Labour needs to go much further on fiscal responsibility

The party should publish a series of potential fiscal rules for discussion and replace the VAT cut with a stimulus based on growth-raising capital investment.

Labour has made a start on re-establishing its fiscal credibility but it now must go further than any opposition has done previously – and soon. Recent announcements on fiscal responsibility and welfare reform were pivotal. Having accepted that it can’t simply oppose, Labour is now free to advocate a political approach that is genuinely different to that of the Tories – placing the pursuit of social justice, greater employment, pay and growth at the heart of a fiscally responsible agenda.

When a paper called In the Black Labour was published by Policy Network at the end of December 2011, there was a storm in the Labour teacup. The party started to move towards a fiscally conservative stance but that was soon reversed under some political pressure. Many critics accused the paper of adopting George Osborne’s fiscal and economic stance. This was strange given that Osborne’s strategy of austerity before growth wasn’t fiscal conservatism, but fiscal-self harm which has led to a series of missed deficit targets.

Having resumed the path to a fiscally responsible policy 18 months later, Labour now needs to go further. To ensure fiscal responsibility, while preserving counter-cyclical flexibility, Labour should publish a series of potential fiscal rules for discussion in the expert community, identify preferred public expenditure pathways under different growth scenarios and have these tested independently. Any stimulus would need to be focused on growth-raising capital spend. Therefore, questions should be asked about a stimulus based on a VAT cut, even if temporary in nature. Labour should consider dropping this policy – and soon.

In government, these choices should be monitored by a strengthened Office for Budget Responsibility, or Fiscal Council, who would assess whether government is likely to deliver on its fiscal rules, and to make recommendations if the targets are missed. These proposals mean Labour opening its plans to greater scrutiny at an early stage than any opposition has done before, while still allowing room for manoeuvre should growth hasten or slow. Such scrutiny will make it clear how little money there is, so spare resources must be focused on generating growth through capital investment, helping the unemployed into work, encouraging business investment, and promoting science, education and skills.

Shifting from short-term expenditure to long-term investment and developing sound fiscal rules to ensure sustainable debt levels will be useful tools to help deliver a reduction in debt. However, these measures alone will not be enough to advance social justice in an era of limited budgets.

It also poses questions for welfare policy. Housing has attracted particular attention but the challenge of containing housing benefit budgets is far wider. Yes, more houses are needed but incomes for the most vulnerable, in-work support for those with disabilities and high impact job brokerage, like that seen in Newham, are also required. It is in providing all these supports and services that welfare spending should be focused. None of this will be revolutionary but it will make a measurable difference – the politics of austerity are harder. Spending elsewhere, for example on support for the better off and on above-inflation pension commitments, will have to be reduced.

This also raises the question of tax revenue. From a purely fiscally conservative perspective, the mixture of tax rises and spending cuts is broadly irrelevant (despite fervent academic debates about this issue), so long as deficits are reduced. From the point of view of social justice, however, trying to deliver 80 per cent of deficit reduction from cuts would involve an unacceptable breach of our national social fabric and would, in all likelihood, prove counter-productive. If people are therefore going to be asked to pay more tax it becomes even more important to be open about constraints and choices at an early stage – consent must be earned. The radical realisation among the more savvy on the centre-left is that spending is no longer the shortcut to social justice that it once seemed.

The state still has significant levers. For example, we live in an economy populated by almost 5 million businesses – a 40 per cent increase in only a decade and a six-fold increase since the 1970s. The vast majority of these businesses are sole traders or micro-enterprises. Many are challenging the way big businesses operate with innovative approaches; many bring benefits to their communities that many larger operations struggle to emulate,  not least keeping the wealth they generate local. Yet big business enjoys all sorts of advantages over smaller business, including access to legal action, patent restrictions, expensive regulatory constraints, access to prime space, favour by government procurement and planning law.

Challenging the bias in favour of big business would help release the spirit of entrepreneurial activity in communities across the UK that would not just drive growth and innovation but allow a fairer distribution of wealth.

Labour could place itself firmly on the side of these millions of worker-businesses committed to creating as level a playing field as possible through planning reform, tax changes, access to intellectual property, finance, international markets and marketing support.

