Labour’s poll performance is no “red herring”

The largest cuts since the 1920s will make the coalition fantastically unpopular.

Over at Left Foot Forward, Professor Philip Cowley, formerly of the much-missed Revolts, argues that Labour's impressive poll performance is a "red herring".

In response to the latest Ipsos MORI/Reuters poll, which put Labour and the Tories neck and neck on 37 per cent, he writes:

After losing in October 1951, Labour had pulled ahead by January 1952, but it didn't stop the Conservatives enjoying 13 years in government. In 1970, after a June election, Labour were level by October; that didn't stop Ted Heath polling more votes four years later, even if he didn't secure enough seats to cling on.

He adds that Labour "led Mrs T's cutting government within a month of the [1979] election", but was still out of power for the next 18 years. "Don't get too excited, we've been here before," is Cowley's message.

But there are good reasons to believe that 2010 will prove atypical. For a start, the cuts planned by the coalition, the largest since the Geddes Axe of the 1920s, are greater than anything we saw under the Iron Lady.

Many on the left are unaware that, despite her neoliberal ideology, spending actually rose during Margaret Thatcher's premiership. While education and health were neglected, spending on defence, law and order and welfare payments (thanks to mass unemployment) continued to grow.

Overall, public spending under Thatcher -- from 1978-79 to 1989-90 -- rose by 1.1 per cent a year on average.

There has, therefore, never been in living memory an austerity drive of the sort planned by the coalition. Figures on the left and the right are agreed that those 25 per cent cuts will make David Cameron's government fantastically unpopular.

The coalition hasn't even announced, let alone implemented, the key cuts, but already this week it has attracted the ire of the trade unions, the police and the defence establishment. No wonder one Liberal Democrat cabinet minister has predicted that support for his party will fall to 5 per cent and the Tories to 25 per cent.

Cowley's analysis is an antidote to Labour complacency, but fails to factor in the historically extraordinary cuts we're about to see.

George Eaton is political editor of the New Statesman.

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Brexit has opened up big rifts among the remaining EU countries

Other non-Euro countries will miss Britain's lobbying - and Germany and France won't be too keen to make up for our lost budget contributions.

Untangling 40 years of Britain at the core of the EU has been compared to putting scrambled eggs back into their shells. On the UK side, political, legal, economic, and, not least, administrative difficulties are piling up, ranging from the Great Repeal Bill to how to process lorries at customs. But what is less appreciated is that Brexit has opened some big rifts in the EU.

This is most visible in relations between euro and non-euro countries. The UK is the EU’s second biggest economy, and after its exit the combined GDP of the non-euro member states falls from 38% of the eurozone GDP to barely 16%, or 11% of EU’s total. Unsurprisingly then, non-euro countries in Eastern Europe are worried that future integration might focus exclusively on the "euro core", leaving others in a loose periphery. This is at the core of recent discussions about a multi-speed Europe.

Previously, Britain has been central to the balance between ‘ins’ and ‘outs’, often leading opposition to centralising eurozone impulses. Most recently, this was demonstrated by David Cameron’s renegotiation, in which he secured provisional guarantees for non-euro countries. British concerns were also among the reasons why the design of the European Banking Union was calibrated with the interests of the ‘outs’ in mind. Finally, the UK insisted that the euro crisis must not detract from the development of the Single Market through initiatives such as the capital markets union. With Britain gone, this relationship becomes increasingly lop-sided.

Another context in which Brexit opens a can of worms is discussions over the EU budget. For 2015, the UK’s net contribution to the EU budget, after its rebate and EU investments, accounted for about 10% of the total. Filling in this gap will require either higher contributions by other major states or cutting the benefits of recipient states. In the former scenario, this means increasing German and French contributions by roughly 2.8 and 2 billion euros respectively. In the latter, it means lower payments to net beneficiaries of EU cohesion funds - a country like Bulgaria, for example, might take a hit of up to 0.8% of GDP.

Beyond the financial impact, Brexit poses awkward questions about the strategy for EU spending in the future. The Union’s budgets are planned over seven-year timeframes, with the next cycle due to begin in 2020. This means discussions about how to compensate for the hole left by Britain will coincide with the initial discussions on the future budget framework that will start in 2018. Once again, this is particularly worrying for those receiving EU funds, which are now likely to either be cut or made conditional on what are likely to be more political requirements.

Brexit also upends the delicate institutional balance within EU structures. A lot of the most important EU decisions are taken by qualified majority voting, even if in practice unanimity is sought most of the time. Since November 2014, this has meant the support of 55% of member states representing at least 65% of the population is required to pass decisions in the Council of the EU. Britain’s exit will destroy the blocking minority of a northern liberal German-led coalition of states, and increase the potential for blocking minorities of southern Mediterranean countries. There is also the question of what to do with the 73 British MEP mandates, which currently form almost 10% of all European Parliament seats.

Finally, there is the ‘small’ matter of foreign and defence policy. Perhaps here there are more grounds for continuity given the history of ‘outsourcing’ key decisions to NATO, whose membership remains unchanged. Furthermore, Theresa May appears to have realised that turning defence cooperation into a bargaining chip to attract Eastern European countries would backfire. Yet, with Britain gone, the EU is currently abuzz with discussions about greater military cooperation, particularly in procurement and research, suggesting that Brexit can also offer opportunities for the EU.

So, whether it is the balance between euro ‘ins’ and ‘outs’, multi-speed Europe, the EU budget, voting blocs or foreign policy, Brexit is forcing EU leaders into a load of discussions that many of them would rather avoid. This helps explain why there is clear regret among countries, particularly in Eastern Europe, at seeing such a key partner leave. It also explains why the EU has turned inwards to deal with the consequences of Brexit and why, although they need to be managed, the actual negotiations with London rank fairly low on the list of priorities in Brussels. British politicians, negotiators, and the general public would do well to take note of this.

Ivaylo Iaydjiev is a former adviser to the Bulgarian government. He is currently a DPhil student at the Blavatnik School of Government at the University of Oxford

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