Labour must offer a change from this failed experiment

On the doorstep in the 2015 election campaign a voter is complaining about how their local Sure Start centre has been closed, and how their pregnant sister no longer gets the maternity grant or health in pregnancy grant.

You empathise, and for good measure remind them of the coalition government’s three year freeze on Child Benefit too. “So”, the voter asks, “will Labour reverse it?”

And that’s when you loyally deliver the party line:

“We won’t be able to undo the cuts that have been felt in recent years. And I know that will be disappointing for many people. A more limited pot of money will have to be spent on a smaller number of priorities. Lower priorities will get less. Vote Labour!”

Now of course no Labour canvasser, no Labour MP, is going to be delivering that message to their constituents – not even shadow financial secretary Chris Leslie MP who spoke those words on Friday. It’s a clear vote loser. It says, “You know the reason you don’t like the coalition government? Right, well we will do nothing about it.”

It’s bad electoral politics, but it’s underpinned by even worse economics. I don’t blame Chris Leslie.

This Labour opposition is struggling because it has not rejected the economic myths of either the current coalition government and the last Labour government. These are still the economics of the Thatcher consensus – a ‘failed experiment’ – and we should be rejecting it, admitting our previous complicity.

New Labour oversaw a long period of economic growth, but it was increasingly reliant on credit rather than raising wages in a strong balanced economy. And yes we do have to take some responsibility for the crash. It was global, but we boasted about how the City of London dominated the global finance sector. The last Labour government facilitated further deregulation so that it could happen. Our over-dependence on the finance sector and failure to have any wider industrial strategy left us particularly exposed.

But we equally have to reject the coalition government’s myths: chiefly that the last Labour government was profligate with public services. Actually public spending was higher under the governments of Thatcher and Major than Blair and Brown, who also reduced (prior to the crash) the national debt they inherited.

We need an economic strategy that rejects the orthodoxy of the last 35 years that the best thing government can do is get out of the way of market-led growth. That has led to rising inequality, poverty, higher unemployment, a growing democratic disengagement, and a dearth of investment in industry and infrastructure. Oh, and actually growth since 1979 has averaged a pretty pallid 2.1%, compared to 3.0% on average in the 35 years prior to 1979.

We have to draw a line under that orthodoxy and say One Nation Labour would have “an economic and industrial strategy … This means a serious strategy for investing in skills … we want stability and certainty with a British Investment Bank”. Those bits were also in Chris Leslie’s speech – but not spelled out or spun to the media in advance.

What will work on the doorstep, and in the media, will be expanding on that positive vision of an economy that works for people.

So we need to radically change our priorities – measure our economic success not by the state of the FTSE Index or dubious calculations of GDP  but on whether living standards are improving, unemployment reducing, the tax gap closing and whether our creaking housing, transport and energy infrastructure is catching up with the rest of Europe.

But is it affordable? Haven’t we got “a more limited pot of money”, as Chris Leslie said? No, of course not. Public investment in publicly owned homes, renewable energy and rail routes brings a return – in rents, bills and fares paid. And we need to hit the richest with some wealth taxes to stop the disgrace of 1000 people expanding their already grotesque wealth by £70 billion in one year! the money is there, we just need to get it.

For the last 35 years chancellors and finance ministers have reduced themselves to a sort of middle management role in the economy. If Labour continues along this track in 2015 – managing a path of austerity already set, managing the appeasement of the finance sector and the super-rich – it will manage only to be a one term, not a one nation, government.

Andrew Fisher is author of The Failed Experiment