How Labour can credibly pledge to outspend the Tories

While restricting current spending, the party should promise to invest the proceeds of growth into future-facing areas like skills, childcare and infrastructure.

Labour must make a fundamental choice; whether to broadly accept George Osborne’s fiscal plans or commit to spending more. Until that decision is made, the question of whether Labour is tacking to the left or hugging tight to the coalition will remain unanswered: 'follow the money', to use the old Watergate maxim.

A Fabian Society commission has spent the last year examining this choice by considering the impact of rolling forward the chancellor’s current plans, as well as asking how much more it might be possible for a future government to spend and what that money might do.

The inquiry concluded that the coalition’s existing plans for 2016 and 2017 would translate into an almost unthinkable decline in public provision. Councils would be able to deliver little more than their statutory social care and refuse collection duties. Some government departments would end up with less than half the budgets they started with in 2010. And a further round of deep social security cuts would be needed, with George Osborne’s proposal to remove benefits from young people only the start.

A future government should do everything it can to avoid making these choices, but it must also remain totally committed to deficit reduction, for both economic and political reasons. That leaves a tight-rope to walk, between fiscal denial and spending cuts which will cause huge harm. Exactly how much more money a future government will be able to spend will depend on how well the economy is doing, because rising GDP feeds through into extra tax revenue. But the Fabian commission concluded that any party wishing to offer a convincing alternative to the coalition should aim to spend £20bn more in 2017 than the government now intends.

This would be enough extra money to avoid the worst of the pain scheduled for after the next election. But an incoming government would still need to make some hard decisions, which could prove very uncomfortable for Labour activists. For example, it would probably be possible to avoid big new cuts, but most departments would see spending frozen or increased by inflation only. The government would also need to find money from social security, so some entitlements would need to be cut unless economic recovery creates unexpected savings. There will almost certainly need to be a debate about 'least bad' benefit cuts, with fresh attention to some of the more marginal pensioner benefits.

Labour won’t win the argument, however, if the fiscal debate is just about spending 'more' or 'less'. The left also needs to set out the positive case for spending, by arguing that the composition of public expenditure must change. Under the coalition, the spending priorities have been healthcare and pensions. Both are very important, but without enough money to go round, the result has been deep cuts to the sort of future-facing spending which brings long term prosperity: skills, childcare, infrastructure, innovation and job creation.

The Fabian commission proposes that in 2016 and 2017, spending on these areas should receive the same special protection as the NHS budget does today. It also argues for a permanent increase to capital spending. With these reforms a future government could show that higher expenditure is the only way to spend on the future without sacrificing the vulnerable, old and sick of today.

Labour will no doubt worry about the political attacks it will face if it is to promise more spending. And it is true that some of the extra money would probably need to come from tax rises, although these can be limited to high income groups. For example the Fabian commission heard that many billions could be saved through reform of pension tax relief, so that rich workers only receive the same public subsidy for each pound they save as everyone else.

But the improving economic outlook also offers some cover for the proponents of higher spending, since projections for tax revenue will soon be revised upwards. The coalition seems likely to commit the money to accelerating deficit reduction or pre-election tax cuts. Labour can promise an alternative; to recycle the 'proceeds of growth' into productive, pro-growth public expenditure. A promise to spend more after 2015 need not be seen just as a shift to the left. It is also a commitment to Britain’s long-term future.

2030 Vision: The final report of the Fabian Society Commission on Future Spending Choices is published today. Read it on the Fabian Society's website here 

Ed Miliband and Ed Balls at the Labour conference in Brighton last month. Photograph: Getty Images.

Andrew Harrop is general secretary of the Fabian Society.

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David Osland: “Corbyn is actually Labour’s only chance”

The veteran Labour activist on the release of his new pamphlet, How to Select or Reselect Your MP, which lays out the current Labour party rules for reselecting an MP.

Veteran left-wing Labour activist David Osland, a member of the national committee of the Labour Representation Committee and a former news editor of left magazine Tribune, has written a pamphlet intended for Labour members, explaining how the process of selecting Labour MPs works.

Published by Spokesman Books next week (advance copies are available at Nottingham’s Five Leaves bookshop), the short guide, entitled “How to Select or Reselect Your MP”, is entertaining and well-written, and its introduction, which goes into reasoning for selecting a new MP and some strategy, as well as its historical appendix, make it interesting reading even for those who are not members of the Labour party. Although I am a constituency Labour party secretary (writing here in an expressly personal capacity), I am still learning the Party’s complex rulebook; I passed this new guide to a local rules-boffin member, who is an avowed Owen Smith supporter, to evaluate whether its description of procedures is accurate. “It’s actually quite a useful pamphlet,” he said, although he had a few minor quibbles.

Osland, who calls himself a “strong, but not uncritical” Corbyn supporter, carefully admonishes readers not to embark on a campaign of mass deselections, but to get involved and active in their local branches, and to think carefully about Labour’s election fortunes; safe seats might be better candidates for a reselection campaign than Labour marginals. After a weak performance by Owen Smith in last night’s Glasgow debate and a call for Jeremy Corbyn to toughen up against opponents by ex Norwich MP Ian Gibson, an old ally, this pamphlet – named after a 1981 work by ex-Tribune editor Chris Mullin, who would later go on to be a junior minister under Blai – seems incredibly timely.

