Why this half-hearted plot will fail

Barring a major cabinet resignation, Brown is safe

The behaviour of Geoff Hoon and Patricia Hewitt is a fine example of how not to lead a plot. Both have been making the media rounds claiming, absurdly, that their decision to call for a secret ballot on Brown's leadership is not designed to undermine the Prime Minister. Do they really believe that Brown could emerge strengthened from a disruptive ballot? Their refusal to declare which way they would vote is taking the PLP for a bunch of fools.

There are several reasons why this plot is likely to fail. First, the decision to go public strongly suggests they have failed to persuade any cabinet minister to turn against Brown. While the Prime Minister retains the support of cabinet heavweights such as Mandelson, Miliband, Darling and Straw he is likely to survive.

Second, that this latest plot is led by two unambiguous Blairites means the centre left of the party, focused around the Compass group, is unlikely to join in. So long as the rebellion remains confined to the usual suspects -- Charles Clarke, Frank Field, Barry Sheerman -- Brown and his allies can dismiss this as another botched coup.

Third, there remains no pre-eminent, Heseltine-style challenger for disaffected MPs to coalesce around. It is noteworthy that neither Hewitt nor Hoon named an alternative leader.

Finally, as my colleague James Macintyre, who broke the story today, has pointed out, their plot comes after an unusually strong performance by Brown at PMQs, something that is likely to have lifted the mood of backbenchers.

Although he is likely to survive, the latest plot remains a disastrous development for Brown. The Tories and the Lib Dems will declare again and again (and they'll be right) that Labour is a divided party and that the electorate hates divided parties.

The psephological case against Brown remains strong. No prime minister has been as unpopular as him and gone on to win the subsequent election. But at this stage it's hard to see how a prolonged and bitter leadership contest could be anything but damaging for Labour. Should the party wish to avoid a catastrophic defeat at the election it must call time on this pitiful spectacle.

 

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George Eaton is political editor of the New Statesman.

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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR