The Tories should listen to their own economic adviser

Senior Tory pundit warns that early spending cuts would plunge UK economy back into recession.

Conflicting advice for the Tories on spending cuts this morning.

Here's the Institute of Directors:

We are convinced that we need swift action to tackle the Budget deficit. This means making significant spending cuts in 2010. We believe that lower spending is likely to trigger a whole series of positive developments that will assist growth.

And here is Sir Alan Budd, one of the party's senior economic advisers:

If you go too quickly, then there is a risk that the recovery will be snuffed out and we will go back into a recession -- I mean what the Americans say: "Remember 1937."

Budd, who is expected to run the Tories' new Office of Budget Responsibility, is of course right. As our own David Blanchflower has consistently warned, the immediate spending cuts promised by George "Slasher" Osborne would likely trigger a double-dip recession. So long as the level of lending to businesses remains low, the state must step in to boost demand.

Osborne has hailed the IoD's Budget submission (and a similar report from the CBI) as evidence that the economic consensus is moving in the Tories' favour.

But he should be wary of courting such right-wing company. The IoD has called for public spending to be slashed from 48 per cent of GDP to 35 per cent, in part so that corporation tax can be reduced from 28 per cent to 15 per cent.

Osborne has already promised early action to cut the headline rate of corporation tax to 25 per cent and the Tory treasurer, Michael Spencer, has spoken of a rate of 20 per cent by the end of a first parliament.

In a previous report, co-authored with the TaxPayers' Alliance, the IoD suggested, among other things, a two-year public-sector pay freeze, abolishing Sure Start and scrapping the Education Maintenance Allowance.

Osborne may yet need to turn to the IoD for advice on cuts. The Institute for Fiscal Studies has estimated that the Tories' promise to ring-fence spending on health and overseas aid, combined with their pledge to reduce the deficit faster than Labour, means that all other departments face cuts of 22.8 per cent by 2014-2015.

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George Eaton is political editor of the New Statesman.

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Leader: Corbyn’s second act

Left-wing populism is not enough – Labour must provide a real alternative.

Since Jeremy Corbyn first stood for the Labour leadership he has been fortunate in his opponents. His rivals for leader ran lacklustre campaigns in 2015 and failed to inspire members and activists who longed to escape the tortured triangulations of the Ed Miliband era. Later, at the 2017 general election, Mr Corbyn was confronted by a dismal Conservative campaign that invited the electorate’s contempt. Theresa May’s complacency – as well as Mr Corbyn’s dynamic campaign –has helped propel the Labour leader to a position from which he could become prime minister.

With greater power, however, comes greater responsibility. Mr Corbyn’s opponents have for too long preferred to insult him or interrogate his past rather than to scrutinise his policies. They have played the man not the ball. Now, as he is a contender for power rather than merely a serial protester, Mr Corbyn’s programme will be more rigorously assessed, as it should be. Over the months ahead, he faces the political equivalent of the “difficult second album”. 

Labour’s most electorally successful – and expensive – election policy was its pledge to abolish university tuition fees. Young voters were not only attracted by this promise but also by Mr Corbyn’s vow, in an interview with the free music paper NME, to “deal with” the issue of graduate debt. The Labour leader has since been accused of a betrayal after clarifying that the phrase “to deal with” did not amount to a “commitment” to wipe out student debt. In an interview with the BBC’s Andrew Marr, he explained that he had been “unaware of the size of it [graduate debt] at the time”. (The cost of clearing all outstanding student debt is estimated at £100bn.)

In fairness to Mr Corbyn, Labour’s manifesto said nothing on the subject of existing student debt (perhaps it should have) and his language in the NME interview was ambiguous. “I’m looking at ways that we could reduce that [graduate debt], ameliorate that, lengthen the period of paying it off,” he said. There is no comparison with the Liberal Democrats, who explicitly vowed not to raise tuition fees before trebling them to £9,000 after entering coalition with the Conservatives in 2010. Yet the confusion demonstrates why Mr Corbyn must be more precise in his policy formulations. In a hyperactive media age, a single stray sentence will be seized upon.

At the general election, Labour also thrived by attracting the support of many of those who voted to remain in the European Union (enjoying a 28-point lead over the Conservatives among this group). Here, again, ambiguity served a purpose. Mr Corbyn has since been charged with a second betrayal by opposing continued UK membership of the single market. On this, there should be no surprise. Mr Corbyn is an ardent Eurosceptic: he voted against the single market’s creation in 1986 and, from the back benches, he continually opposed further European integration.

However, his position on the single market puts him into conflict with prominent Labour politicians, such as Chuka Umunna and the Welsh First Minister, Carwyn Jones, as well as the party membership (66 per cent of whom support single market membership) and, increasingly, public opinion. As the economic costs of Brexit become clearer (the UK is now the slowest-growing G7 country), voters are less willing to support a disruptive exit. Nor should they. 

The worse that Britain fares in the Brexit negotiations (the early signs are not promising), the greater the desire for an alternative will be. As a reinvigorated opposition, it falls to the Labour Party to provide it. Left-wing populism is not enough. 

The glory game

In an ideal world, the role of sport should be to entertain, inspire and uplift. Seldom does a sporting contest achieve all three. But the women’s cricket World Cup final, on 23 July at Lord’s, did just that. In a thrilling match, England overcame India by nine runs to lift the trophy. Few of the 26,500 spectators present will forget the match. For this may well have been the moment that women’s cricket (which has for so long existed in the shadow of the men’s game) finally broke through.

England have twice before hosted women’s World Cups. In 1973 matches were played at small club grounds. Twenty years later, when England won the final at Lord’s, the ground was nearly empty, the players wore skirts and women were banned from the members’ pavilion. This time, the players were professionals, every ticket was sold, and the match was shown live around the world. At the end, girls and boys pressed against the advertising hoardings in an attempt to get their heroes’ autographs. Heather Knight, Anya Shrubsole, Sarah Taylor, Tammy Beaumont, and the rest of the team: women, role models, world champions. 

This article first appeared in the 27 July 2017 issue of the New Statesman, Summer double issue