The polls this weekend reveal clearly that the Cameron-Osborne Tory project is close to imploding. With Lord Ashcroft’s huge trawl of 19,000 voters showing that Labour is on course to win 93 of the most marginal Tory seats, yielding an overall Labour majority of 84 seats at the next general election only 2 years away, and with 3 times more voters now believing that the Osborne policy of austerity is harming the economy than restoring it to health, the collapse of Osborne’s plan A with no plan B to fall back on is now only a matter of time.
The Tories have now been hammered by the loss of Osborne’s flagship triple A credit rating, a humiliating third place in the Endsleigh by-election behind UKIP, a very likely triple dip recession, and an almost certain wipe-out in the May elections, their position might now seem irrecoverable and a Labour government near to certain. That would however be a very premature assumption.
First, if Osborne is replaced, which increasingly seems inevitable, there is at least the possibility of a painful but necessary U-turn in Tory economic policy. Of course it will be hedged round with all sorts of fudge to assure everyone that the government is simply wisely responding to negative outcomes for which they are not responsible, but what matters is that if Cameron (or his successor) can swallow his pride to adopt any of the many routes open to speed a recovery, the economy could rebound quite quickly and prospects could look very different by May 2015.
Second, as the election rapidly draws closer, the electorate will begin to look much more closely at what Labour has to offer as an alternative. There is still time for the party to do this, provided the Cruddas review offers some resonant policies by the conference season this year in September. There is however little sign of this. What is at stake is not simply, or even primarily, winning over voters from other parties but rather galvanising the 3-4 million potential Labour voters who were so demoralised and disaffected that they didn’t vote at all at the last election.
How should that be done? What is needed is a series of inter-connected reforms which offer a fundamental reconstruction of Britain from the total dead-end now being reached.
First, the endless austerity of self-destructive expenditure and benefit cutting should be replaced by an expansionary jobs and growth strategy, putting 2 million now on the dole back to work within 3 years through a major programme of house-building, infrastructure enhancement and low-carbon investment. It should be funded by a mix of diverting a QE tranche away from the banks to manufacturing investment, taxing the super-rich, and instructing the semi-nationalised banks to prioritise lending to industry.
Second, the Big Five banks should be broken up in order to create a national investment bank and a series of smaller specialist and regional banks committed to Britain’s economic recovery, not overseas speculation and tax avoidance.
Third, the objectives of economic policy should be full employment and long-term growth built on stable demand, with a partnership between employers, trade unions and government to maximise productivity and competitiveness and to secure the re-balancing of the economy away from over-dependence on finance to a revived manufacturing.
Fourth, the obscene polarisation of runaway inequality should be halted and reversed, not only by a living wage at the base but also by tight restraint on bonuses and excessive remuneration through requiring the approval of the organisation’s shareholders and employees.
