Learning the right lessons from Labour's economic record

Neither Labour nor the Coalition is willing to ask why Britain's tax base was so fragile.

You might think the one thing the world doesn't need right now is yet another instant history about the Labour years. But here one comes -- this time, though, with a difference. The authors certainly won't be dining out on the royalties and there's no insider gossip or "he said, she said" revelations about rows in Downing St. Which is perhaps one reason why it's worth reading; it says something serious about what did and didn't happen to economic performance during the Labour years.

It is authored by John Van Reenen from the LSE -- one of Britain's leading economists, and something of a guru on productivity and growth; together with Dan Corry, a seasoned and respected economic advisor from the former Labour government, and someone not averse to being contrary and defying the conventional view of the day.

Their central argument is that the 2.8 per cent a year productivity growth achieved between 1997 and the start of the 2008 recession was impressive in both historical and international terms; rooted in substantive improvements in a number of sectors, rather than relying on the frothy gains from financial services; and arose in part due to policy choices -- particularly investment in research and science, strong competition policy, expansion of higher education and gains in skills. Their argument is as unfashionable as it is empirically substantiated.

Above all it is an attempt to rebalance the current economic debate about the Labour years, a first (and no doubt doomed) effort at taking on those who assert that there was little more to the Labour era than an attempt to surf the wave of public and private debt over which it presided. This puts the authors at odds with the swelling ranks on left and right who wish to portray Labour's economic strategy as little more than a Faustian pact with the City: light regulation in return for growing tax-revenues. The report, of course, concedes financial regulation was a failure, but contends that wider economic policy made a real and positive difference to a range of sectors -- a point that is currently in danger of being completely over-looked.

Nor do the authors just make an argument about the past -- they also seek to pick a fight about the future. Entering the fray of the current economic debate, they refute the "supply-side pessimists" who assert there is no scope for any further stimulus on the basis that the productive potential of the economy has already fallen (which if true would mean that further expansionary policy would be counter-productive). In contrast, the LSE report contends there is plenty of spare capacity, it just requires some form of Plan B to ensure it is utilised. In truth, however, the authors are most interested in advocating a Plan V, as they term it, for long term growth involving a more muscular and far-sighted industrial policy.

For all the cogency of their arguments on productivity -- and let's hope someone in Whitehall is taking note about the insights offered about the real sources of growth -- there are some puzzling omissions and assertions. Little is said about the UK's ongoing trade imbalances. There is no investigation of the weakening link between GDP growth and the gains going to low-to-middle income Britain, and the associated wage stagnation that took hold in the years preceding the recession -- a phenomena that Labour in office failed to grasp. When you reach the end of the report you don't have much of a sense of the policy agenda that would lift the prospects of the millions of low and modestly paid workers employed in Britain's vast low-skill, low-productivity sectors. The authors, like so many others, focus their attention on what can be done to improve the industrial vanguard, rather than the laggards.

And when it comes to the record on public finances, they choose to pin-point blame on Labour's record on overall public debt, saying it got too high pre-recession. This seems like an odd argument to select given that the UK's debt was relatively low compared to others. A better target would have been Labour's projections for tax receipts -- together with the wisdom of running modest deficits in the middle of the last decade, in a period of steady growth when modest surpluses would have been more prudent.

But even this criticism is dwarfed by the real argument which neither Labour nor the Coalition wants to make as it doesn't fit their favoured narratives -- which is to ask why Britain's tax base was so fragile, crumbling so dramatically, during the recent recession in a way that those in other countries didn't. Indeed, after several years of intense focus on the need to "stress test" banks to ensure their balance sheets could stand up to future financial shocks, it is remarkable that there is no equivalent debate about the sort of tax-base the modern British state needs if it is to better withstand global turbulence in the decades ahead (see this for an exception). Only when this issue is properly aired and addressed will we know that Labour, along with the Coalition, are intent on having a strategic discussion about Britain's long-term fiscal future.

