With business leaders, even the director general of the British Chambers of Commerce, now slamming Osborne’s policy for indecision, equivocation, short-termism and political manipulation, Labour must now be poised to take a decisive lead in the crucial area of economic policy. But if it is going to consolidate a lead which at present is much too dependent on the Tories’ obsessively sticking with manifestly failed policies, Labour must put right 3 fundamental failures which have so far drastically held it back.
First: it allowed the Tories and their right-wing media friends to get away with the blatant canard ever since 2010 that austerity has been forced on the country because of the last Labour government’s over-spending. As every economic observer knows perfectly well, the budget deficit as a percentage of GDP at mid 2007 was just 3% and only rose to 11.6% in 2010 as a result of the bank bailouts. Indeed for three-quarters of its 13 years in office the Labour government ran a lower level of public expenditure than Thatcher did in her lowest spending year. Yet the electorate still largely blames Labour for the budget deficit, and until that is robustly and persistently challenged Labour will continue to fight its economic corner with one hand tied behind its back.
Second: Labour is at last – though far too late – acknowledging the need for a jobs and growth strategy. But if the party is going to carry conviction and not just appear to be shifting in the shadow of business discontent, it must do two things. It must recognise that its previous adherence to a ‘cut less far less fast’ policy was a badly mistaken adoption of a pseudo-Tory policy driven by very different motives (i.e. shrinking the State). Even more importantly, Labour must not just chant the ‘jobs and growth’ mantra, but must spell out in detail how it will be delivered if Labour’s conversion is to be seen as real.
Third: Labour has once more also followed a disastrous Tory lead in accepting that the costs of the folly of the bankers’ ramp must be borne exclusively by those on average and low earnings, and that the rich should be let completely off the hook. Since the 1,000 richest persons made gains of no less that £155bn over the last 3 years of austerity, this has been a monumental error. The Glasgow Media Group led by Prof. Greg Philo has reinforced this by pointing out that the £4 trillion owned by the UK’s top 10% is five times the size of the country’s entire accumulated national debt, which could therefore be entirely wiped out by a one-off wealth tax of 20%. So why is Labour going so soft on the mega-rich? We’ll never get their votes, but we need their (fair) contribution to fund the jobs and growth strategy so that we can launch a million jobs within the next 2 years without any increase in public borrowing at all.