Bounce back hope must spring eternal

What Labour policies should be in a recession

LABOUR’S theme for the general election next year will probably be “hope”. That is, we will hope that the economy recovers sufficiently in time; we will hope that unemployment has peaked before the election; and we will hope that voters will not risk letting the Tories interfere with a nascent recovery. At the moment, this seems a rather pessimistic kind of hope.

In fact, the signs are that the economy is no longer deteriorating as fast as a couple of months ago. It may still shrink further, but perhaps not at the same rate. If the first quarter of this year was the low point economically, Alistair Darling’s Budget last month may have been a low point politically. In that Budget week, it was unpopular to be optimistic. However, City forecasters are revising up their estimates of growth in 2010. Unemployment is still expected to rise. A lower sterling exchange rate should encourage exports and our flexible economy may mean that Britain bounces back a lot faster than people are assuming. Even if growth remains sluggish for a while, people could be surprised by this country’s economic performance compared to their current pessimism. Yet any growth is likely to be tempered by the scale of bank and public debt.

One of my themes over the past year has been that Labour needs to get ahead of the deteriorating economic conditions in terms of both policies and message. It is not too late to do this, but we need to refresh our approach urgently. Labour thinkers have proposed various solutions. Unfortunately, many ideas out there give a rather stolid impression, taking little account of the powerful impact of the banking crisis or lacking an attractive central theme.

Progressive politics is changing again. As early as 1956, when Labour was wedded to nationalisation, Anthony Crosland argued that what really mattered were the values underpinning socialism. The policies could change with the times. We might think we have learned this lesson, but we have relied on increasing public spending growth. Years of underinvestment in public services had to be tackled and we can see the results now – for example, in better schools and hospitals. Higher spending levels, particularly when tax revenues were buoyant, were appropriate. That is no longer possible.

The scale of the national debt means future government spending growth will be slow, with cuts in many areas. A socialism based on deciding how to slice an ever-expanding cake will no longer be viable. As spending cuts loom, we need to decide what spending we need to retain. We will have to revisit our values to help make the hard choices and work out new ways of putting them into practice.

Labour wins when it has a progressive vision of the future that resonates with the country. That helped us win in 1945, rather than Winston Churchill and the Tories. In 1979, we had no such a vision and we lost. In 1997, we did and we won. We need to think not about what are today’s battles, but what, next year, will be the hopes and concerns people will have for the future.

Our message should start from workplaces, families and communities. We can show how our values apply to each and how a Labour government will work with people to help them enjoy better lives.

People must be convinced we are serious about tackling unemployment, which could rise by another million or more. That should mean some direct measures to generate employment and a renewed commitment to improve opportunity for everyone, since everyone is of equal worth. To be truly radical, we should also take significant action to promote business investment – even at the expense of some treasured spending programmes. We have to boost the economy’s potential and in an environmentally sustainable way. Business needs confidence and stability and a sense that taxation will continue to be fair but not onerous. Without growth, the outlook for spending is bleak indeed.

The family (in whatever form) is an important source of security for many, especially when times are hard. In a recession, we should strengthen our support for families and keep talking about it. Education spending needs protection.

Promotion of co-operation and community is at the heart of progressive politics. We can find ways of encouraging a renewed public service ethos in government agencies. That would cover the use of our data, where talk of civic freedom must be reflected in our actions.

Such an ethos would apply to our financial sector, too. Radical reform of local government in terms of its aims and links with its residents could be considered, with tax breaks or movable holidays for local charitable activities.

When we recover a coherent narrative, with consistent policies tailored to recessionary times, we will be more confident when criticising Conservative positions. Tory policies, especially on the economy, crumble under scrutiny. A Conservative government would be a risk for the country. Labour has the values and the experience to guide the country through these difficult times to a better future.

This article was first published in Tribune on 15 May 2009.