Labour will want to keep its Trident options open

A half-hearted commitment to renewal would make an easy concession to Lib Dems in future coailtion talks.

As with so many policies, Labour’s official position on whether or not it is worth funding a like-for-like replacement for the Trident submarine-based nuclear missile system is under review. More specifically, the view is that the party supports Britain having a nuclear deterrent. (Of course it does. The party isn’t about to revisit early 80s-style unilateral disarmament.) But the question of whether or not that requires having big Cold War-design submarines lurking in the seas ready to retaliate against the Soviets remains undecided.

So it is naturally a matter of interest when Des Browne, a former Labour defence secretary, co-authors an article in the Telegraph suggesting Trident may have had its day; not least because he championed the opposite view in government.

At the moment, on the government side, the matter is also subject to a review, headed by Danny Alexander, the Liberal Democrat Chief Secretary to the Treasury. The very existence of that process is held up by Lib Dems as a mini-policy triumph, effectively thwarting the Tories’ hopes of prompt Trident renewal in this parliament. Scrapping the system is one of those totem Lib Dem policies in which activists take an especially vigorous interest even if the public is largely uninterested.

Labour, meanwhile, are ambivalent. There is still a whiff of CND around the party, but there is also a residual fear from the macho New Labour era of looking like a bunch of weak-kneed lefty pacifists. The Browne position is eminently reasonable: if there is a workable, cheaper alternative that retains some nuclear deterrent capacity, it would be perverse for a cash-strapped government not to take it.

That isn’t to say Labour is ready to adopt such a position. But it is worth noting that a final decision isn’t due before 2016 and it certainly won’t be taken this side of an election. That leaves Labour with the option of a manifesto pledge keeping all Trident options open. It probably hasn’t escaped the leadership’s notice that a vague, half-hearted commitment to Trident would also make an easy concession in the event of coalition negotiations with the Lib Dems in a hung parliament – a concession the Tories could not make.

A Trident submarine makes its way out from Faslane Naval base in Scotland. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

Photo: Getty
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George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.