Osborne is losing political control of the economic debate

The once mighty 'Plan A' is reduced to a pile of cold pasties.

In today’s Telegraph, Liam Fox has written a brisk précis of the analysis often heard on the right wing of the Tory party about why the economy isn’t growing. The problem, in the former Defence Secretary’s view, is a lack of rigour in pursuing supply side reforms.
Chiefly, that means aggressive labour market deregulation. The theory is that rules protecting employees’ rights are deterring companies from taking on staff. Relaxing those rules - making it easier to sack people - is thus supposed to lubricate private sector job creation. This was the essential thrust of a report commissioned last year by Downing Street from Adrian Beecroft, a venture capitalist (and Tory party donor).
The Beecroft report got bogged down in coalition warfare as Lib Dems briefed heavily against it – suggesting it was a shoddy piece of work with recommendations that were mostly peripheral to the task of rebooting the economy. Fox takes a swipe at Nick Clegg’s party for “intuitive left-wing opposition to supply side reform”.
It is worth recalling at this point what Lib Dem Energy Secretary Ed Davey said in a New Stateman interview on this subject recently.  (He was the employment minister at the time of the most ferocious rows over Beecroft):

I never bought the argument that our labour market was the most regulated there is. All the evidence shows we have one of the least regulated labour markets in the world.

One reason this issue ignites internal coalition tension is that it becomes a proxy for pro- and anti-European feeling. The right wing of the Conservative party sees the EU as an engine of pernicious bureaucracy and regulation. Eurosceptics put setting employment rules at the top of their list of powers to be “repatriated”. The Lib Dems are desperately trying to steer the government into a more consensual approach in Brussels and find all talk of repatriation unhelpful.
But there is a different political problem for David Cameron and George Osborne contained in Fox’s intervention. The news of a double dip recession has emboldened both the left and right in their conviction that the coalition’s current course is failing. Naturally, they have entirely different diagnoses and as a sense of urgency - bordering on panic – takes hold, that divergence will become more extreme. The great danger for the Prime Minister and the Chancellor (and, by association, for Nick Clegg and Danny Alexander) is that they will lose control of the economic debate entirely.
As the Tory backbenches get frothy about bolder supply side measures and deeper cuts, Labour bangs its Keynesian drum for a change of course in the opposite direction. That leaves Downing Street holding a bunch of discredited budget measures that no one thinks will make the blindest bit of difference to growth. Plan A is reduced to a pile of cold pasties.


Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Like it or hate it, it doesn't matter: Brexit is happening, and we've got to make a success of it

It's time to stop complaining and start campaigning, says Stella Creasy.

A shortage of Marmite, arguments over exporting jam and angry Belgians. And that’s just this month.  As the Canadian trade deal stalls, and the government decides which cottage industry its will pick next as saviour for the nation, the British people are still no clearer getting an answer to what Brexit actually means. And they are also no clearer as to how they can have a say in how that question is answered.

To date there have been three stages to Brexit. The first was ideological: an ever-rising euroscepticism, rooted in a feeling that the costs the compromises working with others require were not comparable to the benefits. It oozed out, almost unnoticed, from its dormant home deep in the Labour left and the Tory right, stoked by Ukip to devastating effect.

The second stage was the campaign of that referendum itself: a focus on immigration over-riding a wider debate about free trade, and underpinned by the tempting and vague claim that, in an unstable, unfair world, control could be taken back. With any deal dependent on the agreement of twenty eight other countries, it has already proved a hollow victory.

For the last few months, these consequences of these two stages have dominated discussion, generating heat, but not light about what happens next. Neither has anything helped to bring back together those who feel their lives are increasingly at the mercy of a political and economic elite and those who fear Britain is retreating from being a world leader to a back water.

Little wonder the analogy most commonly and easily reached for by commentators has been that of a divorce. They speculate our coming separation from our EU partners is going to be messy, combative and rancorous. Trash talk from some - including those in charge of negotiating -  further feeds this perception. That’s why it is time for all sides to push onto Brexit part three: the practical stage. How and when is it actually going to happen?

A more constructive framework to use than marriage is one of a changing business, rather than a changing relationship. Whatever the solid economic benefits of EU membership, the British people decided the social and democratic costs had become too great. So now we must adapt.

Brexit should be as much about innovating in what we make and create as it is about seeking to renew our trading deals with the world. New products must be sought alongside new markets. This doesn’t have to mean cutting corners or cutting jobs, but it does mean being prepared to learn new skills and invest in helping those in industries that are struggling to make this leap to move on. The UK has an incredible and varied set of services and products to offer the world, but will need to focus on what we do well and uniquely here to thrive. This is easier said than done, but can also offer hope. Specialising and skilling up also means we can resist those who want us to jettison hard-won environmental and social protections as an alternative. 

Most accept such a transition will take time. But what is contested is that it will require openness. However, handing the public a done deal - however well mediated - will do little to address the division within our country. Ensuring the best deal in a way that can garner the public support it needs to work requires strong feedback channels. That is why transparency about the government's plans for Brexit is so important. Of course, a balance needs to be struck with the need to protect negotiating positions, but scrutiny by parliament- and by extension the public- will be vital. With so many differing factors at stake and choices to be made, MPs have to be able and willing to bring their constituents into the discussion not just about what Brexit actually entails, but also what kind of country Britain will be during and after the result - and their role in making it happen. 

Those who want to claim the engagement of parliament and the public undermines the referendum result are still in stages one and two of this debate, looking for someone to blame for past injustices, not building a better future for all. Our Marmite may be safe for the moment, but Brexit can’t remain a love it or hate it phenomenon. It’s time for everyone to get practical.