George Osborne prior to an EU Economic and Financial Affairs meeting on 6 May, 2014 at EU headquarters in Brussels. Photograph: Getty Images.
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Why is the alternative to austerity kept such a secret?

An ambitious growth plan could be implemented with no public borrowing at all. 

The Tory attack lines for the next general election are already crystal clear. They run as follows. "Labour left a dreadful economic mess which we had to clear up the way we did.   It’s been painful, but we were all in it together.  We always had a long-term economic plan, and now it’s come good. We have a strong economic recovery, the fastest of any industrial nation. So do you want to give the keys back to the people who caused all the trouble in the first place?" Every one of these claims is untrue, but they have gained momentum because none of them has been contested.

Labour didn’t leave behind an economic mess; the bankers did. In the Labour pre-crash years, the biggest deficit was 3.3 per cent of GDP, whereas the Thatcher and Major governments ratcheted up deficits bigger than that in 10 of their 18 years; and whilst Thatcher-Major produced surpluses in two years, Blair-Brown achieved surpluses in four. We were not all in it together when the burden of the cuts was split 80 per cent on reduced benefits and only 20 per cent on higher taxes, and even the higher taxes were mainly the VAT increase which impacts highly regressively on the poor. Nor is it a fair carve-up of the post-crash cake that average real wages have fallen 7 per cent while the richest 1,000 in the UK population, according to the Sunday Times Rich List, have doubled their wealth over this short period to more than half a trillion pounds.

Osborne’s long-term economic plan was to shrink the public sector so that the private sector could expand to fill the space, but that didn’t happen. Such growth as there has been has come from (dangerously) inflating the housing market though Help to Buy and from easing some of the capital cuts he had unwisely made earlier. And as for the present "recovery", it is far too dependent on rising consumer debt and is not sustainable when wages, productivity, business investment and net exports all remain negative.

But the biggest fib in the Tory attack plan is that they had to clear the huge deficit by prolonged austerity. Alistair Darling’s two stimulatory budgets in 2009-10 brought down the deficit sharply from £157bn in 2009 to £118bn in 2011. Thereafter, Osborne’s austerity budgets have reduced this to a trickle to reach £108bn in 2014. Not much doubt, then, about the quickest and most effective way to cut the deficit.

So how would a growth plan work? Initially it would use public investment, till there is a strong enough recovery to encourage private investment to flow back in, directed in consultation with industrial leaders at energy, transport and IT infrastructure, house-building, and laying the foundations for a low-carbon economy. The obvious objection is: how will it be paid for? The conventional answer is that, with interest rates at 0.5%, a hefty investment package of £30bn could be purchased from the markets at the bargain basement cost of £150m a year.

But if that is still too much for some conservative minds, the same investment could be secured in three other ways with no increase in public borrowing at all. A further £25-30bn tranche of quantitative easing, tiny compared to the £375bn already issued, could be directed not at the banks as before but at agreed industrial projects. The publicly owned banks RBS and Lloyds could be instructed to prioritise their lending on industry, rather than speculation abroad or property. And the very rich 1 per cent who have monopolised 90 per cent of the gains since the crash could be subject to a special super-tax to help contribute to tackling the nation’s debt, which some of them helped to create and from which they have most benefited.

That of course is only the start of generating growth that is really sustainable and redressing Britain’s deep structural problems. The UK manufacturing base has been hollowed out leading to a current deficit on the manufacturing account of over £100bn a year. The economy has only been kept going in its steady decline by ever-higher consumer borrowing. Income growth per head has almost halved in the 30 neoliberal years since 1980 compared with the 30 years before. And the banks not only exploited the deregulated system, but blew it up.

A major expansion of high-tech manufacturing, with jobs and skills that go with it, has therefore to be a central goal of the next government. That will require smaller, more specialist banks as well as much greater public control of the money supply when at present only 8 per cent of the nation’s capital goes into productive investment. A new relationship between state and markets is needed which is neither centralised planning nor deregulated markets, but which tries to learn the lessons of highly successful post-war Asian economies among others. And the excesses of inequality need to be addressed by giving other stakeholders and employees, as well as shareholders, a voice in determining pay.

Michael Meacher is Labour MP for Oldham West and Royton, and was environment minister from 1997-2003.

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Find the EU renegotiation demands dull? Me too – but they are important

It's an old trick: smother anything in enough jargon and you can avoid being held accountable for it.

