Labour must recognise the need for ruthless prioritisation

The party must seize control of the debate and show a bit of leg when it comes to economic policy.


There are three central arguments that will determine the outcome of the next election. One is over fairness, a second is over economic management, and a third over cultural affinity with the British – or more accurately the English – people.

Labour is winning the first of these hands down, but on the other two there is still a lot of spade work to do. Winning the cultural argument is perhaps the hardest. But it is on the economy that more progress must be made now if Labour is to make a genuine breakthrough.

Many observers wrongly believe that a weak economy and depressed living standards will hand Labour victory. There is nothing axiomatic about this. In fact, even if there is no economic recovery – and there may well be – this assumption is intoxicatingly complacent. No one should confuse the vicissitudes of government with the big questions that determine election outcomes.

If economic malaise continues, it is likely that in the general election campaign more questions will be asked of Labour than of the Conservatives because fear of change will dominate the psychology of the electorate. Credit downgrade, double, triple or even quadruple dip, it will not matter much. Elections are about choice.

And on the economy one question above all will define the debates – where is the money coming from? There is nothing new in this. It is an age old question, which has defined many elections. But this time, without better economic news, anxiety about debt – national and personal - will make it more potent.

To borrow from George Bernard Shaw, if Labour is unable to answer this question - we will neither find it easy to look at things as they are and ask why nor dream of things that never were and ask why not?

Ed Miliband knows this. Hence, his use of the phrase “ruthless prioritisation” in his Fabian lecture in January. It is time his party knew it.

There is a perfectly credible economic argument that the pace of cuts should be slower but whether you are a Keynesian, a Monetarist or just care about the price of a loaf of bread, it cannot be denied that there is now a need for some ruthless prioritisation.

Economics and politics sometimes pass in the night, but they rarely face in the same direction. The paradox is that the more you side with the view that cuts should be slower, the more you must reassure the electorate by demonstrating your determination to prioritise ruthlessly.

Taxing the rich more is not ruthless prioritisation, but the easy option; a habit that progressive parties should indulge in judiciously. Tax avoidance has to be tackled, but it is fiendishly difficult to raise more revenue consistently by doing so, particularly from global corporations. To deal with it effectively often requires international agreement.

Before Labour comes to a judgement on the spending envelope it needs to set out a coherent case to begin to answer the question that looms large on the horizon.

First, it must define, or rather redefine, the role of the state, and from this demonstrate how it will deliver value for money.

Old Labour believed that central government’s job was to deliver. New Labour wanted to steer not row the boat, but this too often became micro management from the centre, which stifled local initiative. One Nation Labour must let go. On housing benefit, employment programmes, and support for business, there are strong arguments for devolving certain powers to local government.

The IPPR has already made the case for some devolution of powers, but it has also articulated an excellent case for what it terms the ‘relational state.’ Fundamentally, opportunity derives from connections: who you know, not just what you know. By beginning to think about the problem in this way One Nation Labour can radically redefine the role of the state.

Here there are encouraging signs. In his recent contribution to the debate, Jon Cruddas, set out the case for both these changes in thinking.  But to make it fly Labour’s Treasury team must also sign up to this agenda.

One of Ed Miliband’s most effective themes is responsibility, from top to bottom. He should tie government into this theme, based on the responsibility of government to deliver good value for taxpayers. To make the case for this there are many reforms that should be advocated. Most of which don’t normally grab headlines, but demonstrate a real desire to be responsible with taxpayer’s money. An obvious example is the amalgamation of local government pensions, which has the potential to save billions.

Labour is beginning to think about ways to raise revenue which do not entail plucking the goose. It has to be careful not to show too much leg too soon but one idea that has far more mileage is social impact bonds, which reward investors only if certain agreed social outcomes are attained.

But even if Labour articulates these arguments well it cannot duck the need for ruthless prioritisation.  Universal provision of certain services and core universal benefits are vital to binding the nation together, but the boundaries of state provision have always fluctuated, and a debate about those boundaries, based on clear principles, should hold no fear. Certainly not for a mature party that is hungry for government.

For those who would protect everything and change nothing ask yourself how you would react if the Tories were to declare - as they are likely to do - that in the next parliament they would scrap certain pensioner benefits, such as free bus passes and the winter fuel allowance, and put the money instead into a better minimum pension, to protect the poorest?

It is far better for Labour to demonstrate strength and open up this debate now than to respond meekly when the question is put. Oppositions oppose, governments in waiting confront the challenges the nation faces.

Nick Pecorelli is associate director of The Campaign Company

Ed Miliband. Photograph: Getty Images

Nick Pecorelli is Associate Director of The Campaign Company

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Geoffrey Howe dies, aged 88

Howe was Margaret Thatcher's longest serving Cabinet minister – and the man credited with precipitating her downfall.

The former Conservative chancellor Lord Howe, a key figure in the Thatcher government, has died of a suspected heart attack, his family has said. He was 88.

Geoffrey Howe was the longest-serving member of Margaret Thatcher's Cabinet, playing a key role in both her government and her downfall. Born in Port Talbot in 1926, he began his career as a lawyer, and was first elected to parliament in 1964, but lost his seat just 18 months later.

Returning as MP for Reigate in the Conservative election victory of 1970, he served in the government of Edward Heath, first as Solicitor General for England & Wales, then as a Minister of State for Trade. When Margaret Thatcher became opposition leader in 1975, she named Howe as her shadow chancellor.

He retained this brief when the party returned to government in 1979. In the controversial budget of 1981, he outlined a radical monetarist programme, abandoning then-mainstream economic thinking by attempting to rapidly tackle the deficit at a time of recession and unemployment. Following the 1983 election, he was appointed as foreign secretary, in which post he negotiated the return of Hong Kong to China.

In 1989, Thatcher demoted Howe to the position of leader of the house and deputy prime minister. And on 1 November 1990, following disagreements over Britain's relationship with Europe, he resigned from the Cabinet altogether. 

Twelve days later, in a powerful speech explaining his resignation, he attacked the prime minister's attitude to Brussels, and called on his former colleagues to "consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long".

Labour Chancellor Denis Healey once described an attack from Howe as "like being savaged by a dead sheep" - but his resignation speech is widely credited for triggering the process that led to Thatcher's downfall. Nine days later, her premiership was over.

Howe retired from the Commons in 1992, and was made a life peer as Baron Howe of Aberavon. He later said that his resignation speech "was not intended as a challenge, it was intended as a way of summarising the importance of Europe". 

Nonetheless, he added: "I am sure that, without [Thatcher's] resignation, we would not have won the 1992 election... If there had been a Labour government from 1992 onwards, New Labour would never have been born."

Jonn Elledge is the editor of the New Statesman's sister site CityMetric. He is on Twitter, far too much, as @JonnElledge.