Progress | Centre-left Labour politics

Reining in future promises

What is the right response to last week’s elections? Much has been written about the meaning and the implications of the locals and the Euro elections. Quietly, but in a very assured manner, the Labour frontbench are making their strategic response. It is to continue to address the problems that matter to the public with policies of substance.

First we had Rachel Reeves, speaking yesterday to the Resolution Foundation, making a major speech on pensions and saving. This is important ground for a number of reasons. For one thing, the Tories’ attack on personal pensions is beginning to unravel. The Treasury is starting to realise just how much revenue it might lose from the reforms. For another, the fall in living standards since the Great Recession has people worried about their eventual income in retirement. Finally, and most importantly we are seeing a sustained challenge by Labour to the assumptions that the Tories and the Liberal Democrats have about the nature of the labour market.

Steve Webb’s response to the speech was telling. Reeves argued for the auto-enrolment into pensions of many more low-paid workers. One of the side-effects of the middle-class tax cut that in the raising of the tax threshold is that it removes low-paid workers from automatic pensions. Webb would not concede the government’s error, so just said that these workers would never save enough for a decent pension so it was fine to exclude them. Put aside that some of these workers are young and will move to other, better-paid jobs and that others will gain skills and progress – this is a profoundly depressing view to take of the labour market and pension provision. We can see long-term routes to better wages for workers – Australia shows how sectoral bargaining makes all workers better off. There are also ways to make pensions better value for workers. In her speech Reeves made the case for collective pensions where the charges are shared by many and so allow pension pots to grow larger.

This is fertile ground for Labour. Fighting the Tories and the Liberal Democrats on what they are doing to low-paid and middle-class workers’ pensions and offering a concrete alternative.

Hard on the heels of that speech comes shadow chief secretary to the Treasury Chris Leslie’s speech making the socialist case for deficit reduction. Three cheers for him. It is a brave and important speech. Being a Keynesian on the way into recession needs to be matched by being Keynesian on the way out.

Leslie has a hard task ahead of him. We are in an odd political situation. The United Kingdom permanently lost around seven per cent of GDP because of the Great Recession. Leading independent commentators like the Office for Budget Responsibility and the Institute for Fiscal Studies warn that we face a sustained squeeze on public expenditure. Politicians talk endlessly of hard choices. Yet at the same time politics remains defined by ‘free’ things. From the lunacy of universal free school meals to the equally batty universal free childcare, politicians battle to bribe the voters with their own money. So Leslie hasn’t only got to cut existing levels of expenditure, he has to rein in future promises too. His approach is right – first make the principled case, then rough up spending ministers. Repeat until the message gets through.

Reeves and Leslie are setting the pace. Let’s see more speeches like these.


John McTernan is former political secretary at 10 Downing Street and was director of communications for former prime minister of Australia Julia Gillard. He writes The Last Word column on Progress and tweets @johnmcternan



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John McTernan

is former chief of staff to the leader of the Scottish Labour party. He is former political secretary at 10 Downing Street and was director of communications for former prime minister of Australia Julia Gillard. He tweets @johnmcternan

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