You win nothing in politics just for being right

If the Tories were a private company, their shareholders would be furious. So why are voters more le

Imagine you are a management consultant called in by shareholders to appraise the performance of the management team of a large business. They were recruited a couple of years ago and, although inexperienced, took over with a highly controversial strategy for reducing the company's debt. The workforce has since been radically reduced as have the pensions and benefits of those employees who remain. The hugely popular childcare scheme has been axed and the equally successful company healthcare scheme put out to tender.

Corporate morale is, not unsurprisingly, at an all-time low. Even worse, all of this sacrifice has not only been in vain but has proved positively counter-productive. The company's growth has stalled, annual losses have increased and the corporate debt is higher than ever. The management team has itself recently had to admit that its flagship strategy (let's call it Plan A) lies in tatters.

That is not all. Even the execution of their plan has been inept. Through almost laughable naivety and arrogance in their preparation for, and conduct at, a crucial meeting of the business's European partners, the management team found itself isolated, tactically outplayed and unable to achieve any of its negotiating goals. At home, its management style has been characterised by poorly considered proposals which have, more often than not, been reversed at the first sign of trouble. Those with which they persist have been subjected to so many unforeseen amendments and variations that they have been rendered of Byzantine complexity making them not only incomprehensible but impracticable.

How then would you, the management consultant, rate this team? In what terms would you report back to the shareholders? Would you tell them that the company was in safe hands, that management was doing a good job in difficult circumstances and that their interests as shareholders were best served by letting this team carry on? I thought not. And yet that is precisely the current judgement of the electorate of this administration. Why?

The unfortunate truth is that politics isn't a talent competition any more than it is simply a question of being right. If it were, then the fact that Labour consistently and accurately predicted the failure of Plan A - a plan whose corollary has been wildly unpopular cuts to valued public services - would have led to it now enjoying a 15-point lead in the polls and Ed Balls being feted as the economic seer of his age. While all of this may lead one to conclude that the electorate is irrational or capricious, I would argue that it merely continues to behave as it has always done. It has now, and ever has had, two primary criteria, to which all else is subsidiary.

Firstly, and as ever, it's the economy, stupid. Everyone wants a world class health service, a state education system that realises the potential of every child and decent pension provision for all -- and the polls tell us that the voters consistently trust Labour more than the Tories to prioritise, and to deliver, them. However, those same voters also know that without a stable, growing, economy, they will not happen, regardless of who is in power. And for so long as the electorate believes that Labour was responsible for, and has no credible solution to, the country's current economic predicament, they will not trust it with the reins of government.

The polls tell us that this is precisely what they do believe and you could hardly blame them for doing otherwise. As I suggested in an article which I wrote in these pages nearly a year ago, the Tories' greatest triumph since the election has been the embedding of the twin myths that it was the profligacy of Labour ('the maxing out of the credit card') that caused the deficit to balloon and that the only sensible response is therefore savagely to cut public expenditure.

It pains me to reflect that Labour has done so little since then to disabuse the public. Now that Osborne's Plan A has been exposed as economic illiteracy, it may find a more receptive audience for its message of 'too far too fast' but it needs to work far, far harder to deliver its own narrative. Labour must explain both the cause and its solution in straightforward terms that we can all understand. Do neither and we may as well all sit back and wait for the Tories to win a majority at the next election.

Secondly, and no less importantly, the country likes its leader to look the part. Whatever one's view of Cameron - and, believe me, mine could not be much more negative - he looks like a prime minister. He is telegenic, charismatic, confident and assured. He is seen (paradoxically given his administration's record) as decisive, even ruthless. These are qualities which the electorate likes and admires. To prove my point, and without naming names, I invite you to consider the characteristics of those party leaders who have achieved electoral success in the last thirty years and those who have not.

The sad truth is that unless your leader has, and is seen to have, those qualities - in short, unless he looks the part - you are whistling in the wind. That is why a stock question of the pollsters is whether you can visualise candidate X standing outside Downing Street. We cannot ignore the fact that Ed Miliband is currently failing that acid test. He can console himself that, for some time after she was elected Tory leader, so did Margaret Thatcher. It took a lot of time, hard work and the magic of Gordon Reece and the Saatchi brothers to mould her into a plausible prime minister - but it worked. Time, however, is not on his side. We live in volatile times and we cannot assume that a general election is years hence. Ed, and those around him, need to recognise the problem and act on it, urgently and effectively.

Labour can theorise as much as it wants about the mythical centre ground of politics and how to capture it. It can do good work, and make transient headlines, on phone tapping, Murdoch, bankers' bonuses and executive pay. It can echo public anger about pensions, austerity and cuts to public services. But without a coherent and compelling narrative on the economy and a leader who genuinely looks like a prime minister-in-waiting, Labour will not only fail to win the next general election, it will become a political irrelevance.