I spoke to Osland on the telephone yesterday.

Why did you decide to put this pamphlet together now?

I think it’s certainly an idea that’s circulating in the Labour left, after the experience with Corbyn as leader, and the reaction of the right. It’s a debate that people have hinted at; people like Rhea Wolfson have said that we need to be having a conversation about it, and I’d like to kickstart that conversation here.

For me personally it’s been a lifelong fascination – I was politically formed in the early Eighties, when mandatory reselection was Bennite orthodoxy and I’ve never personally altered my belief in that. I accept that the situation has changed, so what the Labour left is calling for at the moment, so I see this as a sensible contribution to the debate.

I wonder why selection and reselection are such an important focus? One could ask, isn’t it better to meet with sitting MPs and see if one can persuade them?

I’m not calling for the “deselect this person, deselect that person” rhetoric that you sometimes see on Twitter; you shouldn’t deselect an MP purely because they disagree with Corbyn, in a fair-minded way, but it’s fair to ask what are guys who are found to be be beating their wives or crossing picket lines doing sitting as our MPs? Where Labour MPs publicly have threatened to leave the party, as some have been doing, perhaps they don’t value their Labour involvement.

So to you it’s very much not a broad tool, but a tool to be used a specific way, such as when an MP has engaged in misconduct?

I think you do have to take it case by case. It would be silly to deselect the lot, as some people argue.

In terms of bringing the party to the left, or reforming party democracy, what role do you think reselection plays?

It’s a basic matter of accountability, isn’t it? People are standing as Labour candidates – they should have the confidence and backing of their constituency parties.

Do you think what it means to be a Labour member has changed since Corbyn?

Of course the Labour party has changed in the past year, as anyone who was around in the Blair, Brown, Miliband era will tell you. It’s a completely transformed party.

Will there be a strong reaction to the release of this pamphlet from Corbyn’s opponents?

Because the main aim is to set out the rules as they stand, I don’t see how there can be – if you want to use the rules, this is how to go about it. I explicitly spelled out that it’s a level playing field – if your Corbyn supporting MP doesn’t meet the expectations of the constituency party, then she or he is just as subject to a challenge.

What do you think of the new spate of suspensions and exclusions of some people who have just joined the party, and of other people, including Ronnie Draper, the General Secretary of the Bakers’ Union, who have been around for many years?

It’s clear that the Labour party machinery is playing hardball in this election, right from the start, with the freeze date and in the way they set up the registered supporters scheme, with the £25 buy in – they’re doing everything they can to influence this election unfairly. Whether they will succeed is an open question – they will if they can get away with it.

I’ve been seeing comments on social media from people who seem quite disheartened on the Corbyn side, who feel that there’s a chance that Smith might win through a war of attrition.

Looks like a Corbyn win to me, but the gerrymandering is so extensive that a Smith win isn’t ruled out.

You’ve been in the party for quite a few years, do you think there are echoes of past events, like the push for Bennite candidates and the takeover from Foot by Kinnock?

I was around last time – it was dirty and nasty at times. Despite the narrative being put out by the Labour right that it was all about Militant bully boys and intimidation by the left, my experience as a young Bennite in Tower Hamlets Labour Party, a very old traditional right wing Labour party, the intimidation was going the other way. It was an ugly time – physical threats, people shaping up to each other at meetings. It was nasty. Its nasty in a different way now, in a social media way. Can you compare the two? Some foul things happened in that time – perhaps worse in terms of physical intimidation – but you didn’t have the social media.

There are people who say the Labour Party is poised for a split – here in Plymouth (where we don’t have a Labour MP), I’m seeing comments from both sides that emphasise that after this leadership election we need to unite to fight the Tories. What do you think will happen?

I really hope a split can be avoided, but we’re a long way down the road towards a split. The sheer extent of the bad blood – the fact that the right have been openly talking about it – a number of newspaper articles about them lining up backing from wealthy donors, operating separately as a parliamentary group, then they pretend that butter wouldn’t melt in their mouths, and that they’re not talking about a split. Of course they are. Can we stop the kamikazes from doing what they’re plotting to do? I don’t know, I hope so.

How would we stop them?

We can’t, can we? If they have the financial backing, if they lose this leadership contest, there’s no doubt that some will try. I’m old enough to remember the launch of the SDP, let’s not rule it out happening again.

We’ve talked mostly about the membership. But is Corbynism a strategy to win elections?

With the new electoral registration rules already introduced, the coming boundary changes, and the loss of Scotland thanks to decades of New Labour neglect, it will be uphill struggle for Labour to win in 2020 or whenever the next election is, under any leadership.

I still think Corbyn is Labour’s best chance. Any form of continuity leadership from the past would see the Midlands and north fall to Ukip in the same way Scotland fell to the SNP. Corbyn is actually Labour’s only chance.

Margaret Corvid is a writer, activist and professional dominatrix living in the south west.