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Five questions Conference delegates should ask

This year’s Labour Conference occurs amidst more anxiety in markets about debt and with the UK economy showing few signs of growth.  Labour is ahead in the opinion polls but still not scoring well as far as its economic reputation is concerned.  Here are some questions Labour Party delegates and members should be asking in Manchester.

Have we really grasped the scale of the crisis?
The financial crisis was huge.  As the private sector reined itself in and the banking sector suffered from near collapse, public sector borrowing (the other side of the equation) ballooned.  To get it back to meaningful levels means a combination of spending cuts, tax rises, and growth.  We know this but the scale is immense.  The IPPR pointed this out recently.  It means that government departments will have to face significant real cuts in spending, even if we did not follow Tory/LibDem plans.  That should force us to consider what kind of country we want to be.  Can we afford to lead in education?  Defence cuts could turn us into a minor player on the world stage; are they going too far?  What will it mean to be unhealthy in the UK in five years time?

Are we saying enough about growth – and are we optimistic?
The option other than spending cuts or tax rises is growth.  Long term fiscal projections look gloomy as we think about the cost of long term care for example, let alone cope with current annual deficits in the public sector (the estimates are highly inaccurate by the way).  Yet a little more growth goes a long way, as it compounds year on year, and solves many problems.  So we have to be radical on growth.  A national investment bank is a good idea (as I argued last year) but we need to decide what it would be for and how it would work.  Are we prepared to sacrifice some current spending to boost capital spending on infrastructure?  That would be a difficult decision but this is where the debate should be.  Markets cannot be ignored but investors are worried about both debt levels and growth.

Labour really needs to move on from statist thinking.  Economies are dynamic. At the moment, business confidence is low.  Low interest rates and quantitative easing will not be sufficient while that remains the case.  Labour needs to exude optimism about the future, with the policies to match. Labour should not be satisfied with small measures.  We need more than a short period of stimulus. Labour should commit to a decade of investment, so helping households and businesses have confidence in the future.

How are we going to reform public services?  Do we even want to?
Labour is still not trusted on spending.  We need to get this.  Blaming Labour for wasting money is an easy Coalition attack line and we heard it at the LibDem conference (we did increase spending rapidly with constant deficits). That is why last year I proposed we give an ‘effective spending guarantee’ that no new spending would continue without being certified as working by an independent auditor, such as the National Audit Office.  Recently Stella Creasy MP has proposed a ‘zero budget’ spending review. Challenging existing commitments is a good starting point, and the proposal recognises the seriousness of the situation, but we need to do more if we are to have voters’ permission to increase spending.  At Conference we need to see that shadow cabinet members have foremost in their minds the attitude that they are pitching to be stewards of the public’s money.  How will they spend it wisely, and differently from the Tories and LibDems? Alongside that, we need to hear what principles will underpin public service reform so we can do more for less.  If we don’t engage with this debate, the Right will control this agenda with proposals to shrink the state for ideological reasons.

Do our ideas to boost employment match the challenge?
The UK has a similar unemployment rate as the United States but there seems less concern here.  That is in part due to our welfare system; a good thing.  However a persistent unemployment rate around 8% can mean more people becoming long term unemployed and therefore harder to get back into work.  Meanwhile each year another cohort of young people enters the jobs market.  We need more than local initiatives, though the Evening Standard’s partnership in London with City Gateway is an encouraging example.  Will we hear that a Labour government will be an employer of last resort?  It should be.  Perhaps we will need to visit the conference fringe for ideas on tackling youth unemployment but either way there are jobs to be made and votes to be won in this important policy area.
How can we develop the ‘responsible capitalism’ theme?
It was the great theme of Ed Miliband’s speech last year and events since have highlighted its relevance.  Yet much more work is required to identify the values that define responsible capitalism and what it would look like in practice.  The rebooted policy review needs a framework within which to work and we have more to do on defining our values.  These should translate into ways to encourage companies with long run sustainable growth strategies.  Again, the fringe maybe the place to go to hear about values and markets (eg CSM’s ‘Put Your Money Where Your Mouth Is’ fringe meeting) but it would be good to hear some speeches in the Conference hall on the theme.

Big questions perhaps, but we face big challenges.  A conference which addresses these questions will be a conference that really wants Labour to be in power and knows what to do when we get there.
This article was first published by Progress on 29 September 2012.
Progress, 29 September 2012, 29/09/2012

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