Can Labour defuse the "borrowing bombshell"?

An increasing number of Labour MPs believe that the party must make an explicit case for borrowing to invest if it is to counter the Tories' attack line of choice.

In 1992, it was the “tax bombshell” that sank Neil Kinnock and John Smith’s election hopes. The Conservatives believe that the “borrowing bombshell” will do the same to Ed Miliband and Ed Balls in 2015. The shadow chancellor’s refusal to rule out running a deficit to fund higher capital investment has given the Tories the target they wanted. A Times front page warning “Labour’s spending spree to cost £25bn” and Danny Alexander’s subsequent claim that the party would “pile another £166bn of borrowing on to the debt mountain” were the opening shots in the long war that will now be waged on Labour’s economic credibility.

Faced with this assault, the opposition’s instinct remains to change the subject: to its pledge to achieve a current budget surplus, to the living standards crisis, to George Osborne’s failure to meet his deficit targets. Balls and his aides state both publicly and privately that no decision will be taken on whether to borrow to invest until closer to the election, when the state of the economy is clearer. But few in the party believe it will be possible for Labour to achieve its priorities – a mass housebuilding programme, universal childcare, the integration of health and social care – without doing so. As one shadow cabinet minister told me: “We all know that a Labour government would invest more.” The question, rather, is a tactical one: when and how does Labour make the case for “good borrowing”?

The party starts, as all sides acknowledge, from a position of weakness. The Conservatives’ framing of the crash as the result of overspending by the last government has succeeded in crowding out all alternative accounts. It is the belief that Labour was profligate in the past that allows the Tories to warn that it would be profligate in the future. Yet the facts are on the opposition’s side. In 2007, both the deficit (2.4 per cent of GDP) and the national debt (36.5 per cent) were lower than in 1997 (3.4 per cent of GDP, national debt of 42.5 per cent). It was the crash that caused the deficit (which swelled to 11 per cent after a collapse in tax receipts), not the deficit that caused the crash. But politics is not an Oxford economics seminar. The perception among the public that the last government spent too much is so ingrained that the numbers no longer matter. There is little to be gained from repeatedly contesting this myth, just as there is little to be gained from an insincere apology. The outcome of the election will depend on Labour winning an argument about the future, not the past.

An essential part of this will be a commitment to invest in those areas, such as housing and childcare, that support long-term prosperity. But given the fiscal constraints that Labour would face in office, with £12bn of tax rises required merely to maintain departmental spending cuts at their present pace, it will almost certainly have to borrow to make up the shortfall.

In private, Miliband’s advisers argue that the voters are able to distinguish between borrowing to fund day-to-day spending and borrowing for investment, just as they distinguish between “borrowing to fund the weekly shop” and “borrowing for an asset like a house”. But the Labour leader is not yet prepared to make this case in public. Since an ill-fated interview last year on Radio 4’s The World at One, in which he refused eight times to admit that Labour would borrow more than the Conservatives, Miliband has focused deliberately on market reforms that would not cost government money: freezing energy prices, expanding use of the living wage and restructuring the banking system. When he has made promises that would require new funding, such as the construction of 200,000 homes a year by 2020, the question of borrowing has been deferred.

It is an ambiguity that increasing numbers of Labour MPs believe can no longer be maintained. If the party waits until early 2015 before showing its hand, they warn, it will be too late to win the voters round. The former cabinet minister John Healey told me: “The terms of debate about borrowing are still dominated by the simple sloganeering from the coalition … I think we have to break that argument; there is clearly good borrowing and bad borrowing.” Another former cabinet minister, Peter Hain, similarly argued: “We ceded the territory in the months after May 2010 by being preoccupied with an overlong leadership election. We’ve got to win it back, basically.”

Healey urges Labour to turn the Tories’ household analogies against them: “It makes sense to borrow to buy a house, especially if your mortgage payments are less than your rent. It makes sense to borrow money to buy a car if that allows you to then travel to take up a job that pays better and brings in more.”

The case for borrowing to invest could be made more easily if Labour were to have what one MP calls a “fiscal Clause Four moment”: an act that convinces voters it means what it says about “iron discipline”. It is this ambition that explains Balls’s continued threat to withdraw support for High Speed 2 and the doubt over Labour’s commitment to Trident. But while the party continues its search for an emblem of fiscal responsibility, the Tories are remorselessly increasing their lead on this issue.

Rather than proselytising for borrowing, as Labour’s most ardent Keynesians propose, or entering an auction on austerity, as its most ardent fiscal conservatives suggest, Miliband’s ambition remains to shift the debate towards building “a different kind of economy”, one beyond the conventional terms of exchange on tax and spend. In an era of depressed living standards, it is a gamble that may serve his party well. But if the next election proves more like its predecessors than many expect, he risks being left defenceless beneath the bombshell.