If Labour aims to focus resources on supporting growth, putting the economy on a sustainable long term footing and fulfilling the left’s mission of being on the side of the many, not the few, then social justice, economic efficiency and, indeed, fiscal conservatism will go hand-in-hand. The choices are hard, the solutions tougher, but that is the nature of pursuing social justice in fiscally and economically constrained times. It’s better to start early. Labour has now done that but it’s only a start.

Hopi Sen and Anthony Painter have co-written Moving Labour into the Black published by Policy Network with Adam Lent

Ed Miliband and Ed Balls at the Labour conference in Manchester last year. Photograph: Getty Images.

Hopi Sen is a former head of campaigns at the Parliamentary Labour Party and blogs at www.hopisen.com

Anthony Painter is a political writer, commentator and researcher. His new book Left Without A Future? is published in July

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Nigel Farage's love for Dunkirk shows how Brexiteers learned the wrong lessons from WWII

Film has given Britain a dangerously skewed perspective on World War II

For months now it’s been hard to avoid the publicity for what seems like an epidemic of new World War Two films for 2017. June brought us Churchill (starring Brian Cox), which concerns Operation Overlord and the allied invasion of Normandy in 1944. A month later, in July we were pushed back four years, to Dunkirk, with Christopher Nolan’s film of the evacuation of Allied troops from French soil in the summer of 1940. April had already brought Their Finest, a comedy about making a - let us not let the irony go unacknowledged -  stirring film about the evacuation of Dunkirk in the event’s more or less immediate aftermath and November will bring us Darkest Hour, some events in which will predate all three earlier films, as Gary Oldman’s Churchill struggles through the earliest days of his war premiership.

This glut is peculiar. There are no significant round anniversaries to commemorate (e.g. Dunkirk is 77 years ago, the Normandy landings 73). More, we’re meant to be in the middle of a series of commemorations of the horror and waste of the Great War of 1914-18, but that seems to have slipped away from us in the political turmoil that’s engulfed this country since 2014. Instead, it’s to the Second World War we return yet again. To modern Britain’s founding myth.

It’s a coincidence, of course, that these films should come along together, and at a seemingly odd time. They were developed separately, and films takes so long to conceive and produce that no one could have anticipated them arriving together, let alone arriving in a toxic Brexit Britain where they seem like literally the least useful things for anyone in the UK to watch right now. As works that will inevitably, whatever their own creative intentions and merits, be hi-jacked by a press and political culture that is determined to gloss its opposition to the UK’s membership of the European Union, and its appalling mishandling of the process of exit with garbled references to, the conflict the films portray.

This is an impression that is not exactly dismissed by Nigel Farage posting to twitter of an image of himself standing next to the poster for Dunkirk, along with a statement in which he encourages all young people to see the film. For what reason, we’re entitled to wonder, does he make this encouragement? Does he admire the sound design? Or the aerial photography? Or is he just a big fan of Mark Rylance and Harry Styles? Or perhaps he is, inevitably, indulging in a behaviour that some might call "nostalgic"? Of pining for the past. Except, of course, nostalgia requires an element of pain. The suffix "algia" the same as employed when referring to chronic conditions. For Farage and his ilk there is no pain in this behaviour, just the most extraordinarily banal comfort.

Farage is asking us and asking the young who voted against his chosen cause by an overwhelming majority, and who are are sickened by where he and his ilk have brought us - to share in his indulgence. To enjoy, as he does, those fatuous analogies between the UK’s isolation between Dunkirk and Pearl Harbour with its imminent failures in European politics. To see that "escaping from Europe with nothing is at least better than not escaping at all". Or to believe, once again, in a "plucky little Britain, standing up against the might of a wicked mainland European tyranny, its back against the wall".

All this, confused, indeed nonsensical, as it is, is being invoked, as surely as the anti-EU right have always invoked Churchill. This is despite his own family recognising him, as the EU itself does, as the fervent pro-European he was. Indeed, he was one of the founding fathers of the whole post-war pan-European enterprise.

What Farage and his behaviour demonstrates, yet again, is that British culture, in many ways, learned not merely the wrong lessons from the war against Hitler, but exactly the wrong lessons. It’s a lesson that found its most enduring, poisonous expression in Margaret Thatcher’s breathtaking assertion that the European Union was a "third attempt" by Germany to take over the world.

