Getting from economic bingo to a growth plan

The sheer volume of economic statistics released last week highlights the challenge facing all three

The last week has produced a bumper crop of economic reports and statistics - resulting in a form of daily economic bingo - which will define the political and economic debate for the rest of the autumn and set the scene for the run into 2012. It's a week that has sharpened the economic and political challenge on growth - not just for the Coalition, but for Labour too.

It kicked off with Incomes Data Services grabbing the headlines with their finding that this year there has been a near 50 per cent increase in total remuneration for FTSE 100 directors - a hike that dwarfs the 2.3 per cent increase in average earnings, or the 4.5 per cent annual rise in the FTSE 100. It provided extra piquancy to the rapidly unfolding events at St Pauls, as well as to our new poll showing that only one in three workers feel secure in their jobs (one in four part-time workers), a finding that helps explain the ongoing weakness of consumer spending as well as the upward tick in savings.

Hot on the heels of this the OECD slashed growth figures for the eurozone to just 0.3 per cent in 2012 and to 1.8 per cent for the US. It decided to avoid producing specific forecasts for UK (and other individual European countries), as it persisted with its own brand of economic diplomacy by serving up just enough quotes for either side of the political argument to claim at least some vindication. Less diplomatic was the International Labour Organisation (ILO) - who clearly didn't receive David Cameron's new memo calling for an end to economic pessimism - with its bleak headline that it will take at least five years for employment to return to pre-crisis levels in advanced economies, making widespread social unrest far more likely.

Next up was the ONS telling us that the UK economy grew by 0.5 per cent in the third quarter of the year, above the expected 0.3 per figure, yet a long way below what is required to meet the OBR's 1.7 per cent growth forecast for 2011. It means the economy has grown just 0.6 over the last 6 months, or a paltry 0.5 over the last 12 months. Leading City commentators immediately predicted next quarter's figures could well be worse, in part because the latest purchasing managers' index (PMI) is going backwards -- suggesting the manufacturing sector is contracting for the first time since mid-2009. The gloom was only reinforced by further turmoil in Greece - with NIESR predicting a 70 per cent chance of recession in the UK next year without a resolution of the euro crisis, and a staggering 50 per cent chance even if one is found. Continued sluggish growth also shines the spotlight on the OBR who will soon need to downgrade their growth forecasts - presumably this time to a level which leaves them confident they won't have to do this once more next spring.

All of this economic news raises the stakes for both sides at Westminster. For the Coalition the clock is ticking with little more than three weeks until the Chancellor's autumn statement and the long awaited, and much vaunted, growth strategy.

The smoke signals are not encouraging. Repeated briefings are stoking contradictory expectations, risking disappointment on all sides. On the Tory right there are high hopes that the forthcoming Beecroft report will serve up some real red meat on deregulation (eg reigning in maternity rights, and ending unfair dismissal). Few of these ideas may survive Cabinet discussion, and if they do they are likely to do little to boost overall employment levels, yet could still destabilise Coalition relations. Meanwhile, those closer to the centre ground are pinning their hopes on talk of a new stream of capital projects as evidence that a meaningful 'plan A+' may emerge, involving significant new infrastructure investment (even if it falls short of a 'plan B' which slows the pace of cuts to current spending). These hopes may well also be dashed if what materialises is simply a list of modest announcements broadly in line with existing planned (cuts) to capital spending.

For their part Labour strategists are pleased that 'growth' rather than 'the deficit' has become the dominant economic and political frame in Westminster. This is perhaps the first time (other than the momentary News International meltdown) that the issue the Labour leadership wants to talk about overlaps so directly with what the media wants to write about - which provides a real opportunity.

Despite this Labour has yet to flesh out its own growth strategy - an omission that is likely to become more glaring over the next few weeks. Labour has, of course, put forward some specific growth measures. And it has made some important big picture economic arguments - most noticeably Ed Miliband's conference speech, and Ed Balls' 2010 Bloomberg lecture. Even foes of the leadership now concede that both of these were significant moments, that have aged well, and to some degree changed the political weather. Yet supporters would have to admit that neither intervention really sought to clarify the nature of the growth problem the UK is likely to face in 2012-2015 (and beyond), never mind Labour's distinctive post-crisis approach to industrial, infrastructure and innovation policy. Neither Ed Miliband's call for a new ethic of responsibility in our system of capitalism, nor Ed Balls' critique of austerity economics answers this. Thinking on longer-term growth remains a work in progress.

