The Labour campaign bus. Photo: Christopher Furlong/Getty Images
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Leader: Political cross-dressing – how the Tories and Labour are fighting to cover faults

The party manifestos fight hard to cover up perceived weaknesses. Labour don't want to admit they'll borrow to invest; the Tories don't want to explain the welfare cuts.

The perception that Labour cannot be trusted to control the public finances has hardened into received wisdom. This might be unfair – Gordon Brown used to operate with considerable fiscal discipline and preach “prudence with a purpose” in the early years of the New Labour government – and it is largely a consequence of the aftermath of the financial crisis and the effectiveness of George Osborne’s rhetorical assault on Labour’s economic record. But it is a fact.

Distracted by a protracted and bitter leadership contest in 2010, Labour feebly allowed the Tory-led coalition to frame the fundamental economic argument as one of Labour profligacy v Tory competence. Fatuous and alarmist comparisons were made between Britain and Greece (which was trapped within the eurozone and, because it did not have an independent central bank, unable to use monetary policy to mitigate the effects of the downturn). While the Miliband brothers set about fighting each other, the Tories were winning over the British public to the view that Labour was to blame for the debt crisis afflicting the country.

It is this perception that Ed Miliband very belatedly attempted to address with his front-page manifesto promise of “fiscal responsibility”: that each of Labour’s policies would be fully funded and require no additional borrowing and that he would eliminate the deficit by 2020, notwithstanding another recession or economic crisis.

The trouble for Labour is that the public has very little trust in politicians’ promises or “vows”, which is why Nick Clegg is so loathed, why Labour has become so unpopular in Scotland, where the SNP styles itself as an anti-austerity party, and why Tony Blair has never been forgiven for the Iraq war.

Mr Miliband’s mission in politics is to reduce inequality and to use the tax system and structural reforms of the economy to close the gap between the richest and the rest of us. Polling shows that his crackdown on “non-doms” commands widespread public support even if it might not raise much revenue, as does a rise in the minimum wage. Yet it is a sign of Labour’s weakness that it has felt obligated to offset every policy in this vein with tough talk about cutting benefits and the deficit. Mr Miliband knows that his party is vulnerable to caricature as a group of old-school socialists.

By contrast, the Tories have been spraying around unfunded commitments as if they had been subject to a secret takeover by Scandinavians. Individual ministers may struggle to explain where the extra money pledged for the NHS will come from but Mr Osborne’s calculation is that his economic credibility is sufficiently strong that a little wooziness will be forgiven. In the Tory manifesto, however, the party has moved from the arena of unachievable promises to downright regressive ones. Inheritance tax is currently paid by 6 per cent of estates, so raising its upper limit will benefit only the wealthy. And while “Right to Buy” was popular in its first incarnation under Margaret Thatcher, it has had devastating consequences. The social housing stock was never replenished; it created a new rentier class (a third of Right to Buy homes are rented out) and the state now subsidises more working families to rent in the private sector, causing the housing benefit bill to swell. It is to Labour’s credit that it has pledged to tackle this crisis at its source – lack of supply – with a housebuilding programme. There is also a cap on rent increases and a mansion tax, a move towards the asset taxes for which we have long argued. Earned income for low and middle earners is taxed too heavily (as is consumption; VAT is a regressive tax) and unearned income and static assets too little.

If there is a lesson to take from the Tory and Labour manifestos, it is that both are intent on neutralising their perceived weaknesses. Labour will not admit that it would borrow to invest (a necessary flexibility, as all Keynesians would understand) nor set out where serious cuts would be, and the Tories will not explain how they intend to make £12bn of welfare cuts and more – their numbers are so absurd as to be almost beyond discussion. The war of the weak is ending with both parties trying desperately to feign strength.

This article first appeared in the 17 April 2015 issue of the New Statesman, The Election Special

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Forget planning for no deal. The government isn't really planning for Brexit at all

The British government is simply not in a position to handle life after the EU.

No deal is better than a bad deal? That phrase has essentially vanished from Theresa May’s lips since the loss of her parliamentary majority in June, but it lives on in the minds of her boosters in the commentariat and the most committed parts of the Brexit press. In fact, they have a new meme: criticising the civil service and ministers who backed a Remain vote for “not preparing” for a no deal Brexit.

Leaving without a deal would mean, among other things, dropping out of the Open Skies agreement which allows British aeroplanes to fly to the United States and European Union. It would lead very quickly to food shortages and also mean that radioactive isotopes, used among other things for cancer treatment, wouldn’t be able to cross into the UK anymore. “Planning for no deal” actually means “making a deal”.  (Where the Brexit elite may have a point is that the consequences of no deal are sufficiently disruptive on both sides that the British government shouldn’t  worry too much about the two-year time frame set out in Article 50, as both sides have too big an incentive to always agree to extra time. I don’t think this is likely for political reasons but there is a good economic case for it.)

For the most part, you can’t really plan for no deal. There are however some things the government could prepare for. They could, for instance, start hiring additional staff for customs checks and investing in a bigger IT system to be able to handle the increased volume of work that would need to take place at the British border. It would need to begin issuing compulsory purchases to build new customs posts at ports, particularly along the 300-mile stretch of the Irish border – where Northern Ireland, outside the European Union, would immediately have a hard border with the Republic of Ireland, which would remain inside the bloc. But as Newsnight’s Christopher Cook details, the government is doing none of these things.

Now, in a way, you might say that this is a good decision on the government’s part. Frankly, these measures would only be about as useful as doing your seatbelt up before driving off the Grand Canyon. Buying up land and properties along the Irish border has the potential to cause political headaches that neither the British nor Irish governments need. However, as Cook notes, much of the government’s negotiating strategy seems to be based around convincing the EU27 that the United Kingdom might actually walk away without a deal, so not making even these inadequate plans makes a mockery of their own strategy. 

But the frothing about preparing for “no deal” ignores a far bigger problem: the government isn’t really preparing for any deal, and certainly not the one envisaged in May’s Lancaster House speech, where she set out the terms of Britain’s Brexit negotiations, or in her letter to the EU27 triggering Article 50. Just to reiterate: the government’s proposal is that the United Kingdom will leave both the single market and the customs union. Its regulations will no longer be set or enforced by the European Court of Justice or related bodies.

That means that, when Britain leaves the EU, it will need, at a minimum: to beef up the number of staff, the quality of its computer systems and the amount of physical space given over to customs checks and other assorted border work. It will need to hire its own food and standards inspectors to travel the globe checking the quality of products exported to the United Kingdom. It will need to increase the size of its own regulatory bodies.

The Foreign Office is doing some good and important work on preparing Britain’s re-entry into the World Trade Organisation as a nation with its own set of tariffs. But across the government, the level of preparation is simply not where it should be.

And all that’s assuming that May gets exactly what she wants. It’s not that the government isn’t preparing for no deal, or isn’t preparing for a bad deal. It can’t even be said to be preparing for what it believes is a great deal. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.