George Osborne holds his red box aloft. Photo:Getty Images
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Labour must make the case for greater spending: in its past and the future

George Osborne is selling off our children's future. Labour must set a different course, argues John Healey MP. 

Government has a duty to do what no individual can and no business will: look out for the long term interests of a country and its citizens.

George Osborne’s political trick of the last five years against a too-timid Labour opposition has been to define our national, long-term economic interest as a problem of the fiscal deficit.

Never mind that if the UK economy had continued to grow at the same rate as the first six months of 2010, before Labour’s recovery was choked off, it would be £100bn bigger today. A Yorkshire-sized lump of lost national income, and thousands of good jobs that we could now have had gone with it.  

Never mind that GDP per person is still lower than before the 2008 global banking crisis and crash, with most people still thinking their household finances are getting worse not better.

Never mind that only France, Italy and Japan of the G20 countries have grown slower than the UK since 2010. Or that Osborne has led the slowest UK recovery from recession for 100 years – the main reason he failed to deal with the deficit as he promised in the last Parliament.

In Osborne’s Ministry of Truth where black is white and war is peace, vital job-creating, growth-generating investment in our country’s future is the threat.

How else to explain the Chancellor’s plan to legislate that government runs a surplus? His latest political trick to double down on an economic narrative that locks Labour out. It may be good politics but it is bad economics and bad fiscal management.

If we let him do it, then Labour won’t win in 2020, and we won’t deserve to. We know that in the last Parliament, growth weakened as the Tories cut public investment in infrastructure in half, reduced government investment on R&D, slashed vital capital investment on affordable homes, and cut further education.

Economists may argue about the scale of the knock-on economic effect of cutting this sort of spending – the so-called fiscal multiplier – but almost all agree it is significant, and bigger in a downturn or during a recovery. A mid-range IMF estimate suggests that for every £1m governments cut, their economy shrinks between £0.9m and £1.7m.

But investment spending brings more benefit than just short-term economic stimulus.

It’s vital in the long-term as a sure-fire way to lock in both higher growth and higher productivity, which is imperative for good jobs in the future. Without investment in transport, research, skills, energy and communications we won’t create and keep the well-paying jobs we need in Britain.  

And it’s vital to any alternative vision of making Britain a better place. Government decisions today determine the opportunities that our children will have tomorrow.

It’s their futures that George Osborne is failing when he chokes off public investment. And their potential he is stunting when he limits our country’s economic potential.

Just as his surplus rule would not work for a family looking for a mortgage to buy their own home, a teenager wanting to go to university or a business aiming to expand, it’s counterproductive too for a country that needs to invest in its future.

The public agree. By nine percentage points, they think the best way to grow our economy is to boost productivity and invest rather than focusing on cutting the deficit and lowering taxes.

No party of the centre-left deserves to get into power if it can’t convince people that government can be a force for good, not just in distributing national income but in creating it too. These arguments are there for the making. And ahead of the Budget next week, Labour must make them.

John Healey is the Labour MP for Wentworth and Dearne and was formerly housing minister, local government minister and financial secretary to the Treasury

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Building peace in a dangerous world needs resources, not just goodwill

Conflict resolution is only the first step.

Thursday 21 September is the UN-designated International Day of Peace. At noon on this day, which has been celebrated for the last 25 years, the UN general secretary will ring the Peace Bell on the UN headquarters in New York and people of good will around the world will take part in events to mark the occasion. At the same time, spending on every conceivable type of weaponry will continue at record levels.

The first couple of decades after the end of the Cold War saw a steady reduction in conflict, but lately that trend seems to have been reversed. There are currently around 40 active armed conflicts around the world with violence and suffering at record levels. According to the 2017 Global Peace Index worldwide military spending last year amounted to a staggering $1.7 trillion and a further trillion dollars worth of economic growth was lost as a result. This compares with around 10 billion dollars spent on long term peace building.

To mark World Peace Day, International Alert, a London-based non-government agency which specialises in peace building, is this week publishing Redressing the Balance, a report contrasting the trivial amounts spent on reconciliation and the avoidance of war with the enormous and ever growing global military expenditure.  Using data from the Institute for Economics and Peace, the report’s author, Phil Vernon, argues that money spent on avoiding and mitigating the consequences of conflict is not only morally right, but cost-effective – "every dollar invested in peace building reduces the cost of conflict".

According to Vernon, "the international community has a tendency to focus on peacemaking and peacekeeping at the expense of long term peace building."  There are currently 100,000 soldiers, police and other observers serving 16 UN operations on four continents. He says what’s needed instead of just peace keeping is a much greater sustained investment, involving individuals and agencies at all levels, to address the causes of violence and to give all parties a stake in the future. Above all, although funding and expertise can come from outside, constructing a durable peace will only work if there is local ownership of the process.

The picture is not wholly depressing. Even in the direst conflicts there are examples where the international community has help to fund and train local agencies with the result that local disputes can often be settled without escalating into full blown conflicts. In countries as diverse as East Timor, Sierra Leone, Rwanda and Nepal long term commitment by the international community working with local people has helped build durable institutions in the wake of vicious civil wars. Nearer to home, there has long been recognition that peace in Ireland can only be sustained by addressing long-standing grievances, building resilient institutions and ensuring that all communities have a stake in the outcome.

At a micro level, too, there is evidence that funding and training local agencies can contribute to longer term stability. In the eastern Congo, for example, various non-government organisations have worked with local leaders, men and women from different ethnic groups to settle disputes over land ownership which have helped fuel 40 years of mayhem. In the Central African Republic training and support to local Muslim and Christian leaders has helped reduce tensions. In north east Nigeria several agencies are helping to reintegrate the hundreds of traumatised girls and young women who have escaped the clutches of Boko Haram only to find themselves rejected by their communities.

Peace building, says Vernon, is the poor cousin of other approaches to conflict resolution. In future, he concludes, it must become a core component of future international interventions. "This means a major re-think by donor governments and multilateral organisations of how they measure success… with a greater focus placed on anticipation, prevention and the long term." Or, to quote the young Pakistani winner of the Nobel Peace Prize, Malala Yousufzai: "If you want to avoid war, then instead of sending guns, send books. Instead of tanks, send pens. Instead of soldiers, send teachers."

Redressing the Balance by Phil Vernon is published on September 21.   Chris Mullin is the chairman of International Alert.