How the left can be radical without spending money

Balls's speech made way for a new agenda that is profoundly exciting.

Balls's speech made way for a new agenda that is profoundly exciting.{C}

Ever noticed how shutting one door can open another? This week Labour's staunchest champion of growing our way out of the deficit acknowledged that he could well be making cuts in 2015. The left, personified by Owen Jones and Len McCluskey, were up in arms. They think we've lost the possibility of being radical. I say we've opened it up.

The modern left frequently makes one mistake. They assume that the most significant means government has of transforming lives is through taxing and spending, traditionally known as the "demand" side of the economy. They have left the supply side - the rules that govern the price of labour and capital - to the right.

But what if, at a time of pressure to reduce government spending, the left could develop an agenda for the supply side of the economy that delivered meaningful change?

It's not surprising we're sceptical. Because the right have dominated such policy in the past, such an agenda is associated with smashing unions to decrease the cost of labour, deregulating capital to enrich the fortunate or privatising at the expense of quality.

But supply side policy doesn't have to be regressive. It's just a tool that's been used in the wrong way. Most recently, Ed Miliband has been talking about a number of supply side policies that are courageous, imaginative and proudly consistent with the values of the left.

The most high profile example is his attack on certain energy and transport companies. We know that these markets are sown up, so increasing competition and regulation will deliver a fairer result. The living wage is another example. Government contracts that build in apprenticeships and local investment is another. The High Pay Commission's work on wage transparency and shareholder representation on boards is another. Cutting down on corporate tax havens as Miliband just outlined is another. Breaking up the banks takes this one step further.

Although it needs sexier branding, these supply side policies are all part of what Miliband calls "responsible capitalism". It's why Blue Labour is interesting.

These policies have three big advantages. First, they don't cost anything. Second, they make people's lives better. Third, they are much closer to where the public is at. I appreciate the arguments made by Owen Jones, but I don't think he has appreciated the scale of anger there is about a perceived waste of public money by Labour in the good times.

As someone who remembers what it was like to not have enough chairs in their classroom, I'm never going to apologise for investing in schools, and you'll never hear me say that government spending isn't essential and necessary. But waste on IT contracts, PFI and middle managers? I'm happy to apologise for some of that.

And as Ed Balls said this week, a true Keynesian is sometimes a hawk. If you genuinely believe we should be running a programme of increased spending now, then you have to acknowledge that we should have spent less when the economy was booming. The idea that Keynesians believe in high spending throughout the cycle misses the point completely.

So let's not get confused - Labour is still saying that we should cut less fast and less deep now, but with the OBR estimating we'll be 18 per cent poorer as a result of the recession, the state will be smaller once we're out of this mess. And that means a progressive supply side agenda.

If we do that, then Ball's speech wasn't a sign of giving up and following the Tories slowly back to the middle ground. It was a necessary part of gaining credibility with the public to make way for a new agenda that is profoundly exciting. Interestingly, it's one that Miliband is leading, not the shadow chancellor. The left shouldn't abandon ship, it should get on board.

Rowenna Davis is Labour PPC for Southampton Itchen and a councillor for Peckham

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Theresa May is paying the price for mismanaging Boris Johnson

The Foreign Secretary's bruised ego may end up destroying Theresa May. 

And to think that Theresa May scheduled her big speech for this Friday to make sure that Conservative party conference wouldn’t be dominated by the matter of Brexit. Now, thanks to Boris Johnson, it won’t just be her conference, but Labour’s, which is overshadowed by Brexit in general and Tory in-fighting in particular. (One imagines that the Labour leadership will find a way to cope somehow.)

May is paying the price for mismanaging Johnson during her period of political hegemony after she became leader. After he was betrayed by Michael Gove and lacking any particular faction in the parliamentary party, she brought him back from the brink of political death by making him Foreign Secretary, but also used her strength and his weakness to shrink his empire.

The Foreign Office had its responsibility for negotiating Brexit hived off to the newly-created Department for Exiting the European Union (Dexeu) and for navigating post-Brexit trade deals to the Department of International Trade. Johnson was given control of one of the great offices of state, but with no responsibility at all for the greatest foreign policy challenge since the Second World War.

Adding to his discomfort, the new Foreign Secretary was regularly the subject of jokes from the Prime Minister and cabinet colleagues. May likened him to a dog that had to be put down. Philip Hammond quipped about him during his joke-fuelled 2017 Budget. All of which gave Johnson’s allies the impression that Johnson-hunting was a licensed sport as far as Downing Street was concerned. He was then shut out of the election campaign and has continued to be a marginalised figure even as the disappointing election result forced May to involve the wider cabinet in policymaking.

His sense of exclusion from the discussions around May’s Florence speech only added to his sense of isolation. May forgot that if you aren’t going to kill, don’t wound: now, thanks to her lost majority, she can’t afford to put any of the Brexiteers out in the cold, and Johnson is once again where he wants to be: centre-stage. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.