government and the damage to our policy objectives across a range of areas of cutting too far and too fast. And as Leader of the Labour Party he had a duty to consider both whether our economic approach was consistent with our political values, and what the impact of our economic decisions would be on our electoral fortunes.
To my mind Gordon made the right call. I make no claims to be an economist but the impact on slowing the recovery of the current Tory/Lib Dem cuts suggests even earlier cuts by Labour would have been even more dangerous. In terms of wider policies, the continued high levels of spending in the final years of Labour in government after the financial crisis enabled us to make significant advances in health, education and other fields – I only have to think of schools build under BSF in deprived boroughs like my one, Hackney, in that final period in government, that wouldn’t have been if we had followed the Treasury’s recommendations. And we went into the last election with clear political and economic dividing lines with the Tories that enabled us to stay united as a Party and hold onto a good haul of seats despite Gordon’s own personal unpopularity, the bleak economic picture and public tiredness with us after 13 years in power. We shouldn’t forget that the polls showed the public supported our economic strategy in 2010. So did the election result: the Lib Dems went into the election closer to our position on cuts, and only flipped their position to a hawkish one after polling day, so there was no majority for deeper cuts. The public only moved to a more critical view of our position on deficit reduction during the first six months of the Coalition, when the Government repeated its mantra that we had overspent and this had caused the deficit, with us unable to respond effectively as we were leaderless pending the leadership election.
The historical precedents for Labour Governments following Alistair’s line and making deep cuts at the behest of the Treasury are not pretty ones. In 1931 Ramsay MacDonald sided with his Chancellor Philip Snowden to back a Treasury-recommended series of cuts, including to unemployment benefit. It was an economic mistake – the 1930s turned into a lost decade of mass unemployment and poverty for industrial communities, with the Jarrow March signifying the continued lack of jobs even five years later. It was the end until 1945 of progress on any of Labour’s coveted social policy goals. And it was a political disaster, splitting the Labour Party with the majority leaving MacDonald and Snowden to pursue their deficit reduction plans as part of a National Coalition, and the remainder of the Party losing 213 seats and retaining just a rump of 52.
I’m not sure if an attempt by Labour to implement deep cuts would have caused a 1931 style split. It certainly would have risked it, if not in the PLP then I am not sure how we would have persuaded any of the unions to support our re-election campaign. But I am sure what would have happened if we had tried to go into the 2010 election defending a record not of historic investment but of cuts, not of the renewed growth we were beginning to see as we left office but of a deepening slump, and we were defending the abandonment of all our social policy objectives and a stance that was totally at odds with our values as a Party. We wouldn’t just have had the drubbing we got at the polls, we would have been annihilated, and the task of recovery for a new leader would have involved first overcoming a mood of betrayal amongst our members, activists and voters that thankfully Ed Miliband doesn’t have to start with.
I respect Alistair’s position. But I think he got it wrong economically and politically and we are lucky, for all of the abrasive way in which Alistair records that he did it, that Gordon won that strategic argument.