In the interim the risk for Labour - on growth as on other issues - is that it repeats the pattern of getting ahead on an issue by correctly identifying and naming it (think "squeezed middle" or "the promise of Britain") only to struggle to convert this into real momentum with a distinctive policy direction. It quickly needs to learn how to make its prescience pay a political dividend.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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David Blunkett compares Labour membership to failed revolution “from Ukraine to Egypt”

The Labour peer and former home secretary says new members need a “meaningful political education”, and accuses unions of neglecting their “historic balance”.

There are three sorts of opposition. There’s the civil society opposition, with people campaigning in their own specific areas, people who’ve got an interest group or are delivering social enterprise or a charity. I don’t think we should underestimate that because we're going to have to hang on to it as part of the renewal of civil society.

The second is the opposition formally, within the House of Commons: those who have agreed to serve as the formal shadow ministerial teams. Because of what I’d describe as the turmoil over the last two years, they’ve either not been able to be impressive – ie. they’re trying very hard but they don't have the coherent leadership or backing to do it – or they’ve got completely different interests to what it is they’re supposed to be doing, and therefore they’re not engaged with the main task.

Then there’s the third, which is the informal opposition – Labour linked sometimes to the Lib Dems and the SNP in Parliament on the opposition benches as a whole. They’re not doing a bad job with the informal opposition. People getting on with their work on select committees, the departmental committees beginning to shape policy that they can hopefully feed to the National Executive Committee, depending on the make-up of the National Executive Committee following this year’s conference. That embryo development of coherent policy thinking will be the seed-bed for the future.

I lived through, worked through, and was integrally involved with, what happened in the early Eighties, so I know it well. And people were in despair after the ‘83 election. Although it took us a long time to pull round, we did. It’s one reason why so many people, quite rightly in my view, don't want to repeat the split of 1931 or the split of 1981.

So they are endeavouring to stay in to argue to have some vision of a better tomorrow, and to persuade those of goodwill who have joined the party – who genuinely believe in a social movement and in extra-parliamentary non-violent activity, which I respect entirely – to persuade them that they’ll only be effective if they can link up with a functioning political process at national level, and at townhall and county level as well.

In other words, to learn the lessons of what’s happened across the world recently as well as in the past, from the Ukraine to Egypt, that if the groundswell doesn’t connect to a functioning party leadership, then, with the best will in the world, it’s not going to achieve its overall goals.

How do we engage with meaningful political education within the broader Labour party and trade union movement, with the substantially increased rank-and-file membership, without being patronising – and without setting up an alternative to Momentum, which would allow Momentum to justify its existence as a party within a party?

That's the challenge of the next two years. It's not just about someone with a vision, who’s charismatic, has leadership qualities, coming forward, that in itself won’t resolve the challenge because this isn't primarily, exclusively about Jeremy Corbyn. This is about the project being entirely on the wrong trajectory.

A lot depends on what the trade unions do. They command effectively the majority on the National Executive Committee. They command the key votes at party conference. And they command the message and resources that go out on the policy or programmes. It’s not just down to personality and who wins the General Secretary of Unite; it’s what the other unions are doing to actually provide their historic balance, because they always have – until now – provided a ballast, foundation, for the Labour party, through thick and thin. And over the last two years, that historic role has diminished considerably, and they seem to just be drifting.

I don’t think anybody should expect there to be a party leadership challenge any time soon. It may be that Jeremy Corbyn might be persuaded at some point to stand down. I was against the challenge against him last year anyway, purely because there wasn't a prepared candidate, there wasn't a policy platform, and there hadn’t been a recruitment drive to back it up.

People shouldn’t expect there to be some sort of white charger out there who will bring an immediate and quick end to the pain we’re going through. I think it’s going to be a readjustment, with people coming to conclusions in the next two years that might lead the party to be in a position to fight a credible general election in 2020. I’ve every intention of laying down some good red wine and still being alive to drink it when the Labour party is elected back to power.

David Blunkett is a Labour peer and former home secretary and education secretary.

As told to Anoosh Chakelian.

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition