Labour can no longer duck tough choices on spending

If it is to reject Osborne's doom-laden plans, Labour needs to start developing an alternative now.

Within weeks, George Osborne will use the Autumn Statement to announce his spending plans for the early years of the next parliament. He is expected to set out further cuts and in doing so hopes to lay political traps for the opposition, especially on welfare cuts.

Political gamesmanship is trumping compassionate politics. Spending choices should be about how to minimise the pain and suffering families must endure as a result of today's savage economic forces. Instead, the government is intent on targeting the least popular groups and protecting those who are most likely to vote.

The Labour Party can no longer duck questions about what it would do differently with power. It needs to start developing an alternative so that before the next election it has a clear direction on spending to show it is a credible and caring contender for government. And if the Liberal Democrats want to keep open the option of working with Labour after 2015, they too need to say what they would do differently without their Tory partners.

Labour, in particular, will have to find a formula that proves the party can be responsible with the public finances, whilst avoiding being locked into Conservative spending limits. The Tory policy of eliminating the structural deficit by 2017-18 will come at a cost of perhaps £50bn in further cuts or tax rises. By contrast, Barack Obama's re-election shows the political and economic dividends of an offer of intelligent spending in place of grinding austerity.

Much will depend on the state of the economy by 2015, but if growth returns there is scope for cautious optimism. For example, a government can close the deficit over time if it is prepared to freeze public spending while the economy expands. However, the starting point for spending decisions should be the end-point: what do politicians on the left want the public finances to look like by 2020? Of course, the deficit needs to brought under control, but we also need to ask what proportion of the economy should be devoted to public spending. Today, spending remains well above the post-war average of 42 per cent of GDP but Osborne has deliberately planned to overshoot this number in a bid to permanently shrink the size of the state.

Labour could offer a distinctive but mainstream alternative by simply pledging a return to trend. This would mean taking a little longer to close the deficit than the Conservatives plan and substituting tax rises for some of the planned cuts. The result would be more flexibility to address the huge social pressures the economic crisis has caused.

But the need for painful decisions will not disappear if a 2015 government signs up to spending limits which are less severe than Osborne's. Even if spending remains flat overall it will feel like another parliament of austerity, and some budgets will need to shrink to pay for others to grow. Embracing this mathematical inevitability should not be the preserve of the left's self-styled fiscal hawks, who wear a spending hair-shirt as a badge of honour. It's time for an open, frank and respectful conversation, which draws in the full range of opinion on the centre-left.

This week, that process begins with the launch of the Commission on Future Spending Choices. It is a year-long inquiry hosted by the Fabian Society, whose associations with the British welfare state date back more than a century. For we think it is the cheerleaders, not the adversaries of government, who are best placed to consider how the state can live within its means.

The commission will look at where to spend and how to cut. We will explore whether economic reforms can reduce demand for social security or whether cuts to entitlements are needed. We will consider how public service budgets should be shared and question where provision will need to change in the face of perhaps ten years of flat or falling budgets. Lastly, we will consider how public spending can do more to boost growth, employment and earnings.

The left faces hard choices if it is to earn economic credibility but stay true to its values. But the choices are not as bad as the Conservatives would have us believe. Labour can reject Osborne's doom-laden plans and offer an optimistic alternative. But to return to power the alternative must be clearly specified, including the painful decisions. The UK will be far less wealthy in 2020 than anyone would have predicted in 2005 and public spending has to adjust to this reality. But as long as the economy returns to decent growth, Britain can afford a strong and compassionate welfare state.

John McFall is a Labour peer and the former chair of the House of Commons Treasury select committee

Andrew Harrop is the general secretary of the Fabian Society

Ed Miliband speaks at the CBI's annual conference on 19 November 2012. Photograph: Getty Images.

John McFall is a Labour peer and the former chair of the House of Commons Treasury select committee

Andrew Harrop is the general secretary of the Fabian Society

All photos: India Bourke
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“They cut, we bleed”: activists Sisters Uncut protest closures of women's services

 “Our blood should not pay for our rape.”

Over 500 domestic violence survivors and support workers processed through central London this weekend. The protest, staged by the feminist direct action group Sisters Uncut, mourned the women’s services that are losing out as a result of the government's austerity drive.

Since November 2014 the group has occupied streets, burned copies of the Daily Mail, and hijacked the Suffragette film premiere. But on Saturday the mood was somber. In Soho Square the group staged a symbolic funeral service. Attendees stood in a protective circle, fists raised, while members took turns to read out the names of the scores of women who’ve been killed by men in the past year:  “Anne Dunkley, 67; Nadia Khan, 24; Lisa Anthony, 47…”. The youngest was just 14 years old.

The service culminated in a promise “to never forget” the dead, and also to protect the living: “We must love and support one another; we have nothing to lose but our chains".

As the protestors passed St Martins in the Fields Church, dressed in black veils and funeral attire, the crowd of passers-by broke into spontaneous applause. “It gave me goosebumps”, Caroline, an activist and former victim of abuse told me. “You expect people on the march to be supportive but not the people on the street. I’ve been on other marches and people normally complain about you being selfish and blocking up the streets but this response makes you feel like people do  care.”

The show of public support is especially welcome in the aftermath of the Chancellor’s Autumn Statement. Cuts to local authority budgets have already led to the closure of over 30 domestic violence services since 2010, including Eaves, a charity that provided services for single, low-income and vulnerable women.

Further erosions to local council budgets will only put more services and lives at risk, activists say. Also of concern is Osborne’s decision to devolve responsibility for raising a social care tax (of up to 2 per cent on council tax) to local authorities. This tips hostility to tax increases away from central government to local authorities, and could place greater pressure on women’s services to compete for funding.

The Chancellor offered a supposed silver lining to the cuts with the promise that VAT money raised from the EU’s compulsory tax on sanitary products will be ringfenced for women’s charities, such as the Eve Appeal and Women’s Aid.

The implication, however, that only women are to pay for helping the victims of domestic violence was met with derision from Sisters Uncut. As the marchers approached their final destination in Trafalgar Square, red dye turned the square’s famous fountains the colour of blood. “This blood won’t wash the blood from Osborne’s hands,” read one tampon-draped banner; “Our blood should not pay for our rape”, read another.

For those on the march, the cuts are an affront on many levels. All those I spoke to worked in some form of public service; everything from housing to foster care. But some have had to move out of the women’s services sector for the lack of funding.

Louisa used to work for a domestic violence service in London until it was forced to close last month. “I’m here because I’ve witnessed first hand what the cuts are doing to women and how much the organisations are having to squeeze what they can provide.”

All public services have legitimate claims to support - from the 14-strong police team that escorted the marchers, to the sweepers who were left to dredge the protesters’ roses out of the fountains and brush away the tampons that had fallen from their banners.

The danger, however, according to Caroline, is that the needs of domestic violence victims are all too easy to sideline: “This is by its nature something that goes on behind closed doors,” she says. As funding tightens, these voices musn’t be squeezed out.

Sisters Uncut is an intersectional group open to all who identify as women. The national domestic violence helpline offers help and support on 0808 2000 247. Members of the LGBT communities can also access tailored support from Broken Rainbow on 0800 9995428.

India Bourke is the New Statesman's editorial assistant.