Labour’s budget response was a missed opportunity

The Party leadership is in danger of sleepwalking into a huge political trap – not set by the grandmaster of political strategy, George Osborne – but by themselves. Growth, at the moment, has been hitherto ignored by the rhetoric used to describe Labour’s economic and subsequent political strategy.

Without a negative shift in economic circumstances voters very rarely change the way they vote. Most changes of government have been preceded by an economic crisis of some sort or another. That should be of great concern for Labour.

Looking back to the 2010 election one of the most significant moments was the release of the GDP figures at the end of the January. They showed the economy had grown just 0.1%. The Conservatives had expected the economy to show stronger growth, which would have allowed them to shift the focus of the election to cutting the deficit. The day before the figures were released David Cameron foolishly boasted of his plan to tear up Labour’s spending plans and make huge immediate cuts. But the figures suggested that the recovery was too uncertain to risk the scale of the cuts the he was proposing. Following the World Economic Forum in Davos the Tories tried to row back from his earlier rhetoric and Peter Mandelson poured scorn on their economic strategy during a memorable press conference.

Momentum and consistency of message is important in politics, and it is understood in crude terms by a disinterested public. As we approach the halfway stage of this parliament the question is not if, but when, economic growth returns. Now when you consider that the only message from Labour that has cut through with the public has been “too far, too fast” it is easy to see how vulnerable the Party will be when the quarterly GDP figures start to rise. The Government will point out that their austerity measures have been, well, just about right. And that Labour not only caused the problem, but also couldn’t solve it.

The suggestion that austerity alone is responsible for low growth is of course ludicrous, but much like Labour’s economic policy the electorate do not care for a lengthy explanation. The “too far, too fast’ slogan has stuck and so will the ‘borrow-and-spend’ mantra if the Party leadership isn’t careful.

Following the poor coverage of the budget and Dinnerplate Gate it has been all too easy to get caught up in the fervor surrounding the Party’s largest poll leads for some time. But for me, the response from the two Eds, excellent as they were, should not be without criticism – they missed an opportunity to adjust their political narrative at a rare point when the public tunes in to political discourse. I had hoped the Party leadership would start to acknowledge the danger of becoming trapped by their own rhetoric and use the budget as an opportunity readjust their economic message. Perhaps with the slogan “too little, too late” or some other derivative.

Fast forward to 2015 and the conventional approach would be that the defining question would surely be, Ronald Reagan’s “are you better off” than you were five years ago? But as we all know this isn’t a conventional period of history.

At the moment it is not clear whose interest it will be to have Reagan’s question hovering over the ballot paper. The IFS has said 2006-16 will be the ‘lost decade’, real household disposable income per head will be lower in 2016 than 2006 and we will be living in an economy for 10 years that is failing to make anyone richer. Understandably all party leaders are navigating towards the next election with a sense of trepidation.

The challenge for them is to identify the electorate’s common point of reference. If I was running focus groups this would be the single most important piece of information I would want to discover before May 2015. Will it be the public’s living standards when the Coalition came to power, or the change in the months immediately prior to the election? Will it be the Coalition’s achievements in office? Will it be manifesto promises? Headline macro-economic figures? Or a combination of the above? Who knows.

For the Conservatives, campaigning on “it would be worse under Labour” is hardly a tubthumping campaign tune. And Labour, having gifted the Coalition a powerplay to savage their economic credibility while the leadership contest took place, still have a monumental ideologue to overcome. Unless the Party somehow manages to secure a meteoric shift in the public’s assessment of where the blame lies for the austerity measures it probably won’t like the answer it gets to Reagan’s question either. Flatlining economy or not, there has not been a consistent message since May 2010 demonstrating the Party should be trusted with the public finances if growth returns.

Despite the obvious threat growth poses to the Party there is another, much more counter-intuitive scenario that could arise in the run-up to May 2015. With the roles reversed from 2010, strong pre-election growth and a fall in unemployment would at first glance provide the basis for a traditional incumbent campaign theme. But it is possible that the emergence of a year or so of strong growth prior to the election becomes a source of vulnerability for the Coalition and an opportunity for Labour. After enduring years of austerity the public may refuse further pain if the government fails to convince voters that their individual livelihoods can be improved. Child benefit, tax credits and the recent raid on pensions are obvious policy areas Labour can exploit.

Whether you consider the return of growth more of a threat than an opportunity or not, there can be no argument that the implications of its return have been largely ignored. Either way, for Labour, when it does return – having spent the first half of this parliament talking themselves into a corner, the real challenge will be talking themselves out of it.