I don’t know about you, but I found the details of Britain’s European Union renegotiation demands quite hard to read. Literally. My eye kept gliding past them, in an endless quest for something more interesting in the paragraph ahead. It was as if the word “subsidiarity” had been smeared in grease. I haven’t felt tedium quite like this since I read The Lord of the Rings and found I slid straight past anything written in italics, reasoning that it was probably another interminable Elvish poem. (“The wind was in his flowing hair/The foam about him shone;/Afar they saw him strong and fair/Go riding like a swan.”)

Anyone who writes about politics encounters this; I call it Subclause Syndrome. Smother anything in enough jargon, whirr enough footnotes into the air, and you have a very effective shield for protecting yourself from accountability – better even than gutting the Freedom of Information laws, although the government seems quite keen on that, too. No wonder so much of our political conversation ends up being about personality: if we can’t hope to master all the technicalities, the next best thing is to trust the person to whom we have delegated that job.

Anyway, after 15 cups of coffee, three ice-bucket challenges and a bottle of poppers I borrowed from a Tory MP, I finally made it through. I didn’t feel much more enlightened, though, because there were notable omissions – no mention, thankfully, of rolling back employment protections – and elsewhere there was a touching faith in the power of adding “language” to official documents.

One thing did stand out, however. For months, we have been told that it is a terrible problem that migrants from Europe are sending child benefit to their families back home. In future, the amount that can be claimed will start at zero and it will reach full whack only after four years of working in Britain. Even better, to reduce the alleged “pull factor” of our generous in-work benefits regime, the child benefit rate will be paid on a ratio calculated according to average wages in the home country.

What a waste of time. At the moment, only £30m in child benefit is sent out of the country each year: quite a large sum if you’re doing a whip round for a retirement gift for a colleague, but basically a rounding error in the Department for Work and Pensions budget.

Only 20,000 workers, and 34,000 children, are involved. And yet, apparently, this makes it worth introducing 28 different rates of child benefit to be administered by the DWP. We are given to understand that Iain Duncan Smith thinks this is barmy – and this is a man optimistic enough about his department’s computer systems to predict in 2013 that 4.46 million people would be claiming Universal Credit by now*.

David Cameron’s renegotiation package was comprised exclusively of what Doctor Who fans call handwavium – a magic substance with no obvious physical attributes, which nonetheless helpfully advances the plot. In this case, the renegotiation covers up the fact that the Prime Minister always wanted to argue to stay in Europe, but needed a handy fig leaf to do so.

Brace yourself for a sentence you might not read again in the New Statesman, but this makes me feel sorry for Chris Grayling. He and other Outers in the cabinet have to wait at least two weeks for Cameron to get the demands signed off; all the while, Cameron can subtly make the case for staying in Europe, while they are bound to keep quiet because of collective responsibility.

When that stricture lifts, the high-ranking Eurosceptics will at last be free to make the case they have been sitting on for years. I have three strong beliefs about what will happen next. First, that everyone confidently predicting a paralysing civil war in the Tory ranks is doing so more in hope than expectation. Some on the left feel that if Labour is going to be divided over Trident, it is only fair that the Tories be split down the middle, too. They forget that power, and patronage, are strong solvents: there has already been much muttering about low-level blackmail from the high command, with MPs warned about the dire influence of disloyalty on their career prospects.

Second, the Europe campaign will feature large doses of both sides solemnly advising the other that they need to make “a positive case”. This will be roundly ignored. The Remain team will run a fear campaign based on job losses, access to the single market and “losing our seat at the table”; Leave will run a fear campaign based on the steady advance of whatever collective noun for migrants sounds just the right side of racist. (Current favourite: “hordes”.)

Third, the number of Britons making a decision based on a complete understanding of the renegotiation, and the future terms of our membership, will be vanishingly small. It is simply impossible to read about subsidiarity for more than an hour without lapsing into a coma.

Yet, funnily enough, this isn’t necessarily a bad thing. Just as the absurd complexity of policy frees us to talk instead about character, so the onset of Subclause Syndrome in the EU debate will allow us to ask ourselves a more profound, defining question: what kind of country do we want Britain to be? Polling suggests that very few of us see ourselves as “European” rather than Scottish, or British, but are we a country that feels open and looks outwards, or one that thinks this is the best it’s going to get, and we need to protect what we have? That’s more vital than any subclause. l

* For those of you keeping score at home, Universal Credit is now allegedly going to be implemented by 2021. Incidentally, George Osborne has recently discovered that it’s a great source of handwavium; tax credit cuts have been postponed because UC will render such huge savings that they aren’t needed.

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle