The election of Ed Miliband and the decisions he has taken since have certainly upturned the apple cart. If that saves the frontbench from sinking into a bog of entitlement, empire-building and complacency, that will be no bad thing. If the appointment of Alan Johnson as shadow chancellor results in a moderate and constructive critique of government policy that takes the party to where it needs to be by the next election, that too will be something to cheer.

Alan Johnson: a dilemma resolved?

Some have suggested that Alan Johnson lacks the economic credentials for the job and that his appointment was a sop to the Blairites. As a Blairite, it did indeed make me quite happy. I was originally planning a piece called ‘Throne of Blood: Why Ed Miliband bears the mark of Cain’. Now I feel much better. As for his credentials, some of the most successful chancellors had little more than a solid track record and a pragmatic disposition to qualify them for the role. Some of the most flawed had an unshakeable confidence in their supposedly peerless economic gifts. In any case, you need to be Emeritus Professor of Complicated Economics to find fault with the government’s formula that [£83bn cuts ÷ 4 years] + magic = robust private sector recovery.

Encouragingly, Johnson has indicated his support for the Darling plan, which addresses the dual need to secure the recovery and bring the public finances under control in the longer-term. It also reflects the reality that while Britain’s situation is not as dire and straitjacketed as Ireland’s, it lacks the vast horizon for fiscal expansion enjoyed by the far larger US economy. What it badly needs is detail. Labour won’t be able to carry on for much longer pledging to halve the deficit in four years while opposing every cut, which over the summer is pretty much what it has done, from BSF to scrapping child benefit for top-rate taxpayers.

Opposing every cut in the expectation that the coalition will plunge the country into a new depression and send millions flocking back to Labour will come across as little more than an embittered fantasy. Even though growth could well falter in the months ahead, it is not a given that the public will automatically believe that a renewed bout of Keynesianism would have delivered a radically better, catch-free result. Every twist and turn of this crisis has divided opinion deeply and unpredictably.

Secondly, it shouldn’t be assumed that the government won’t adapt its policies to changing realities. Last Thursday’s FT reported that the Treasury could delay the cuts and, for what it’s worth, Chris Huhne suggested the same in Saturday’s Telegraph. This would indeed vindicate many of the arguments that have been made by Labour, but those who have gone further and pinned everything on a doomsday scenario will be denied the only outcome that would have saved them from appearing obstructive and alarmist. There is a fine line between expressing genuine concern about the recovery and appearing to be praying for a double dip just so Labour can say it won the argument.

A refusal to contemplate cuts over any time frame could also be construed as a ploy to put off difficult questions essential for Labour’s renewal and to rivet it into a line of travel likely to be rejected by the electorate. Would a future Labour government restore the size of the state and the welfare system to where it was at the peak of the Brown boom? How would it reconcile espousing a model that was possible in no small part thanks to boom-time financial sector revenues and the bond markets with its new-found wariness towards both of these?

Johnson may not be a trained economist but he is someone who is likely to take seriously the verdict the public has delivered on Labour, rather than just hope that some grisly event – whether it’s the coalition falling apart or the economy falling off a cliff – will somehow undo it instead.

Photo: alanjohnson.org

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Comments: 1...

  1. On October 13, 2010 at 2:50 am Dave responded with... #

    To improve our economy Alan Johnson could usefully take a look at Andy Burnham’s policy for annual Land Value Tax. See this coming weekend’s New Statesman and http://www.labourland.org

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