Who will pay for the coronavirus crisis? Labour needs an answer

James Meadway
© UK Parliament/Jessica Taylor

As Keir Starmer finishes his first 100 days as Labour leader, questions remain about the shape of his economic policy. The tensions have become apparent in the week since the Chancellor’s summer statement, and result from the profound political difficulties the party faces in confronting both a Conservative government of a new type and an overwhelming pandemic crisis. To develop a new economic narrative, Labour should adopt a laser-like focus on the specifics of Tory spending; make clear who it thinks should bear the real costs of the crisis; and adopt a vision of the future rooted in the fundamentals of the crisis as people experience it – of the role and value of work, and how we care for each other and nature.

Boris Johnson has been insisting since he became Prime Minister that austerity is over and, even prior to last year’s general election, his government was prepared to back this up with real spending increases. Since the pandemic erupted, the government has spent money on an extraordinary scale, previously unimaginable in this country outside of war, paying the furlough wages of 8.6 million people and promising to bring forward billions in investment spending across the country. A Tory Prime Minister claiming that his government would “put its arms around every single worker” is a very long way from one claiming that there is “no such thing as society”. Rhetorically and politically, this is a Conservative government of a kind that we have not seen for generations.

Against this, it is tempting for Labour to simply say ‘do this, but do more of it’. Of course we can welcome government spending, and of course we want jobs created. But if Labour is only saying ‘do this, but do more of it’, it’s not opposing the government. If anything, it’s reinforcing the Tories’ central message, since it accepts what the government is doing. And we run into a deeper issue with the public perception of numbers: £5bn (say) is an unimaginably big sum. £50bn is also unimaginably big. The difference between two unimaginably big numbers is essentially zero in terms of public perception. There’s almost nothing to be gained politically from insisting that the very big numbers should be even bigger.

This is why it was correct and necessary for Starmer to oppose the so-called ‘job retention bonus’, and for Shadow Chief Secretary Bridget Phillipson to write to the Chancellor with urgent questions about the scheme. The point at which a programme is so poorly designed that HM Revenue and Customs’ top civil servant refused to sign it off without ministerial direction is exactly the point to attack: the bonus is a vast, £9bn handout for corporations that will do little to nothing to secure jobs, as the unlikely coalition of People’s Quantitative Easing author Richard Murphy and Paul Johnson of the Institute for Fiscal Studies have pointed out.

This should be the first plank of Labour’s new economic narrative. It’s become a cliché to talk about Keir’s ‘forensic’ approach, but the entire party could usefully set itself the task of scrutinising Tory spending, which is already starting to raise questions. Detailed scrutiny of local spending is the sort of thing branches and CLPs can help with. And it would be a useful exercise to pick out some real villains amongst the expected recipients of the job retention bonus, especially if unemployment is rising elsewhere.

This is tied to the second plank. Keir’s short, sharp video for the postponed Durham Miners’ Gala, released over the weekend, included the claim that Labour would never allow workers and their communities to pay for the crisis. This is an excellent line, but it begs the question: who, then, will pay? It does Labour no favours to pretend that dealing with the pandemic will be cost-free. The immediate financial costs are, of course, close to zero, given interest rates for government at world-historic lows and even sometimes below zero. But the medium- to long-term real costs in terms of changed working practices, and perhaps the shrinking of whole industries, are certainly looming.

It’s not plausible to pretend those costs don’t and won’t exist. Labour should get ahead of the arguments to come, and start to clarify now who will pay. Polling shows wealth taxes are overwhelmingly popular, for example, with 57% of Tories even supporting an annual wealth tax – the Tories are even polling their own members about which tax rises they would prefer. Labour needs to develop a language and a broad policy consensus within the party about the management of the real costs of the pandemic. This means specifying some losers, as well as the winners; and this really should be as specific as possible, since as Tax Justice UK’s public attitudes research discovered, generalities about opposing ‘the rich’ don’t wash with the wider public – but specifics do. It would be useful, for example, to think about and have examples of bad businesses as well as thinking about the good. Policy detail can follow the outlines of the narrative, but this has to be done now. Confusion here is damaging, and throwing around some economic jargon is no substitute for real credibility.

That gets us to the final plank. A plan for the recovery should be rooted in real-life experiences, and should be able to be expressed in a language people recognise. The sorts of plans that for example the Women’s Budget Group has put forward for a “care-led recovery”, making the case for investment in care work to create jobs, or the proposals from Autonomy and others for radical changes in how, when and where we work speak to the fundamental issues raised by the crisis. Instead of the grandiose promises of the Tories, Labour can develop an economic programme keyed to the fine-grain detail of people’s lives and experiences.

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