In the danger zone
Labour continues to lag over trust on the economy. Serious assurances on spending can combat this
Given the choice between ‘mean but smart’ and ‘nice but dim’, says the pollster Peter Kellner, voters tend to pick the former. This thesis was tested to the party’s near-destruction by Labour’s leaders in the 1980s as the electorate, despite rejecting the harshness of Thatcherism, returned the Conservatives to power a record four times. Only when Labour was able to convincingly demonstrate in the 1990s that it was possible to combine competence and compassion – ‘social justice and economic efficiency’ in the mantra of the time – was the party entrusted with the nation’s finances.
Today, Labour faces a similar dilemma. Polls show that voters overwhelmingly view it as the party which stands for fairness and has its heart in the right place. But, asked which party is ‘willing to take tough decisions for the long term’, the Conservatives lead Labour by a margin of 20 per cent, while, in another poll, the number of people who believe Labour has ‘leaders prepared to take tough and unpopular decisions’ is just 11 per cent.
And these overall perceptions of Labour’s image – ‘nice but weak’ may be a fairer but no less damning description – are particularly evident on the issue which will decide the outcome of the next general election: the economy. While the coalition’s handling of the economy is widely panned by voters, and the number who believe that its spending cuts are being done unfairly far outstrips those who believe them to be fair, nearly 60 per cent of people believe the cuts are necessary as against 28 per cent who believe them to be unnecessary. Moreover, polls also indicate that, nearly three years after the general election, 37 per cent of voters still blame Labour for the cuts as against one in four who blame the coalition.
Despite producing a ‘triple-dip’ recession, the poor marks the coalition receives from the public for its economic competence, and Labour’s consistent – though unremarkable – lead in the opinion polls, George Osborne and David Cameron are, according to those same polls, more trusted to run the economy than Ed Miliband and Ed Balls. Indeed, Osborne and Cameron’s 20-point lead on this measure in January 2012, which narrowed to just four points in the autumn, appears to be widening once again. It is thus on the twin fronts of ‘trust and toughness’ that Cameron will fight the next general election and attempt to achieve the parliamentary majority that no Conservative leader in two decades has been able to accomplish.
But Labour does not merely face a political imperative. As we argued in The Purple Papers last year, if it wins the next general election the party will face both a short- and long-term challenge in bringing the public finances under control. Even after the deficit has been eliminated the Institute for Public Policy Research predicts that, with tax revenues remaining broadly flat and spending on health, social care and pensions rising, the country is predicted to slip back into deficit by 2030, with long-term demographic change threatening to push the nation’s debt to almost 90 per cent of GDP by 2061.
And while the limits of the coalition’s counterproductive desire to sacrifice growth on the altar of austerity are now all too evident, eliminating the deficit and bringing down the national debt should be viewed as progressive goals. As Steve Van Riel argues on page 10, by 2015 Britain’s public debts will be so large that we will be spending more on our annual debt interest bill than we spend on our whole school system.
Since 2010 Labour has been right to attack the coalition’s deficit-reduction plan as ‘too far and too fast’. But this is a slogan, not a policy. By 2015, ‘too far and too fast’ will explain the sluggish growth of Cameron’s premiership but will say precious little to the public about the alternative Labour would pursue in office.
This year Labour must begin to pivot from an opposition to a government-in-waiting. Central to this shift will be the party’s ability to lay out an alternative direction for the country. A series of illustrative policies – not just on the economy but on public services, welfare, and crime – will be needed to colour in the broad ‘One Nation’ canvas that Miliband unveiled at last year’s party conference.
The Tory party’s strategists will, however, be eagerly awaiting any evidence of uncosted Labour pledges that can be marshalled in 2015 to suggest a ‘black hole’ in the party’s sums. Labour can, however, sidestep this trap if it attempts to shift the debate from one about affordability to one about priorities. In the recent welfare debate, David Miliband showed just how powerful such a shift can be: accepting the coalitions ‘spending envelope’, he argued against the government’s one per cent rise in welfare payments, suggesting that similar savings could be found by reducing pension tax relief for higher-rate taxpayers.
Ed Miliband has ruled out adopting the acceptance of the ‘spending envelope’ in welfare or, indeed, other areas. He should think again. Indeed, Labour should go further and signal that, once they are announced, it will adopt the coalition’s spending limits for the first two years of the next parliament, the period over which the deficit is supposed to be eliminated. As it did in 1997, such an announcement will reassure the voters that Labour will, in the words of the party’s manifesto at the time, ‘be wise spenders, not big spenders’.
Socialism, said Nye Bevan, is the language of priorities. It is the language in which Labour should begin the conversation it must have with the country in 2013 about what it would do in government.
Conservatives, David Cameron, economy, Ed Balls, Ed Miliband, George Osborne, ippr, Labour, Peter Kellner, Purple Papers