Chuka Umunna: Our failure on the economy was that we didn’t restructure and rebalance it

Simply saying that Labour spent too much before the financial crash in 2008 is not enough to to truly learn the lessons about what went wrong with the economy, according to Chuka Umunna. In an article for the Independent on Sunday, the Shadow Business Secretary says that the issue of running a deficit in 2007 “deals with only half the story”.

The piece, which maps out several successes and failures of Labour’s management of the economy, is likely to be seen as a marker that Umunna covets the job of Shadow Chancellor.

He points out that the deficit before the crash was “small and unremarkable”, and was only made large by the crash – which was “triggered by grossly irresponsible behaviour in the banking sector”, not by Labour.

However, he says that after 15 years of economic growth it was still a mistake to be running even a small deficit at the time. Echoing the thoughts of Liz Kendall, whom Umunna is supporting for the leadership, earlier this week, he asks:

“If a government can’t run a surplus in the 15th year of an economic expansion, when can it run one?”

The Streatham MP argues that the cause of the recession “wasn’t government spending, as George Osborne absurdly insists on arguing”, and points out that the Tories had a policy to match Labour’s spending before the global crash. The problems with the economy, he says, run deeper than that:

“The fatal mistake was failing to deal with an economy with too few savings, too concentrated in too few sectors and regions of the UK, and too based around cheap credit. This left our economy awfully exposed.

So, if there is any outstanding mea culpa Labour needs to make, it is in relation to our failure to restructure and rebalance the economy.”

In what will be seen as a rebuke to those who have suggested Labour needs to get back in touch with its core values, Umunna says that the challenge for the party is not rediscovering its purpose, but finding ways to turn those values into practical policy solutions. He says:

“Some have said that the Labour Party does not know what it is for. I could not disagree more. We know what our values are. It is coming up with the policy solutions that will make them real in a completely different world which we have struggled with. The urgent task ahead: to find progressive answers to the world as it is now and as it will be, not revert to tired, old policies from a bygone era.”