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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Boris Johnson's "juddering climax"? Don't let it distract you from his record as mayor

As Johnson finishes his term as mayor of London, his own parting shot leaves this mole feeling cold.

Initially, the feeling down here in the Mole townhouse was that Boris Johnson's "Operation Juddering Climax" tweet wasn't worth giving airtime to.
 

After all: it's an attention-seeking device as old as the hills. Sex sells; unfortunately, so does the soon-to-be-former Mayor's brand of weird bombast. So it's not surprising some press officer realised if you can get the voters to imagine Johnson in gaudens (see, Boris, bit of Latin for you there!), they'll get distracted. At the very least, it'll rechannel their disgust so they're not thinking about the fact he's a man whose past achievements include such gems as calling black people “picanninies” and, recently, suggesting “part-Kenyan” Barack Obama may have an “ancestral dislike” of the British empire.

Like a dead cat, once the possibility of an active penis is on the table people tend to get distracted.

So yes, reading Johnson's account yesterday did feel a little like supervising a class of fourth-formers who have just discovered euphemism and can't stop slipping it into their answers in class, continuing long after it stops being funny, massive shit-eating grins on their faces all the time. The temptation is always to ignore it, in the hope they'll get bored with their own supposed cleverness.

But it's actually more sinister than that. Because when Boris pulls this sort of sniggering schoolboy rhetoric out about the "climax" of his mayoralty, what he's actually doing is urging you to forget the stray pube of his water cannon, the crumpled tissue of his awful, boiling buses and the crusty sock which is his environmental legacy.

Well, here at the NS we believe a gentleman should always offer to sleep in the wet patch. So here, as a parting gift of sorts, is a short selection of some things you might remember Boris for:

The bus stock whose internal temperature “breaches legal limits for livestock”

Championed the contentious Garden Bridge

Installed a cable car that is used by fewer passengers than London’s, er, 400 busiest bus routes

Abused his planning power in the mayoral office in what the Guardian called “an assault on democracy”

Spend over £200,000 on two second hand water cannon from Germany – which he’s not allowed to use

That's that done. This mole's off for a cigarette.

I'm a mole, innit.