In contrast to the rush of war films in cinemas, television has recently given us glimpses into theoretical worlds where Nazism did succeed in conquering the planet, in Amazon Prime’s The Man In The High Castle and BBC One’s SS-GB. There are lessons too, in these alternative histories, proper lessons that we have collectively failed to learn from the real one. Which is that fascism or authoritarianism are not diseases to which anglophone countries are somehow miraculously immune due to [insert misunderstood historical fetish of choice].

The Man in the High Castle, particularly in its more subtle first series, goes out of its way to show Americans that their lack of experience of collaboration with Nazi occupation is a result of circumstance, even luck. Not because collaboration is a peculiarly European tendency. SS-GB also worked hard to demonstrate the helplessness of occupation, and how that leads to the sheer ordinariness of collaboration. Both show the understanding that while fascism from the outside is funny accents and funny uniforms, fascism from the inside is your neighbours informing on you and the absence of the rule of law.

That experience of occupation, of subsequent complicity, and humiliation, felt by many other other European nations, is absent in Britain. Farage’s fellow Leaver Liam Fox, without anything resembling self-awareness, asserted that "the United Kingdom is one of the few countries in the European Union that does not need to bury its 20th century history". Fox’s remark summed up, again seemingly unintentionally, the oafishness of the principle Brexiteers. A group who exemplify a culture that boils a vast and unimaginably complex conflict down to the title sequence of Dad’s Army - an animation in which a Union Flag is forced off the European continent by a trio of Nazi triangles, and after returning home bobs around defiantly. A group who, in a strange and witless inversion, have fantasised themselves into a position where they see the Britain’s membership of the European Union as the occupation the country once avoided.

This is the UK’s postponed tragedy. At a timethat European countries experienced national humiliations which fundamentally reconfigured their understandings of their place in the world, the UK got yet another excuse to shout about how much better it was than everyone else.

I’m a child of the very late Seventies. I grew up in a world where (British) boys’ comics were dominated by war stories rather than science fiction or superheroes, where literally everyone knew several people who had fought in World War Two - and almost everyone someone who could remember World War One. That war was the ever-present past. I am, as a friend who teaches history neatly phrased it "Of the last post-war generation." After me, the generations are post-post-war. They are free. The moral clarity of the war against Hitler has, in the end, been a curse on British culture - a distorting mirror in which we can always see ourselves as heroes. 

But, not, of course, all other generations. The war generation collectively (I make no claim that there were not exceptions) understood what the war was. Which meant they understood that the European Union was, and is, its antonym, not an extension of it. Unlike their children and the eldest of their grandchildren, they had real experience of the conflict, they hadn’t just grown up surrounded by films about how great Britain was during it.

The Prime Minister who, or so he thought, had secured Britain’s European destiny had also, as he related in his autobiography, seen the devastation wrought by that conflict, including by shells he himself had given the order to be fired. Like Helmut Kohl, whose worshipped, conscripted older brother died pointlessly fighting for Hitler, and Francois Mitterrand, himself captured during the fall of France, his experience was real and lived, not second hand.

This can be seen even in the voting in 2016 referendum. That the young principally voted Remain and the old voted Leave has been often noted. But if you break that over-65 vote up further, there’s a substantial flip to back towards Remain amongst the oldest voters, the survivors of the survivors of World War Two. After all, someone who is 65 today was born nearly a decade after the war ended. It was their parents’ war, not their own. A war that has been appropriated, and for purposes of which those who fought in it would, collectively, not approve.

Let’s return to Dad’s Army, after all, BBC Two does often enough. Don’t Panic! The Dad’s Army Story (2000) a cheerful history of the sitcom great written and presented by Victoria Wood contains a telling juxtaposition of interviewees. The series' surprising continued popularity is discussed and Wendy Richard (born 1943) expresses a nostalgia for the war years, and how people banded together during them. This is a sentiment which Clive Dunn (born 1920) bluntly dismisses. “Like most people I had a foul war,” he says, and disgust and horror briefly pass across his face.

It’s the difference between those who remember war, and those who only remember war films.