Decades will pass before a full and fair account of Labour's economic record is formed. For now we need to recognise that, love them or loathe them, instant histories matter in politics: they frame today's media coverage and tomorrow's policy decisions. Here, unusually, is one that merits a wider readership than it will get.

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

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Four times Owen Smith has made sexist comments

The Labour MP for Pontypridd and Jeremy Corbyn’s Labour leadership rival has been accused of misogynist remarks. Again.

2016

Wanting to “smash” Theresa May “back on her heels”

During a speech at a campaign event, Owen Smith blithely deployed some aggressive imagery about attacking the new Prime Minister. In doing so, he included the tired sexist trope beloved of the right wing press about Theresa May’s shoes – her “kitten heels” have long been a fascination of certain tabloids:

“I’ll be honest with you, it pained me that we didn’t have the strength and the power and the vitality to smash her back on her heels and argue that these our values, these are our people, this is our language that they are seeking to steal.”

When called out on his comments by Sky’s Sophy Ridge, Smith doubled down:

“They love a bit of rhetoric, don’t they? We need a bit more robust rhetoric in our politics, I’m very much in favour of that. You’ll be getting that from me, and I absolutely stand by those comments. It’s rhetoric, of course. I don’t literally want to smash Theresa May back, just to be clear. I’m not advocating violence in any way, shape or form.”

Your mole dug around to see whether this is a common phrase, but all it could find was “set back on one’s heels”, which simply means to be shocked by something. Nothing to do with “smashing”, and anyway, Smith, or somebody on his team, should be aware that invoking May’s “heels” is lazy sexism at best, and calling on your party to “smash” a woman (particularly when you’ve been in trouble for comments about violence against women before – see below) is more than casual misogyny.

Arguing that misogyny in Labour didn’t exist before Jeremy Corbyn

Smith recently told BBC News that the party’s nastier side only appeared nine months ago:

“I think Jeremy should take a little more responsibility for what’s going on in the Labour party. After all, we didn’t have this sort of abuse and intolerance, misogyny, antisemitism in the Labour party before Jeremy Corbyn became the leader.”

Luckily for Smith, he had never experienced misogyny in his party until the moment it became politically useful to him… Or perhaps, not being the prime target, he simply wasn’t paying enough attention before then?

2015

Telling Leanne Wood she was only invited on TV because of her “gender”

Before a general election TV debate for ITV Wales last year, Smith was caught on camera telling the Plaid Cymru leader that she only appeared on Question Time because she is a woman:

Wood: “Have you ever done Question Time, Owen?”

Smith: “Nope, they keep putting you on instead.”

Wood: “I think with party balance there’d be other people they’d be putting on instead of you, wouldn’t they, rather than me?”

Smith: “I think it helps. I think your gender helps as well.”

Wood: “Yeah.”

2010

Comparing the Lib Dems’ experience of coalition to domestic violence

In a tasteless analogy, Smith wrote this for WalesHome in the first year of the Tory/Lib Dem coalition:

“The Lib Dem dowry of a maybe-referendum on AV [the alternative vote system] will seem neither adequate reward nor sufficient defence when the Tories confess their taste for domestic violence on our schools, hospitals and welfare provision.

“Surely, the Liberals will file for divorce as soon as the bruises start to show through the make-up?”

But never fear! He did eventually issue a non-apology for his offensive comments, with the classic use of “if”:

“I apologise if anyone has been offended by the metaphorical reference in this article, which I will now be editing. The reference was in a phrase describing today's Tory and Liberal cuts to domestic spending on schools and welfare as metaphorical ‘domestic violence’.”

***

A one-off sexist gaffe is bad enough in a wannabe future Labour leader. But your mole sniffs a worrying pattern in this list that suggests Smith doesn’t have a huge amount of respect for women, when it comes to political rhetoric at least. And it won’t do him any electoral favours either – it makes his condemnation of Corbynite nastiness ring rather hollow.

I'm a mole, innit.