It's about issues not personalities. Photo: Getty Images
Show Hide image

The Labour leadership race has been obsessed with personalities. Here's what it really needs

Rather than focussing on the faces at the top, Labour needs to think about what's going on underneath the surface, says Michael Meacher.

So far the Labour leadership contest has been depressingly far too much about personalities and far too little about the fundamental issues the country now faces and how a potential new leader would handle them.   That narrative must start with the economy since that is the central issue that decided the election.

Too many voters were left fearful of entrusting the nation’s finances to Labour which an incessant Tory barrage,  never challenged or refuted, told them had caused the economic collapse in the first place, as though the bankers and the international recession had nothing to do with it.   The truth is that the Blair-Brown governments in their 11 years 1997-2007 never ran a budget deficit higher than 3.3% of GDP (roughly the same level as Germany’s) whilst the Thatcher-Major governments ran up deficits larger than this in 10 out of their 18 years.   Setting the record straight, and getting it understood, is key to enabling the rest of the narrative to be listened to.

The central economic issue for the next 5 years is the continuation of austerity.   That raises two predominant questions.   Is it achieving what it is meant to do – to eliminate the deficit?    Is it still necessary, and if not, what is the alternative?

There are two ways to cut a deficit, either by restricting expenditure or by increasing income.   Osborne chose the former, with limited success.   Alistair Darling, the last Labour chancellor, after two expansionary budgets in 2009-10 reduced the deficit from its peak at £157bn to £118bn by 2011, a cut of nearly £20bn a year.   George Osborne’s austerity budgets reduced it to its current level of £92bn, a cut of just £7bn a year.   Moreover Osborne, despite such a modest pace of reduction after causing so much pain, has now declared he intends to clear the deficit by 2017-8, a cut of some £25bn a year.   That is simply not credible.   He promised in 2010 he would eliminate the deficit by 2015; now he’s saying he will do so by 2018 – he’s achieving form with his fantasy projections.

If then austerity has achieved so little at the cost of so much detriment, is it still necessary?   The much better alternative is the proven approach taken by Darling and also by the US in their recovery from recession using public investment to kickstart the economy into genuinely sustainable growth – not the fragile version we have now – and thus promote real jobs, increase household incomes, raise government tax receipts, and so pay down the deficit much faster.   Investment should be focused on the key current priorities – house-building, infrastructure in energy, transport and IT, and laying the foundations for a low-carbon economy.

It can be paid for by borrowing since with interest rates on the floor at 0.5% a £30bn package of investment would cost only £150m a year and it would cause no alarm in the markets which are desperate for growth at any cost.   Better still, however, it could be funded at no increase in public borrowing at all either by requiring the publicly owned banks to prioritise lending to British industry rather than foreign speculation, or by a further modest tranche of quantitative easing, or by taxing the extremely rich, those with incomes over £3,000 a week, and by a relentless crackdown with new regulations against tax avoidance.

In providing this alternative scenario for sustainable growth, Labour should blow away the myth of a great Tory economic recovery.   It is anything but.   It is the slowest and weakest recovery for a century, wages are still nearly 8% below pre-crash levels, productivity on which future living standards depend is flat, private investment is anaemic, the trade deficit on manufactured goods is the worst in British history, unemployment is still nearly 2 million, and household debt is tipping £2 trillions.   None of that is mentioned by the Tories.   What alone they proclaim is growth and jobs.   Both repay unpacking.  Osborne’s austerity flattened growth through to 2012, but then by easing some of the cuts plus ultra-loose monetary policy he triggered a spurt of growth from the start of 2013 till mid-2014, after which it has sagged badly.   From 0.9% growth in the 3rd quarter of last year it has now fallen two-thirds to 0.3% in the 1st quarter of this year.   More a temporary uptick than a genuine recovery.      As for jobs, the 2 million increase in private sector employment is certainly welcome, but as surveys have repeatedly shown two-thirds of the jobs are self-employment on a pittance income and most of the rest are insecure, low-paid and up to a million on zero hours contracts.   Moreover surveys have found that 11 out of 12 new jobs have been confined to London and the south-east, and half have gone to migrant labour.   Not quite the picture of a rounded, well-paid recovery.

Third, Labour should be making the case for a major revival in high-tech manufacturing and services since there is no other way to pay our way in the world and reverse an unsustainable trade deficit of over £100bn a year.   The present recovery, such as it is, is far too lopsided in favour of finance against industry and focused too much on the south against dereliction in the north.   It requires a 10-15 year programme of rebalancing the economy and must entail much more reliable funding, far greater emphasis on skill-training and apprenticeships, rebuilding the crucial supply chains broken by the privatisations and sell-offs of the 1980s, safeguarding key strategic sectors and companies from foreign takeovers, and much stronger support for R&D and innovation.   This is the only way back to full employment and rising living standards.   It is also the means to ease immigration pressures through a big increase in building houses, schools and health facilities whilst at the same time lifting the artificial ceiling on access to the UK for tier-one high-tech specialist workers that the CBI is so worried about.

Lastly, as many are now asserting, Labour does need to present the electorate with a programme designed to incentivise aspiration at all levels of society.   But it also needs to be recognised that that this can only become a reality, as opposed to empty rhetoric, if there are radical changes made in today’s dysfunctional structure of opportunity which polarises the low-paid, badly housed, poorly educated and seriously disadvantaged from the well-endowed, well-off, and well-connected.   It equally requires a new relationship between the State and the private sector which stresses, not their ideological antagonism, but their mutual inter-dependence.   Private markets should be enthusiastically supported where they work well, but reformed or replaced where they are clearly failing as currently in housing, energy, rail and banking.

Getty
Show Hide image

Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland