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My advice to Ed Balls: don’t follow Slasher’s lead and promise the earth

Who has really been telling "shameful lies"?

In a speech at the 2009 Conservative party conference in Manchester, George “Slasher” Osborne offered a sneering overview of Labour policy with all sorts of claims about how the streets would be paved with gold if only the Tories were to win the next general election and he was made chancellor. The following spring, after an election a ham sandwich could have won but no one did, the Tories had to form a coalition with a turncoat party that for years had opposed austerity but paused a few days and reversed all of that, once ministerial cars were on offer.

The Lib Dems banked all on the UK economy rising from the ashes; they hoped that there would be an “expansionary fiscal contraction” and growth would emerge before 2015. The governor of the Bank of England, Mervyn King, has what must be the worst economic forecasting record of any governor in living memory. He failed to spot the recession and the subsequent double dip; he thought that the UK and the US had decoupled; he thought that there would be a wage spiral as a result of union power and appeared to have no clue that LIBOR (the London Inter-bank Offered Rate) was being fiddled, even though it was arguably his job to know. King told the coalition posh boys to slash away and all would be well. But it wasn’t.

Some of us even had the audacity to say all of that stuff was for the birds and warned that the government was committing economic suicide; but nobody much listened and on they ploughed. Sadly, the government is now in deep trouble and knows it. It will be interesting to hear how Slasher plans to wriggle out of this mess at the Tory conference in Birmingham.

Look back in anger

Before that, it seems appropriate to go back and look at the claims Osborne made, in his speech in 2009, about what he would deliver. First, he said that the Tory party would “lead the economy out of crisis”. That could hardly be further from the truth, as the coalition has pushed us into an even deeper crisis. We are in the slowest recovery since the Second World War and are perhaps even heading for a triple dip.

The chart below shows the current estimates of GDP growth along with the initial estimates, as data gets revised all the time. The economy was growing nicely when the coalition took over; it grew for five successive quarters from the third quarter of 2009 up to the third quarter of 2010, under Alistair Darling’s policies. Output is now 4.4 per cent lower than it was at the start of the recession in 2008 and has shrunk in five of the past seven quarters. It takes time for policies to feed through to the data, so if we assume that the coalition owns the data from the fourth quarter of 2010, the economy has shrunk 0.6 per cent.

The recession deniers are clueless. The recession hasn’t been revised away and isn’t going to be; the revisions average 0.1 per cent down over the past 20 quarters. Consumer and business confidence today is lower than it was when the coalition took office. The latest European Union sentiment index for the UK (reported in the second chart, below), which is a combination of business and consumer surveys, stands at 91.9, against 102.4 in May 2010, when the coalition took over. It is markedly lower than in Sweden (100.0), which recently moved to inject a stimulus into its economy. Confidence is especially low in the services sector, with a score of -22, compared to -10 in May 2010.

In November 2010, there were 2,477,000 unemployed, with an unemployment rate of 7.9 per cent. The latest data shows 2,645,000 unemployed in July 2012, with an unemployment rate of 8.2 per cent. Over the same period, average weekly earnings rose 3.3 per cent, while the Consumer Price Index has risen by 6.5 per cent, so real earnings have fallen sharply.

Far from leading us out of crisis, Osborne has made matters worse and pushed the UK economy into a double-dip recession. The latest UK PMI for manufacturing was disappointing, falling from 49.6 to 48.4 (anything below 50 indicates decline). This is the third month of declines and job losses are beginning to mount. The PMI for construction in September showed the biggest decline in new business since April 2009, so there’s little sign of green shoots.

I have every expectation that GDP in the next quarter may be positive but the fourth quarter is likely to be negative. Plus, the deficit is up by 22 per cent so far this year. As the shadow chancellor, Ed Balls, said in his Labour conference speech, we are seeing “rising borrowing, not to invest in the jobs of the future but to pay for the mounting costs of this government’s economic failure. There is nothing credible about a plan that leads to a double-dip recession . . . That’s not credible, that is just plain wrong.”

Holidays in the sun

Second, Osborne argued in 2009 that the Tories would protect public services, claiming: “We’re all in this together.” He had the audacity to repeat this phrase seven times. He then claimed: “Our determination as compassionate Conservatives [is] to protect the most vulnerable.” In truth, the poor are all in it together and the rich are holidaying in the south of France.

Sensibly, Balls hasn’t fallen into the same trap as Osborne did just before the election. He doesn’t need to say too much about what Labour would do, other than to reiterate that he will wait and see how serious is the mess he is likely to inherit. He is entitled to say he warned that this economic disaster was looming and things would have been a lot better had he been in charge. My main advice to Balls, though, is to stay away from the pork pies. We all know who told “shameful lies”.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

This article first appeared in the 08 October 2012 issue of the New Statesman, Conservative conference special

Photo: Getty Images
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What's to be done about racial inequality?

David Cameron's words on equal opportunities are to be welcomed - now for some action, says Sunder Katwala.

David Cameron made the strongest, clearest and most high profile statement about ethnic inequalities and the need to tackle discrimination ever yet offered by a British Prime Minister in his leader’s speech to the Conservative Party conference in Manchester.
“Picture this. You’ve graduated with a good degree. You send out your CV far and wide. But you get rejection after rejection. What’s wrong? It’s not the qualifications or the previous experience. It’s just two words at the top: first name, surname. Do you know that in our country today: even if they have exactly the same qualifications, people with white-sounding names are nearly twice as likely to get call backs for jobs than people with ethnic-sounding names? … That, in 21st century Britain, is disgraceful. We can talk all we want about opportunity, but it’s meaningless unless people are really judged equally”, said Cameron.
While the proof of the pudding will be in the eating, this was a powerfully argued Prime Ministerial intervention – and a particularly well-timed one, for three reasons.

Firstly, the Prime Minister was able to root his case in an all-but-universally accepted appeal for equal opportunities. It will always prove more difficult in practice to put political energy and resources behind efforts to remedy discrimination against a minority of the population unless a convincing fairness case is made that values cherished across our whole society are at stake. Cameron’s argument, that any party which tells itself that it is the party of the ‘fair chance’ and ‘the equal shot’ must have a response when there is such clear evidence of discrimination, should prove persuasive to a Conservative Party that has not seen race inequalities as its natural territory. Cameron argued that the same principles should animate responses to discrimination when it comes to race, gender and social class. Put like that, wanting job interviews to be fair – by eradicating conscious and unconscious patterns of bias wherever possible – would strike most Britons as offering as clear a case of the values of fair play as wanting the best baker to win the Great British Bake-Off on television.
Secondly, Cameron’s intervention comes at a potential "tipping point" moment for fair opportunities across ethnic groups. Traditionally, ethnic discrimination has been discussed primarily through the lens of its impact on the most marginalised. Certainly, persistent gaps in the criminal justice system, mental health provision and unemployment rates remain stark for some minority groups. What has been less noticed is the emergence of a much more complex pattern of opportunity and disadvantage – not least as a consequence of significant ethnic minority progress.

Most strikingly of all, in educational outcomes, historic attainment gaps between ethnic minorities and their white British peers have disappeared over the last decade. In the aggregate, ethnic minorities get better GCSE results on average. Ethnic minority Britons are more likely, not less likely, to be university graduates than their fellow citizens. 

As a result of that progress, Cameron’s intervention comes at a moment of significant potential – but significant risk too. Britain’s ethnic minorities are the youngest and fastest-growing sections of British society. If that educational progress translates into economic success, it will make a significant contribution to the "Great British Take-Off" that the Prime Minister envisions. But if that does not happen, with educational convergence combined with current ‘ethnic penalties’ in employment and income persisting, then that potential could well curdle into frustration that the British promise of equal opportunities is not being kept.  Cameron also mirrored his own language in committing himself to both a ‘fight against extremism’ and a ‘fight against discrimination’: while those are distinct challenges and causes, actively pursuing both tracks simultaneously has the potential, at least, depolarise some debates about responses to extremism  - and so to help deepen the broad social coalitions we need for a more cohesive society too.

Thirdly, Cameron’s challenge could mark an important deepening in the political competition between the major parties on race issues. Many have been struck by the increase in political attention on the centre-right to race issues over the last five to ten years. The focus has been on the politics of representation. By increasing the number of non-white Conservative MPs from two to seventeen since 2005, Cameron has sent a powerful signal that Labour’s traditional claim to be ‘the party of ethnic minorities’ would now be contested. Cameron was again able to celebrate in Manchester several ways in which his Cabinet and Parliamentary benches demonstrate many successful journeys of migrant and minority integration in British society. That might perhaps help to ease the fears, about integration being impossible in an era of higher immigration, which the Home Secretary had articulated the previous day.

So symbolism can matter. But facial diversity is not enough. The politics of ethnic minority opportunity needs to be about more than visits to gurdwaras, diversity nights at the party conference fringes and unveiling statues of Mahatma Gandhi in Parliament Square. Jeremy Corbyn’s first speech as Labour leader did include one brief celebratory reference to Britain’s ethnic diversity – “as I travelled the country during the leadership campaign it was wonderful to see the diversity of all the people in our country” – and to Labour bringing in more black, Asian and ethnic minority members - but it did not include any substantial content on discrimination. Tim Farron acknowledged during his leadership campaign that the Liberal Democrats have struggled to get to the starting-line on race and diversity at all. The opposition parties too will no doubt now be challenged to match not just the Prime Minister’s rhetorical commitment to challenging inequalities but also to propose how it could be done in practice.

Non-white Britons expect substance, not just symbolism from all of the parties on race inequalites.  Survation’s large survey of ethnic minority voters for British Future showed the Conservatives winning more ethnic minority support than ever before – but just 29 per cent of non-white respondents were confident that the Conservatives are committed to treating people of every ethnic background equally, while 54 per cent said this of Labour. Respondents were twice as likely to say that the Conservatives needto do more to reach out – and the Prime Minister would seem to be committed to showing that he has got that message.  Moreover, there is evidence that ethnic inclusion could be important in broadening a party’s appeal to other younger, urban and more liberal white voters too – which is why it made sense for this issue to form part of a broader attempt by David Cameron to colonise the broad centre of British politics in his Manchester speech.

But the case for caution is that there has been limited policy attention to ethnic inequalities under the last two governments. Restaurateur Iqbal Wahhab decided to give up his role chairing an ethnic minority taskforce for successive governments, unconvinced there was a political commitment to do much more than convene a talking shop. Lib Dem equalities minister Lynne Featherstone did push the CV discrimination issue – but many Conservatives were sceptical. Cameron’s new commitment may face similar challenges from those whose instinct is to worry that more attention to discrimination or bias in the jobs market will mean more red tape for business.

Labour had a separate race inequalities manifesto in 2015, outside of its main election manifesto, while the Conservative manifesto did not contain significant commitments to racial inequality. The mid-campaign launch in Croydon of a series of race equality pledges showed an increasing awareness of the growing importance of ethnic minority votes - though the fact that they all involved aiming for increases of 20 per cent by 2020 gave them a slightly back-of-the-envelope feel. 

Prime Ministerial commitments have an important agenda-setting function. A generation ago the Stephen Lawrence case opened the eyes of middle England to racist violence and police failures, particularly through the Daily Mail’s persistent challenging of those injustices. A Conservative Prime Minister’s words could similarly make a big difference in the mainstreaming of the issue of inequalities of opportunity. What action should follow words? Between now and next year’s party conference season, that must will now be the test for this Conservative government – and for their political opponents too. 

Sunder Katwala is director of British Future and former general secretary of the Fabian Society.