Balls reaffirms Labour's commitment to cuts in 2015

Labour states unambiguously that it will be "cutting departmental spending in 2015-16" and will not borrow for "day-to-day spending".

While Labour's "cost-of-living" offensive has allowed it to reframe the economic debate in its favour, senior figures in the party know that it will struggle to win a majority unless it can convince voters that it can be trusted to spend money wisely. As Ed Balls says in his interview in today's FT, "Unless we can show . . . that we’ve got a plan which will work, the public won’t think that we will solve the cost of living crisis". 

To prove that Labour does have such a plan, Balls has launched the first phase of his "zero-based" spending review today. A zero-based review differs from others by requiring every item of spending to be approved, rather than merely changes to a pre-determined baseline. In other words, nothing is off the table. Labour plans to scrutinise spending in every area, including those protected by the coalition: the NHS, schools and international development. The document contains the most explicit statement yet that the party will cut departmental spending in 2015-16 and will not borrow to meet day-to-day spending:

We will be cutting departmental spending in 2015-16 and not raising it, with no more borrowing to cover day-to-day spending
The deficit forecasts might be slightly less dreadful than before (the OBR now expects the deficit to be £79bn in 2015-16 compared to £96bn in March; its 2010 forecast was £20bn), but the OBR's judgement that the improvement in the public finances is almost entirely cyclical means that the structural deficit (the part of the deficit that exists regardless of the level of economic output) is deemed to be no smaller than before; austerity cannot be avoided. 
 
But while Labour is committed to matching Osborne's departmental spending plans, there are many different ways to spend £313bn (the spending limit set by the coalition for 2015-16). While remaining within the Chancellor's fiscal envelope, Labour plans to identify "savings" and "switches" that better reflect its "priorities" (what Nye Bevan called "the religion of socialism"). As Balls suggested in his speech in June, this could include withdrawing funding for free schools in areas with surplus places, scrapping Police and Crime Commissioners, cutting the number of army officers and admirals, merging the four separate government motorist agencies, combining management functions in government departments, agencies, fire services and police forces, and requiring industries to contribute more to the cost of regulation. The party is also likely to vary the ratio of spending cuts to tax rises within Osborne's deficit reduction programme, for instance by reintroducing the 50p tax rate. 
 
These switch-spends and tax decisions will be included in Labour's manifesto, with a full Spending Review to follow after the election. It is also in the manifesto that the party will announce which areas, if any, it intends to ring-fence. This will almost certainly include the NHS. Polls show that it is the most popular spending area with voters and the above-average rate of inflation in the health service means it frequently requires real-terms rises just to stand still. With the Tories making it clear that they would continue to ring-fence the NHS after 2015, Labour has no intention of handing them an easy political victory. 
 
Here's the timetable for the zero-based review:
Phase 1 of the Zero-Based Review will involve the Shadow Chief Secretary and the Treasury team working with individual departments on a detailed response to the questions raised in this initial document. 
 
Phase 2 of the work will then identify initial savings and switches to reflect Labour's priorities and report before our manifesto. 
 
Phase 3 covering our first year in Government, will see the implementation of any immediate switches/changes to inherited plans and work on a full spending review for 2016-17 onwards. 
Two other points are worth noting. The first is that Balls has left himself room to borrow more than Osborne to fund investment in infrastructure, telling the FT that "any decision about capital" will depend on "the state of the economy". While polls show that voters are supportive of borrowing for areas such as housing, Labour will need to make the argument early enough to counter the inevitable charge from the Tories that it is planning more of the borrowing that "got us into this mess". 
 
The second is that the big fiscal question is not whether Labour will match the coalition's spending limits in 2015-16 (most governments deviate little from the plans they inherit) but whether it will remain within Osborne's envelope for the entire parliament. But for both political and economic reasons, don't expect an answer to that until after 2015. 
Ed Balls speaks at the CBI's annual conference on November 4, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Trade unions must adapt to the gig economy in order to survive

We can’t allow the story of UK trade unionism to just be about managing decline.

While the world around trade unions has rapidly changed, there is an impression trade unions have remained stuck in the past with antagonistic rhetoric, outdated governance structures and an inflexible approach. Yet trade unions remain as vital as ever in an insecure jobs market, and do have the capacity to protect workers and inspire support when they use positivity in place of hostility.

The future of the UK trade union movement has long been a matter for concern. Trade union membership has been stagnating for the last 30 years and structural changes in the UK economy have led to trade union density in the private sector dropping below 14 per cent. 

The most worrying aspect of this decline is that – despite work being increasingly less secure, growing wage inequality, and workers’ rights being slowly rolled back since 2010 – trade unions, or more precisely trade union membership, appears not to be a relevant choice for millions of workers.

Polling suggests that too many people who would be interested in being a member of an organisation that offered independent advice and protection at work are put off by the tone of voice and confrontational language they hear from union leaders, usually only during an industrial dispute or power struggle within the Labour party. If unions used to be angry, now they’re furious, and it is not helping.

Trade unions face serious challenges, but if we adapt, we can survive. The rise of self-employment, freelancing and the "gig economy" means more and more people are in need of the services and support that unions offer. But our benefits and services must be responsive to the needs of workers today and be flexible enough for change when it comes. 

We do not talk openly enough about our successes. We shouldn’t be embarrassed when we make something happen whilst working in partnership with decent employers. Nor should we shy away from championing successes achieved through industrial strength, but we need to be more sensitive to how we frame this to a wider audience.

But tweaks to our messaging and services are not enough on their own. We also need structural change in our trade union movement to ensure our long-term success.

Firstly, we need to recognise the severity of the situation that we are in and face up to the facts of declining membership, relevance and authority. There needs to be an acceptance that it is the responsibility of the trade union movement to understand the problems we face and to address them – not to blame others such as the press, politicians or employers.
 
Secondly, we need to build a consensus across the trade union movement on a recovery strategy. Given the diverse interests of our many sister organisations, that is easier to say than to deliver on. Strengthening the governance of trade unions should be one priority, seeking to develop a tripartite social framework with employers and government should be another.
 
Thirdly, we need to ensure the continuing and increasing relevance of trade unions to the world of work. We must recognise that we are struggling to connect beyond our membership and in many cases even beyond our activist base.

Too often change is done to trade unions, rather than by them. The Trade Union Act is the most recent example of a Conservative government taking action to reduce trade union influence. It won’t be long before they return to this pursuit. So rather than waiting to respond, why don’t we take the initiative?

It shouldn't be beyond the collective wit of trade unions to seek to develop and modernise our own structures, develop ideas that would underpin our future independence and seek out best practice across the movement in the delivery of services and benefits.
 
These are undoubtedly big challenges for the trade union movement. I know we want to help build a fairer, more equitable society with decent jobs, housing and education. Wanting to do these things isn’t enough, we need to be in a position to make change happen.

John Park is assistant general secretary of the trade union Community.