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

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Theresa May "indifferent" towards Northern Ireland, says Alliance leader Naomi Long

The non-sectarian leader questioned whether the prime minister and James Brokenshire have the “sensitivity and neutrality” required to resolve the impasse at Stormont.

Theresa May’s decision to call an early election reflects her “indifference” towards the Northern Ireland peace process, according to Alliance Party leader Naomi Long, who has accused both the prime minister and her Northern Ireland secretary James Brokenshire of lacking the “sensitivity and neutrality” required to resolve the political impasse at Stormont.

In a wide-ranging interview with the New Statesman, Long – who is running to regain her former Belfast East seat from the DUP for her non-sectarian party in June – accused the Conservatives of “double messaging” over its commitment to Northern Ireland’s fragile devolution settlement. The future of power-sharing province remains in doubt as parties gear up for the province’s fourth election campaign in twelve months.

Asked whether she believed the prime minister – who has been roundly criticised at Stormont for her decision to go to the country early – truly cared about Northern Ireland, Long’s assessment was blunt. “We have had no sense at any time, even when she was home secretary, that she has any sensitivity towards the Northern Ireland process or any interest in engaging with it at all... It speaks volumes that, when she did her initial tour when she was prime minister, Northern Ireland was fairly low down on her list.”

The timing of the snap election has forced Brokenshire to extend the deadline for talks for a fourth time – until the end of June – which Long said was proof “Northern Ireland and its problems were not even considered” in the prime minister’s calculations. “I think that’s increasingly a trend we’ve seen with this government,” she said, arguing May’s narrow focus on Brexit and pursuing electoral gains in England had made progress “essentially almost impossible”.

“They really lack sensitivity – and appear to be tone deaf to the needs of Scotland and Northern Ireland,” she said. “They are increasingly driven by an English agenda in terms of what they want to do. That makes it very challenging for those of us who are trying to restore devolution, which is arguably in the worst position it’s been in [since the Assembly was suspended for four years] in 2003.”

The decisive three weeks of post-election talks will now take place in the weeks running up to Northern Ireland’s loyalist parade season in July, which Long said was “indicative of [May’s] indifference” and would make compromise “almost too big an ask for anyone”. “The gaps between parties are relatively small but the depth of mistrust is significant. If we have a very fractious election, then obviously that timing’s a major concern,” she said. “Those three weeks will be very intense for us all. But I never say never.”

But in a further sign that trust in Brokenshire’s ability to mediate a settlement among the Northern Irish parties is deteriorating, she added: “Unless we get devolution over the line by that deadline, I don’t think it can be credibly further extended without hitting James Brokenshire’s credibility. If you continue to draw lines in the sand and let people just walk over them then that credibility doesn’t really exist.”

The secretary of state, she said, “needs to think very carefully about what his next steps are going to be”, and suggested appointing an independent mediator could provide a solution to the current impasse given the criticism of Brokenshire’s handling of Troubles legacy issues and perceived partisan closeness to the DUP. “We’re in the bizarre situation where we meet a secretary of state who says he and his party are completely committed to devolution when they ran a campaign, in which he participated, with the slogan ‘Peace Process? Fleece Process!’ We’re getting double messages from the Conservatives on just how committed to devolution they actually are.”

Long, who this week refused to enter into an anti-Brexit electoral pact with Sinn Fein and the SDLP, also criticised the government’s push for a hard Brexit – a decision which she said had been taken with little heed for the potentially disastrous impact on Northern Ireland - and said the collapse of power-sharing at Stormont was ultimately a direct consequence of the destabilisation brought about by Brexit.

 Arguing that anything other than retaining current border arrangements and a special status for the province within the EU would “rewind the clock” to the days before the Good Friday agreement, she said: “Without a soft Brexit, our future becomes increasingly precarious and divided. You need as Prime Minister, if you’re going to be truly concerned about the whole of the UK, to acknowledge and reflect that both in terms of tone and policy. I don’t think we’ve seen that yet from Theresa May.”

She added that the government had no answers to the “really tough questions” on Ireland’s post-Brexit border. “This imaginary vision of a seamless, frictionless border where nobody is aware that it exists...for now that seems to me pie in the sky.”

However, despite Long attacking the government of lacking the “sensitivity and neutrality” to handle the situation in Northern Ireland effectively, she added that Labour under Jeremy Corbyn had similarly failed to inspire confidence.

“Corbyn has no more sensitivity to what’s going on in Northern Ireland at the moment than Theresa May,” she said, adding that his links to Sinn Fein and alleged support for IRA violence had made him “unpalatable” to much of the Northern Irish public. “He is trying to repackage that as him being in some sort of advance guard for the peace process, but I don’t think that’s the position from which he and John McDonnell were coming – and Northern Irish people know that was the case.” 

Patrick Maguire writes about politics and is the 2016 winner of the Anthony Howard Award.

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