Spring Statement: ‘Why not draft in Martin Lewis to fill the fiscal hole?’

How will the Chancellor’s spring statement open? Will it be “Help!” It should, given the terrible state of the economy and the problems the Chancellor faces.

There is widespread anger and hurt among Labour members and supporters and recipients of disability and sickness benefits at the proposal to cut £5 billion a year from spending on benefits.

The move is both wrong and foolish. They will not achieve these savings. The Tories and Lib Dems introduced PIP in 2013 to replace the old Disability Living Allowance, claiming it would lead to savings of £1.4bn a year by reducing the number of people eligible. It ended up saving only £100m a year by 2015, and the number of claimants rose by 100,000.

Underlying these unpalatable decisions and undeliverable goals is the economic crisis facing the country and the government’s failure to acknowledge it. Economic growth and living standards flat lined because of austerity. Brexit has made things worse, and Liz Truss did her bit. But the spectre at the feast is the Covid pandemic. Labour has boxed itself in by adopting a policy of safety first with pledges on taxation and spending which are not realistic.

The government needs to start an adult conversation about the state we’re in

Announcing the discovery of a “black hole” in public finances left by the Tories, suggested Reeves had not been paying attention. According to Paul Johnson (IFS) “the pandemic added £400bn to the debt”. Likewise, the claim that soaring rates of poor mental ill health are a function of the benefit system invites us to engage in a collective act of amnesia about the impact of Covid. And that’s before we start on hospital waiting lists and the crisis in the NHS.

In doing so the government has played by their rule book over the last five years. Blaming the Tories. Make as few promises as possible. Safety first. The one way out of the mess is through ‘growth’. But the terrible state of the country and the uncertainty in the world post Trump, means that playing safe is dangerous. There are no guarantees that fiscal caution and pleasing business will deliver growth and fix the mess, when at any point headwinds can blow them off course.

READ MORE: Reeves ‘confident’ civil service could cut 10,000 roles as Blunkett decries fiscal rules

The government needs to start an adult conversation with the country, about the situation we are in. David Blunkett has called for a loosening of the self-imposed fiscal rules. But more will be required. The Resolution Foundation “estimates that freezing income and national insurance thresholds for two years would raise an additional £8bn.” Wealth taxes are another popular suggestion. But all these will only go some way to address the problems.

How does the government rise substantial amounts through progressive taxation, avoid accusations of breaking its promises and triggering a run on the markets? A starting point is a move away from ‘command and control’ politics. The government has been widely criticised for moving away from ‘Labour’ principles, but in one respect it has been true to one of Labour’s worst traditions – statist centralism.

Time for a modern-day Beveridge Report

Elected with a towering majority in seats but a wafer-thin mandate in votes it has clutched power to itself. Labour needs to reach out and ask for help to solve the country’s problems. One way out of the fiscal straight jacket it has put itself in would be to create a commission drawing in other parties and key elements in civil society to look at the challenges we face and how to address them.

A figure like Martin Lewis could be asked to lead this, cost various asks – from cutting waiting lists to fixing primary care, scrapping the two-child benefit cap and addressing the pressures on social care. It could suggest priorities and a timetable and ways to fund them – essentially a modern-day Beveridge Report. None of this could be done over night but it would buy time and lay out a vision for the future.

READ MORE: ‘The Chancellor must not make foreign aid cuts worse’

But the biggest problem is not what the Labour leadership have done, but what they haven’t. There was a significant moment of community solidarity in the pandemic. Our job was to build on that. In Liverpool 8 we called a meeting of our community groups just before lockdown and created links to provide food support, counselling, even transport for funerals. This should have been Labour’s mantra nationally: “we look after each other”. I’m sick of being angry and against things. I want to put out a positive message and bring people together.

Changing course will probably need new leaders

It’s not too late for Labour. In my ward, Dingle, we’ve put in hundreds of claims for fuel grants using the Household Support Fund, to mitigate the cuts to the Winter Fuel Allowance. On the back of this we identified hundreds of people not getting the right benefits and helped them claim.

Contrary to media myth the biggest problem is people not claiming benefits they’re entitled to. On top of that we’ve created Food and Fuel Support Maps showing where people can get help if they need it. Labour needs to be promoting that spirit of community solidarity at local and national level. People will understand that we can’t mend things overnight, but they want to see us trying and be involved.

And that means focusing on what’s important. Markets won’t deliver growth and don’t sound very appetising. During the pandemic nobody woke up in the night thinking “where’s a property developer when you need one?” I rather doubt they are now. Changing course will be a big challenge. Changing course will probably need new leaders. Not everybody’s cup of tea, but better now than never or after the disintegration of the Labour Party or a crushing defeat at the next General Election.

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