Clegg’s new tone on the economy

The coalition needs to work on a climb down.

It’s not every day you open the paper to read about a cabinet minister – one who isn’t the Chancellor - holding forth about the ‘instruction’ that has been given to the Treasury on a key aspect of economic policy. Nor we should we suppose that Nick Clegg elected to give the interview to the FT only to use this line due to a slip of the tongue.  It tells us something.

The specifics are about whether the Treasury should use its ‘balance sheet’ to enable a ‘massive’ increase in infrastructure spending (on housing and transport).  The timing reflects the wider context. The last few weeks have been unkind for the Coalition’s favoured economic narrative. The return of recession has been the key event but hardly the only one. The election of President Hollande, the continued euro-zone crisis, President Obama regularly appearing on our TV screens talking about jobs and growth, a Labour reshuffle that was seen to help unify different shades of economic opinion, and now the IMF saying (once again) that further action may be required, including fiscal stimulus, if the economy doesn’t pick up – all these have unsettled the Coalition.   

As a result the economic and political mood has, for now at least, tilted away from the Coalition on the economy. Pundits who were once scathing about any deviation from the coalition’s economic strategy are now straining to see nuance and be open minded.  Of course, we should never underestimate the fickleness of the commentariat – sentiment could easily shift back again – but the Coalition won’t be relaxed about how this is currently playing out.

One reason for their concern is that they feel very dug in. The stringency and tone of the economic argument made since 2010 on fiscal consolidation didn’t leave rhetorical space for a graceful transition to a different tack if the economy didn’t recover as hoped. That was a very deliberate choice. And given the enormous levels of uncertainly about our economic prospects it was always a foolhardy one.  

Which brings us back to Nick Clegg’s remarks. They are a sign of the resulting strain. Based on the FT report it’s not exactly obvious what the instructions given to the Treasury are, though the point is clearly designed to signal that infrastructure investment will be increased as part of a new emphasis on growth, and that the state can facilitate this without further increasing borrowing (let’s leave to one side the reality that capital investment is actually being slashed). Nor is it immediately obvious why the government thinks that borrowing at rock-bottom interest rates will lead to economic Armageddon yet piling new risks on the state balance sheet is a shiny new idea fit for our times.

Whatever the substance, the way this new tone on the economy has materialised also raises questions.  To date, the rules of exchange for the Coalition have been clear: the parties can differentiate on all manner of issues but when it comes to overall macroeconomic and fiscal policy they have to be seamless. It’s the glue that binds. True, Clegg emphasised that the new edict for the Treasury was agreed by Cameron, so it would be wrong to overstate this, but any perception of disagreement between the coalition parties on core economic strategy would be poison for them.  

Economically, it is to be hoped that there will be a shift in strategy – whatever label they choose to put on it – and others have set out compelling ideas for the form this could take.  Politically, the coalition urgently needs to work out exactly how it wants to evolve its economic narrative in the light of shifting events and then stick firmly to this script. And it might be a good idea if the Chancellor led the way.
 

Photograph: Getty Images

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

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.