The economy: hurting, yes. Working, maybe - but for whom?

Growth that doesn't fix the squeeze on living standards poses a challenge to all parties.

Ken Clarke, the cabinet minister with responsibility for giving mildly revealing interviews, has given a mildly revealing interview to the Daily Telegraph. The item that has grabbed most headlines is the acknowledgement that the government is unlikely to legislate to create a tax break for married couples this parliament. That is disappointing to the Conservative right but not entirely surprising. Tax cuts are a very precious political commodity; the Lib Dems are opposed to this particular one and would demand something juicy in return. The Tory leadership is happy to do those sorts of deals in theory but is not wedded enough [sorry, no pun intended] to the idea of a marriage allowance to squander coalition negotiating capital on it.

Also interesting is Clarke’s line on the economy:

If we are back to strong growth by the next election, we probably won’t need to campaign. If at the next election, the economy is in strong normal growth, George Osborne will be given the Companion of Honour or something and we will all get safe back.

Clarke adds, of course, that such a scenario is supremely unlikely and that a more plausible campaign for the Tories in 2015 is one that advertises them as having a “safe hand on the tiller.” That, along with dark warnings against prematurely handing responsibility for the economy back to Labour – and especially Ed Balls - is bound to be the outline of the Conservative pitch at the next election.  

The news last Thursday that the economy has formally exited recession has opened up a whole new school of political speculation – how does the return of growth change things? This is peculiar in a way because no-one expected the economy to shrink forever. Some recovery was always in prospect. What matters in economic terms is how robust it is. Some pessimists are forecasting a slump back into negative territory – a “triple dip” – most analysts expect weak growth whose benefits will not be widely felt.

Yet politically, Thursday’s positive number has made a difference. There are two reasons for that.

First, Labour MPs and shadow ministers – as I noted in my column last week – were already fretting about their apparent lack of a “fair weather” strategy. The previous week’s relatively buoyant employment figures provoked an attack of nerves, with some anxious consideration of the prospect that the Tory plan might really be working – or be superficially yet plausibly presentable as working. That is really a subset of anxiety about Ed Balls’s handling of the role of shadow chancellor. Broadly speaking he has called the macro-economics of the past two years right. For that he gets a lot of credit in Labour ranks – and among some non-partisan economists. He forecast a double dip and there was one.

But politically he has failed to stick the blame for that recession firmly on the coalition. Opinion polls show a gradual shift on the question of who is more trusted to run the economy – away from the Tories and towards Labour. But given the predictable mid-term dip experienced by any administration and the empirical fact that George Osborne inherited a growing economy and promptly shrank it, the Conservative ratings on the economy are – from Labour’s point of view – shockingly, depressingly good.

The whispering against Balls in the Labour ranks is that he has gambled too much on being vindicated by economics and has misplayed the politics. No-one wants the opposition to be ghoulishly willing the economy to fail. And if, come 2015, it is growing, no-one will be much impressed by a retrospective and unprovable claim that it might have grown sooner and better had the Tories not cut too far too fast in the early stages of the parliament.

That leads to the second obstacle facing Labour, which is psychological as much as political. It is the problem of cognitive dissonance. This is the phenomenon that leads people to unconsciously ignore or reject evidence that challenges a prejudice, because doing so is less painful than recognising and owning up to a fault. In this case, the Liberal Democrats, the Tory-inclined media and quite a few people who voted Conservative all have a profound emotional investment in Ed Balls having been wrong all along. That need will, in most cases, far outweigh the reasonable argument that – in a purely dispassionate account of the economic evidence – he was right. More generally, swing voters who backed coalition parties will be marginally predisposed to give Osborne some economic benefit of the doubt because they don’t want to think – or be told – that ejecting  Labour was an error and that the problems we now face are, to some extent, their own fault.

All of that means that Labour needs to be relentlessly focused on the future. To be fair, Ed Miliband seems to understand this. A crucial point – and an area of great danger for the Tories – is that a return to growth will not end the squeeze on living standards for people in middle of the income scale and below. This recovery will be unlike the bounce back from past recessions. Real wages and the purchasing power of many voters will still feel as if they are shrinking.

Later this week, the Resolution Foundation - the politically neutral think tank that has done more than any institution in Britain to define and highlight the “squeezed middle”  phenomenon – publishes the final report of its Commission on Living Standards. This is an epic piece of work that has drawn testimony and data from a wider range of expert individuals and institutions over the past 18 months. The report will look at various scenarios that might evolve over the next few years and the policy priorities implied by those outcomes. It will be a big mid-week story and makes, from what I have heard, uncomfortable reading in various ways for all political parties.

One thing we already know from past analysis by Resolution and others, such as the IFS, is that many people who consider themselves middle class and who generally expect a growing economy to make them feel more prosperous will reach the next election feeling discernibly poorer than they were in 2010. The political hazard for the Tories is that, even if they try to avoid triumphalism, they will be addressing the electorate with a message that says, in essence, “it hurt but it’s working” and the public will respond by saying “you say it, but it sure as hell doesn’t feel that way to us.” Or, worse, they will think “working for whom, exactly? You and your rich mates, perhaps, but not for us.”

Understanding that feeling and turning it into support for a different, fairer account of the future under Labour is Ed Miliband’s goal. The question for him and his shadow chancellor is whether or not the pursuit of that target means moving on from the big macro-economic argument of the past two years. It is a painful proposition, especially for Ed Balls. Perhaps he was right all along; perhaps no-one cares.