Ed Miliband and Ed Balls at the Labour conference in Manchester in 2012. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

This article first appeared in the 05 February 2014 issue of the New Statesman, Cameron the captive

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What it’s like to fall victim to the Mail Online’s aggregation machine

I recently travelled to Iraq at my own expense to write a piece about war graves. Within five hours of the story's publication by the Times, huge chunks of it appeared on Mail Online – under someone else's byline.

I recently returned from a trip to Iraq, and wrote an article for the Times on the desecration of Commonwealth war cemeteries in the southern cities of Amara and Basra. It appeared in Monday’s paper, and began:

“‘Their name liveth for evermore’, the engraving reads, but the words ring hollow. The stone on which they appear lies shattered in a foreign field that should forever be England, but patently is anything but.”

By 6am, less than five hours after the Times put it online, a remarkably similar story had appeared on Mail Online, the world’s biggest and most successful English-language website with 200 million unique visitors a month.

It began: “Despite being etched with the immortal line: ‘Their name liveth for evermore’, the truth could not be further from the sentiment for the memorials in the Commonwealth War Cemetery in Amara.”

The article ran under the byline of someone called Euan McLelland, who describes himself on his personal website as a “driven, proactive and reliable multi-media reporter”. Alas, he was not driven or proactive enough to visit Iraq himself. His story was lifted straight from mine – every fact, every quote, every observation, the only significant difference being the introduction of a few errors and some lyrical flights of fancy. McLelland’s journalistic research extended to discovering the name of a Victoria Cross winner buried in one of the cemeteries – then getting it wrong.

Within the trade, lifting quotes and other material without proper acknowledgement is called plagiarism. In the wider world it is called theft. As a freelance, I had financed my trip to Iraq (though I should eventually recoup my expenses of nearly £1,000). I had arranged a guide and transport. I had expended considerable time and energy on the travel and research, and had taken the risk of visiting a notoriously unstable country. Yet McLelland had seen fit not only to filch my work but put his name on it. In doing so, he also precluded the possibility of me selling the story to any other publication.

I’m being unfair, of course. McLelland is merely a lackey. His job is to repackage and regurgitate. He has no time to do what proper journalists do – investigate, find things out, speak to real people, check facts. As the astute media blog SubScribe pointed out, on the same day that he “exposed” the state of Iraq’s cemeteries McLelland also wrote stories about the junior doctors’ strike, British special forces fighting Isis in Iraq, a policeman’s killer enjoying supervised outings from prison, methods of teaching children to read, the development of odourless garlic, a book by Lee Rigby’s mother serialised in the rival Mirror, and Michael Gove’s warning of an immigration free-for-all if Britain brexits. That’s some workload.

Last year James King published a damning insider’s account of working at Mail Online for the website Gawker. “I saw basic journalism standards and ethics casually and routinely ignored. I saw other publications’ work lifted wholesale. I watched editors...publish information they knew to be inaccurate,” he wrote. “The Mail’s editorial model depends on little more than dishonesty, theft of copyrighted material, and sensationalism so absurd that it crosses into fabrication.”

Mail Online strenuously denied the charges, but there is plenty of evidence to support them. In 2014, for example, it was famously forced to apologise to George Clooney for publishing what the actor described as a bogus, baseless and “premeditated lie” about his future mother-in-law opposing his marriage to Amal Alamuddin.

That same year it had to pay a “sizeable amount” to a freelance journalist named Jonathan Krohn for stealing his exclusive account in the Sunday Telegraph of being besieged with the Yazidis on northern Iraq’s Mount Sinjar by Islamic State fighters. It had to compensate another freelance, Ali Kefford, for ripping off her exclusive interview for the Mirror with Sarah West, the first female commander of a Navy warship.

Incensed by the theft of my own story, I emailed Martin Clarke, publisher of Mail Online, attaching an invoice for several hundred pounds. I heard nothing, so emailed McLelland to ask if he intended to pay me for using my work. Again I heard nothing, so I posted both emails on Facebook and Twitter.

I was astonished by the support I received, especially from my fellow journalists, some of them household names, including several victims of Mail Online themselves. They clearly loathed the website and the way it tarnishes and debases their profession. “Keep pestering and shaming them till you get a response,” one urged me. Take legal action, others exhorted me. “Could a groundswell from working journalists develop into a concerted effort to stop the theft?” SubScribe asked hopefully.

Then, as pressure from social media grew, Mail Online capitulated. Scott Langham, its deputy managing editor, emailed to say it would pay my invoice – but “with no admission of liability”. He even asked if it could keep the offending article up online, only with my byline instead of McLelland’s. I declined that generous offer and demanded its removal.

When I announced my little victory on Facebook some journalistic colleagues expressed disappointment, not satisfaction. They had hoped this would be a test case, they said. They wanted Mail Online’s brand of “journalism” exposed for what it is. “I was spoiling for a long war of attrition,” one well-known television correspondent lamented. Instead, they complained, a website widely seen as the model for future online journalism had simply bought off yet another of its victims.