Command and control is alive and well on Labour’s front bench. Ed Miliband may be criticised for having a blank sheet of paper about the future but Alan Johnson and the Treasury team plan to keep it that way, at least when it comes to spending commitments. Any front bench spokesperson who plans to say something that could be interpreted as implying a spending commitment has to complete a form and submit it to the Treasury team for approval at least two weeks in advance — I kid you not. Front benchers, of course, with a few exceptions, are well used to command control, having cut their teeth in more authoritarian times.
Alan Johnson obviously takes his job seriously. He also seems to take John Denham’s job quite seriously:
I feel it’s going to be very difficult to make a graduate tax a workable proposition.”
He accepts that Ed Miliband wants to make it work. He must recognise that there are a lot of people out there who, like Ed Miliband, believe that new Labour made a big mistake over tuition fees and are determined to stop the Coalition raise them still higher, and want to see the back of them. He has every right to his point of view, and to argue his case within the party. But what gives him the right to undermine Labour’s support for the students’ case?
The Treasury’s problem with the graduate tax was what it did to the Government’s balance sheet. Student loans are off-balance sheet (i.e. not part of the PSBR) and fees are paid up-front.With a graduate tax, fees are not paid up front (adding to the PSBR) but future tax liabilities cannot be shown as an asset so the balance sheet looks worse — which the Treasury, the last Labour Government, the Coalition and Alan Johnson want to avoid.
However, this is another example, like PFI, of allowing the accounting rather than the economics to drive decision-making. Even using perfect market decision-making logic, both PFI and student loans mean paying a higher cost of capital (i.e. paying yet more rent to the bankers) without any genuine transfer of risk or other benefit. In the longer run, that means people will acquire less knowledge or fewer skills, and less infrastructure will get built for the same money.
It also cuts both ways: rich people (and the Treasury) are concerned with their balance sheets. Poorer people want to make ends met. Large loans will put many of them off doing a degree. End of story.
Alan Johnson needs to learn the difference between economics and accountancy fast. It’s even more important for his own job — opposing the government’s approach to the economy. The Coalition are concerned about the deficit, the imbalance in the accounts of “UK plc”, balancing Britain’s giant household budget, and all that nonsense. We think differently, or we should. The cuts — and the increase in fees and charges for public services — will make the economy shrink and the deficit worse. Oh what a tragedy that we haven’t got Ed Balls in this job! As Mehdi Hassan said yesterday:
Frankly, isn’t it time for Mili-D ally Alan Johnson to get onboard the Ed Miliband Express? According to Westminster’s conventional wisdom, Ed Miliband had to appoint Alan Johnson as shadow chancellor, rather than Ed Balls, despite the latter’s superior qualifications and credentials, because Johnson would help Ed M unite the shadow cabinet while Balls would have undermined Miliband’s leadership; Johnson would be loyal, Balls disloyal. The exact reverse, of course, has happened.