Good economic news puts the Labour under pressure. Source: Getty

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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In the 1980s, I went to a rally where Labour Party speakers shared the stage with men in balaclavas

The links between the Labour left and Irish republicanism are worth investigating.

A spat between Jeremy Corbyn’s henchfolk and Conor McGinn, the MP for St Helens North, caught my ear the other evening. McGinn was a guest on BBC Radio 4’s Westminster Hour, and he obligingly revisited the brouhaha for the listeners at home. Apparently, following an interview in May, in which McGinn called for Corbyn to “reach out beyond his comfort zone”, he was first threatened obliquely with the sack, then asked for a retraction (which he refused to give) and finally learned – from someone in the whips’ office – that his party leader was considering phoning up McGinn’s father to whip the errant whipper-in into line. On the programme, McGinn said: “The modus operandi that he [Corbyn] and the people around him were trying to do [sic], involving my family, was to isolate and ostracise me from them and from the community I am very proud to come from – which is an Irish nationalist community in south Armagh.”

Needless to say, the Labour leader’s office has continued to deny any such thing, but while we may nurture some suspicions about his behaviour, McGinn was also indulging in a little airbrushing when he described south Armagh as an “Irish ­nationalist community”. In the most recent elections, Newry and Armagh returned three Sinn Fein members to the Northern Ireland Assembly (as against one Social Democratic and Labour Party member) and one Sinn Fein MP to Westminster. When I last looked, Sinn Fein was still a republican, rather than a nationalist, party – something that McGinn should only be too well aware of, as the paternal hand that was putatively to have been lain on him belongs to Pat McGinn, the former Sinn Fein mayor of Newry and Armagh.

According to the Irish News, a “close friend” of the McGinns poured this cold water on the mini-conflagration: “Anybody who knows the McGinn family knows that Pat is very proud of Conor and that they remain very close.” The friend went on to opine: “He [Pat McGinn] found the whole notion of Corbyn phoning him totally ridiculous – as if Pat is going to criticise his son to save Jeremy Corbyn’s face. They would laugh about it were it not so sinister.”

“Sinister” does seem the mot juste. McGinn, Jr grew up in Bessbrook during the Troubles. I visited the village in the early 1990s on assignment. The skies were full of the chattering of British army Chinooks, and there were fake road signs in the hedgerows bearing pictograms of rifles and captioned: “Sniper at work”. South Armagh had been known for years as “bandit country”. There were army watchtowers standing sentinel in the dinky, green fields and checkpoints everywhere, manned by some of the thousands of the troops who had been deployed to fight what was, in effect, a low-level counter-insurgency war. Nationalist community, my foot.

What lies beneath the Corbyn-McGinn spat is the queered problematics of the ­relationship between the far left wing of the Labour Party and physical-force Irish republicanism. I also recall, during the hunger strikes of the early 1980s, going to a “Smash the H-Blocks” rally in Kilburn, north London, at which Labour Party speakers shared the stage with representatives from Sinn Fein, some of whom wore balaclavas and dark glasses to evade the telephoto lenses of the Met’s anti-terrorist squad.

The shape-shifting relationship between the “political wing” of the IRA and the men with sniper rifles in the south Armagh bocage was always of the essence of the conflict, allowing both sides a convenient fiction around which to posture publicly and privately negotiate. In choosing to appear on platforms with people who might or might not be terrorists, Labour leftists also sprinkled a little of their stardust on themselves: the “stardust” being the implication that they, too, under the right circumstances, might be capable of violence in pursuit of their political ends.

On the far right of British politics, Her Majesty’s Government and its apparatus are referred to derisively as “state”. There were various attempts in the 1970s and 1980s by far-right groupuscules to link up with the Ulster Freedom Fighters and other loyalist paramilitary organisations in their battle against “state”. All foundered on the obvious incompetence of the fascists. The situation on the far left was different. The socialist credentials of Sinn Fein/IRA were too threadbare for genuine expressions of solidarity, but there was a sort of tacit confidence-and-supply arrangement between these factions. The Labour far left provided the republicans with the confidence that, should an appropriately radical government be elected to Westminster, “state” would withdraw from Northern Ireland. What the republicans did for the mainland militants was to cloak them in their penumbra of darkness: without needing to call down on themselves the armed might of “state”, they could imply that they were willing to take it on, should the opportunity arise.

I don’t for a second believe that Corbyn was summoning up these ghosts of the insurrectionary dead when he either did or did not threaten to phone McGinn, Sr. But his supporters need to ask themselves what they’re getting into. Their leader, if he was to have remained true to the positions that he has espoused over many years, should have refused to sit as privy counsellor upon assuming his party office, and refused all the other mummery associated with the monarchical “state”. That he didn’t do so was surely a strategic decision. Such a position would make him utterly unelectable.

The snipers may not be at work in south Armagh just now – but there are rifles out there that could yet be dug up. I wouldn’t be surprised if some in Sinn Fein knew where they are, but one thing’s for certain: Corbyn hasn’t got a clue, bloody or otherwise. 

Will Self is an author and journalist. His books include Umbrella, Shark, The Book of Dave and The Butt. He writes the Madness of Crowds and Real Meals columns for the New Statesman.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser