Labour would borrow more than the Tories. We should admit it

By Edward Carlsson Browne

The public’s confidence in the government’s management of the economy has reached a nadir, to the extent that only 22% of voters (and only 53% of Conservative supporters) want George Osborne, the face of austerity, to keep his job.

The intellectual lines of defence for his government’s economic programme have collapsed, one by one. First it was claimed that public spending was crowding out a private sector recovery. So they made cuts, and the private sector recovery did not appear. Next was the claim that we were on the road to recovery, disproved by the double dip. Then we were told that at least borrowing was falling, but now it seems that even by Osborne’s specious calculations, that isn’t true. But at least we still had our AAA, because losing that would have been a humiliation. And then we didn’t.

But the Tories still have one last line of defence. That Labour would borrow more. And we do not have a clear answer to that.

This is a problem for Labour. Not just because the economy is going to be the key issue at the next election, but because the public still don’t entirely trust us to manage it responsibly. We could debate whether or not that’s fair, but that’s not what matters. What matters is that for all the intellectual bankruptcy of the other side’s arguments, we won’t even get a hearing unless the public believe we’re giving a straight answer to a straight question.

A Labour government would borrow more than the Tories in the short term. And we should make that very clear, because it’s what the economy needs.

Right now, the economy is stagnant. At best, it’s bumping along the bottom. At worst, the next quarter could put us into a triple dip. Come 2015, there’s every likelihood we’ll be in the same place, and if I’m wrong and the economy starts booming, our economic plans won’t matter because we’re not going to win the next election.

So we’ll be faced with a stubbornly high deficit, weighed down by unemployment, underemployment and negligible growth in real wages or tax revenues. There will be no spare money on the balance sheet to spur growth, no easy choices. Either we carry on the same failed policies as the last lot (and look how well that’s worked for social democrats across Europe) or we have to borrow the cash if we want any kind of fiscal stimulus

Politically, this is tricky ground, because although it’s been a key part of British fiscal policy for the past three centuries, the Tories have made borrowing a dirty word.

But we don’t have a choice. If we don’t have a viable economic alternative, we won’t get a hearing. The electorate do not trust politicians any more. People say, “They’re All the Same”. If people think we’re the same as the current idiots in charge, they won’t vote for us.

We are different from the Tories. We would run the economy better. But if we want to convince people of that, they need to trust us. And if we want their trust, we need to tell them what we’d do. Yes, we’d borrow more. We’d borrow now, because if we don’t get people back to work, we’ll be borrowing to pay for their welfare payments for the next two decades. We’d borrow now because borrowing is as cheap as it’ll ever be, and this country needs a new generation of infrastructure. We’d borrow to get this country back on its feet, so that we don’t need to borrow any more.

And we should tell people that, because if we want their trust we should trust them enough to tell them the truth.