Miliband admits Labour would borrow more - now he needs to make the argument

The Labour leader should explain why borrowing for growth is the economically responsible course.

After his disastrous appearance on The World At One yesterday, it was a more relaxed Ed Miliband who took to the Daybreak sofa this morning. Asked about the ill-fated interview by presenter Lorraine Kelly and his refusal to say whether Labour would borrow more in the short term, he replied: 

Look, that happens. You do interviews; some interviews well, some interviews not so well. Look, I was asked a question about VAT and Labour's plans to cut VAT. I am clear about this, a temporary cut in VAT, as we are proposing, would lead to a temporary rise in borrowing. The point I was making yesterday was that if you can get growth going by cutting VAT, then over time you will see actually borrowing fall - that was the point I was making yesterday and it's good to be able to make it today. 

Although Miliband made it sound otherwise, the admission was a significant one. Labour's "five point-plan for jobs and growth" has always rested on the assumption that the party would borrow more in the short-term. Were it do otherwise, and fund measures such as a VAT cut through spending cuts or tax rises elsewhere, the effectiveness of any stimulus would be dramatically reduced. Yet until now, Miliband has refused to concede as much. 

Now he has finally done so, the task for Labour is to persuade the public that borrowing for growth, at a time of stagnation and rising unemployment, is the right (and responsible) thing to do. Today's ComRes poll for the Independent, showing that 58 per cent of the public believe that the government's economic plan has failed and that it will be "time for a change" in 2015 is a reminder of the appetite for an alternative. 

The difficulty for Labour is that the Tories' argument that "you can't borrow more to borrow less" has a seductive appeal. But as anyone who has ever taken out a mortgage or founded a company knows, it's not true. As families struggle to find affordable housing and adequate employment, Labour should make the argument that now is precisely the time for the government to take advantage of record low interest rates and borrow to invest. To the charge that it is burdening future generations with debt, the party should reply: what kind of country will our children inherit if we don't build more homes, create more jobs and protect the services we rely on? When the private sector is unwilling or unable to fulfil these duties, it falls to the state to intervene and act as a spender of last resort. As Nye Bevan once declared, government must never become a mere "public mourner for private economic crimes". 

The failure of Labour to make these arguments since 2010 means it has a significant political deficit to overcome. But if Miliband is to offer a genuine alternative to austerity, he must now resolve to do so. 

Ed Miliband delivers a speech on the high street in the town centre on April 25, 2013 in Worcester. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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We don't need to build more prisons - we need to send fewer people there

The government talks a good game on prisons - but at the moment, the old failed policies hold sway

Some years ago the Howard League set up an independent expert review of what should happen to the penal system. We called it Do better, do less.

Too many governments have come in with enthusiasm for doing more, in the mistaken belief that this means better. We have ended up with more prisons, more prisoners, a bulging system that costs a fortune and blights lives. It is disappointing that the new regime appears to have fallen into the same old trap.

It is a big mistake to imagine that the justice system can be asked to sort out people’s lives. Prisons rarely, very rarely, turn people into model citizens able to get a great job and settle with a family. It is naïve to think that building huge new prisons with fewer staff but lots of classrooms will help to ‘rehabilitate’ people.

Let’s turn this on its head. There are more than 80,000 men in prison at any one time, and 40,000 of them are serving long sentences. Simply giving them a few extra courses or getting them to do a bit more work at £10 a week means they are still reliant on supplementary funding from families. Imagine you are the wife or partner of a man who is serving five to ten years. Why should you welcome him back to your home and your bed after all that time if you have hardly been able to see him, you got one phone call a week, and he’s spent all those years in a highly macho environment?

The message of new prisons providing the answer to all our problems has been repeated ad nauseam. New Labour embarked on a massive prison-building programme with exactly the same message that was trotted out in the Spending Review today – that new buildings will solve all our problems. Labour even looked at selling off Victorian prisons but found it too complicated as land ownership is opaque. It is no surprise that, despite trumpeting the sell-off of Victorian prisons, the one that was announced was in fact a jail totally rebuilt in the 1980s, Holloway.

The heart of the problem is that too many people are sent to prison, both on remand and under sentence. Some 70 per cent of the people remanded to prison by magistrates do not get a prison sentence and tens of thousands get sentenced to a few weeks or months. An erroneous diagnosis of the problem has led to expensive and ineffective policy responses. I am disappointed that yet again the Ministry of Justice is apparently embarking on expansion instead of stemming the flow into the system.

A welcome announcement is the court closure programme and investment in technology. Perhaps, in the end, fewer courts will choke the flow of people into the system, but I am not optimistic.

It is so seductive for well-meaning ministers to want to sort out people’s lives. But this is not the way to do it. Homeless people stealing because they are hungry (yes, it is happening more and more) are taking up police and court time and ending up in prison. We all know that mentally ill people comprise a substantial proportion of the prison population. It is cheaper, kinder and more efficacious to invest in front line services that prevent much of the crime that triggers a criminal justice intervention.

That does leave a cohort of men who have committed serious and violent crime and will be held in custody for public safety reasons. This is where I agree with recent announcements that prison needs to be transformed. The Howard League has developed a plan for this, allowing long-term prisoners to work and earn a real wage.

The spending review was an opportunity to do something different and to move away from repeating the mistakes of the past. There is still time; we have a radical Justice Secretary whose rhetoric is redemptive and compassionate. I hope that he has the courage of these convictions.

Frances Crook is the Chief Executive of the Howard League for Penal Reform.