The spending review capitulation could cost Labour the election

Labour’s acceptance of Tory spending plans for for the first year of the next parliament is a watershed moment, not least in its potential to cost the party a majority, and keep the current coalition in place.

Why did the Labour leadership decide on this stance? Presumably because of a perception that those who still see the deficit as Labour’s fault will entrench their position if the party commits to spending beyond that of the coalition. No doubt they think that to win over some of these people, we have to accept a huge cuts programme, at least in total terms, and be rather ambiguous about additions to capital spending.

What this means is that Labour has a position that is now far more severe than that of the last Labour chancellor Alistair Darling, who proposed cuts amounting to about half of the current Tory programme.

It is also contradictory: the core of the Balls critique of Tory policy focuses on a cuts programme that disproportionately lowers tax receipts in such a way that the deficit can only be paid off over a very long period of time and at enormous cost. Having conclusively won this argument, we are now saying that we will continue with precisely the policies that we claim are wrecking the economy.

Large numbers of Labour voters will be mystified at this. Many will find that they now have no incentive to vote at all, while some will switch to the Greens, Respect, TUSC or the new ‘Left Unity’ party that is scheduled to be launched later this year. A party, indeed, provided with a potent recruitment vehicle by Labour’s change of direction. The total vote for these other parties is unlikely to be huge, but in many constituencies it could rob Labour of victory and thus maintain the present coalition in power, doing on the left what the Tories fear from UKIP on the right. That’s before we consider those who won’t vote at all.

Labour’s strategy, as in 2010, is based on a fundamental misreading of what is needed. In 2010, and apparently now, Labour was pitching to the middle ground, ‘Middle Britain’, those won over by New Labour in the late 1990s. This strategy was in one sense very successful, as Labour’s middle class voters largely stuck with it in 2010 ( Social class groups A, B and C1). Unfortunately Labour’s working class voters didn’t ( Social class groups C2, D and E), defecting to the Tories or just not voting in substantial numbers, and causing the worst result, and only marginally better, at 29%, since the 1983 election.

Since then Labour’s fortunes have improved considerably, mainly due to a transfer of support from Lib-Dem voters opposed to Lib-Dem participation in the coalition.These voters have been shown to be more left wing than previous Labour voters, not surprisingly as these were the people who transferred to the Lib-Dems after the Iraq War when on this and other matters they were to the left of Labour.

This ‘progressive majority’ is threatened by Labour’s embrace of austerity. Those previously Labour working class voters who didn’t vote or voted Tory will have no incentive to come back to Labour. Fewer will vote Tory, but many will still abstain or go to UKIP or the new left party. The ‘left’ Lib-Dems will likewise have no reason to stick with Labour; some will even revert to the Lib-Dems as their position is no worse than Labour’s, while the more left wing will vote for one of the left parties or the Greens. (See Andrew Harrop’s Fabian Review articles here and here.)

The net effect therefore of Labour’s change of course is that while it may retain some ‘Middle Britain’ votes that might otherwise have gone to the Tories or Lib-Dems, it stands to lose far more from those groups who would have supported even an ‘austerity lite’ position but not one which is indistinguishable from that of the coalition. Votes will be lost to abstention, to UKIP, to the Greens, to the fringe left, even to the BNP. This could well cost the party a majority.

Yes, it is true that more voters still blame Labour than the Tories for the deficit ( about 36% to 26% ), but that has improved since 2011, and crucially is likely to apply much less to the two groups pinpointed above. A growth strategy which would appeal to these two groups is essential, and Labour must revise its current position and adopt such a strategy before it is too late.

Polling figures are hardly a ringing endorsement of the coalition and their economic policies. 60% think the economy is being badly managed, 57% that the cuts are being administered unfairly, and only 27% support the Tories on the economy as against 25% Labour. However 59% see the cuts as necessary, a figure that would undoubtedly be lower if Labour had consistently advocated a growth strategy.

The new line also reflects the internal struggle within the party , and must register a decisive advance for the ‘Blairite right’, which the recent interventions by Blair, Mandelson and co. no doubt assisted. This will further alienate left wing activists and many affiliated unions who are among the strongest supporters of a growth strategy.

Let us hope that common sense prevails, and that Labour reconsiders its position and adopts a growth strategy that is clearly distinct from the Tories and Lib Dems’. Without it, the party could squander an open goal.

All figures quoted are based on YouGov polls.