At Conference, Labour must show it 'gets it' on spending

A key lesson from the Scotland independence referendum result is how important it is to listen to people. It is natural that the so-called ‘English question’ will now be discussed during Labour conference week. We need to debate it properly and we must not be bounced into a bad decision. But we must not lose sight of one key concern of voters –the economy. Labour still has some work to do here and we must not lose the opportunity that conference provides to give a clear message. The Conservatives would love us to spend all our time debating the precise voting rights of Scottish members of parliament, but, while an important issue, it does not appear to be the foremost in people’s minds.

Opinion polls this week provided sobering reading. An Ipsos MORI poll found that the economy is the most important issue for voters deciding who to vote for (with asylum and immigration, and healthcare close behind). Moreover, Ipsos MORI’s tracker on which party has the best policies for managing the economy has the Conservatives on 45 per cent with Labour on 20 per cent. This is a further divergence from 18 months ago, when there was little difference between the parties. As the economy improved, so did the Conservatives’ score on this question, which cannot really come as a surprise. The Ashcroft poll released this week ahead of conference showed that 60 per cent believed Labour had not made clear what it would do to improve things and 58 per cent believed we might spend and borrow more than the country can afford. The figures for swing voters were worse, at 68 per cent and 62 per cent respectively. We need to listen to people so let us start here.

The United Kingdom economy appears to be on track to have another quarter of 0.8 per cent GDP growth according to many economists. The Bank of England, admittedly among the more optimistic forecasters, believes GDP will grow 3.5 per cent this year. Strong growth is also expected in 2015. Unemployment is falling faster than expected. Austerity measures at home and abroad delayed recovery by a couple of years but it is now happening. There are headwinds, in particular a struggling eurozone market for our goods and services, geopolitical risks, and any knock to business confidence if a referendum on European Union membership appears more likely. Moreover, with government trying to move from deficits to surpluses it is relying on other parts of the economy – households, for example – to be travelling in the other direction. There are real questions about how sustainable this recovery is but it may be some months before the answer becomes clear. We may have had an election by then.

Labour’s cost-of-living campaign is getting such traction because people’s incomes are still falling behind inflation. Even though inflation is relatively low at 1.5 per cent, average wages are only growing at 0.7 per cent. New pay settlements are running at around two per cent increases, but fewer people are changing jobs than has been the case so this is not most people’s experience. And a large proportion of new jobs created are low-skilled. There are many people working part time who want more work but who have yet to find it.

This real pain being felt across the UK needs to be addressed. One way to do this is to promise to remove important economic injustices. Labour has called this well on energy prices, for example. However this is only one part of the solution. To rely solely on this approach is to fight parties such as the United Kingdom Independence party and the Scottish National party on their own ground. Alone, it can be divisive and other parties will always want to go further because it can become the politics of getting a bigger share for myself. In our unequal society there is much justification for this and there is a lot to be done, but alone it is not an approach that will help everyone in the UK fulfil their potential. For that, we need, for example, a growing economy and a massive boost to education and infrastructure spending. We need policies that will match the scale of the challenge.

And we need to be credible on spending. Once again, the zero-based spending review stands out as essential. To be successful it has to be about more than telling shadow ministers what they cannot spend, though that is part of it. Labour needs to be the party of effective spending and we need to convince people that Labour will spend wisely, only when necessary, and where we can show spending will work. That is why I have been calling since we lost the election for us to address this issue head-on, particularly with an effective spending guarantee and a consistent message across the party. Especially this close to an election, we need to demonstrate across the Labour movement that our politics are both radical and mature. The opinion polls show there is still some way to go on spending, but we are doing serious work on this issue. We now need to use this conference to get across the message that Labour gets it on spending and will do what is necessary to invest in the economic future of the UK.

This article was first published by Progress on 20 September 2014.