John Whitting is a QC and member of the Labour Party.

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The 2017 Budget will force Philip Hammond to confront the Brexit effect

Rising prices and lost markets are hard to ignore. 

With the Brexit process, Donald Trump and parliamentary by-election aftermath dominating the headlines, you’d be forgiven for missing the speculation we’d normally expect ahead of a Budget next week. Philip Hammond’s demeanour suggests it will be a very low-key affair, living up to his billing as the government’s chief accounting officer. Yet we desperately need a thorough analysis of this government’s economic strategy – and some focused work from those whose job it is to supposedly keep track of government policy.

It seems to me there are four key dynamics the Budget must address:

1. British spending power

The spending power of British consumers is about to be squeezed further. Consumers have propped up the economy since 2015, but higher taxes, suppressed earnings and price inflation are all likely to weigh heavily on this driver for growth from now on. Relatively higher commodity prices and the sterling effect is starting to filter into the high street – which means that the pound in the pocket doesn’t go as far as it used to. The dwindling level of household savings is a casualty of this situation. Real incomes are softer, with poorer returns on assets, and households are substituting with loans and overdrafts. The switch away from consumer-driven growth feels well and truly underway. How will the Chancellor counteract to this?

2. Lagging productivity

Productivity remains a stubborn challenge that government policy is failing to address. Since the 2008 financial crisis, the UK’s productivity performance has lagged Germany, France and the USA, whose employees now produce in an average four days as much as British workers take to produce in five. Perhaps years of uncertainty have seen companies choose to sit on cash rather than invest in new production process technology. Perhaps the dominance of services in our economy, a sector notorious hard in which to drive new efficiencies, explains the productivity lag. But ministers have singularly failed to assess and prioritise investment in those aspects of public services which can boost productivity. These could include easing congestion and aiding commuters; boosting mobile connectivity; targeting high skills; blasting away administrative bureaucracy; helping workers back to work if they’re ill.

3. Lost markets

The Prime Minister’s decision to give up trying to salvage single market membership means we enter the "Great Unknown" trade era unsure how long (if any) our transition will be. We must also remain uncertain whether new Free Trade Agreements (FTAs) are going to go anyway to make up for those lost markets.

New FTAs may get rid of tariffs. But historically they’ve never been much good at knocking down the other barriers for services exports – which explains why the analysis by the National Institute for Economic and Social Research recently projected a 61 per cent fall in services trade with the EU. Brexit will radically transform the likely composition of economic growth in the medium term. It’s true that in the near term, sterling depreciation is likely to bring trade back into balance as exports enjoy an adrenal currency competitive stimulus. But over the medium term, "balance" is likely to come not from new export market volume, but from a withering away of consumer spending power to buy imported goods. Beyond that, the structural imbalance will probably set in again.

4. Empty public wallets

There is a looming disaster facing Britain’s public finances. It’s bad enough that the financial crisis is now pushing the level of public sector debt beyond 90 per cent of our gross domestic product (GDP).  But a quick glance at the Office for Budget Responsibility’s January Fiscal Sustainability Report is enough to make your jaw drop. The debt mountain is projected to grow for the next 50 years. All else being equal, we could end up with an incredible 234 per cent of debt/GDP by 2066 – chiefly because of the ageing population and rising healthcare costs. This isn’t a viable or serviceable level of debt and we shouldn’t take any comfort from the fact that many other economies (Japan, USA) are facing a similar fate. The interest payable on that debt mountain would severely crowd out resources for vital public services. So while some many dream of splashing public spending around on nationalising this or that, of a "universal basic income" or social security giveaways, the cold truth is that we are going to be forced to make more hard decisions on spending now, find new revenues if we want to maintain service standards, and prioritise growth-inducing policies wherever possible.

We do need to foster a new economic model that promotes social mobility, environmental and fiscal sustainability, with long-termism at its heart. But we should be wary of those on the fringes of politics pretending they have either a magic money tree, or a have-cake-and-eat-it trading model once we leap into the tariff-infested waters of WTO rules.

We shouldn’t have to smash up a common sense, balanced approach in order for our country to succeed. A credible, centre-left economic model should combine sound stewardship of taxpayer resources with a fairness agenda that ensures the wealthiest contribute most and the polluter pays. A realistic stimulus should be prioritised in productivity-oriented infrastructure investment. And Britain should reach out and gather new trading alliances in Europe and beyond as a matter of urgency.

In short, the March Budget ought to provide an economic strategy for the long-term. Instead it feels like it will be a staging-post Budget from a distracted Government, going through the motions with an accountancy exercise to get through the 12 months ahead.

Chris Leslie MP was Shadow Chancellor in 2015 and chairs Labour’s PLP Treasury Committee

 

 

 

Chris Leslie is chair of Labour’s backbench Treasury Committee and was shadow Chancellor in 2015.