5 August 2010

Labour will have just 13 days to agree its deficit policy

The new party leader will have less than two weeks to prepare a response to the spending review.

Just as George Osborne’s emergency Budget defined the first three months of the coalition, so the Comprehensive Spending Review on 20 October will define the next three. The political dust-up over Michael Gove’s relatively modest schools cuts offered a preview of the furious rows we can expect this autumn. The decision to cut all non-ring-fenced departments by up to 25 per cent will put more strain on the coalition than anything in the Budget.

With this in mind, Labour’s response to the review will define the approach it takes in opposition. But, based on the current timetable for the shadow cabinet election, the next Labour leader and shadow chancellor will have only 13 days to agree a policy on the deficit and spending cuts. The new shadow cabinet won’t start to be elected until the week beginning 4 October, with the results announced on 7 October.

As one leadership contender said: “It is an incredibly tight timetable for the new leader and their shadow chancellor to map out a policy that might yet determine how we are viewed for the rest of the parliament.”

The big judgement the next leader will face is whether to stick to the Brown/Darling pledge to halve the deficit by 2014 (as David Miliband suggests) or to reduce the pace of cuts (as Ed Balls suggests).

To my mind, Labour needs to come up with something more impressive than a moderated version of Brown’s “investment versus cuts” line. As I’ve suggested before, one way to do this would be to come out against the decision to protect the £110bn National Health Service budget (the International Development budget is a far smaller £6.2bn).

To his credit, Andy Burnham (in his capacity as a former health secretary) has argued as much, pointing out that the decision to ring-fence health “will visit real damage on other services that are intimately linked to the NHS”.

It’s about time that one of the Milibands followed Burnham’s lead. This could yet provide Labour with its Nixon-in-China moment: only the party of the NHS can be trusted to cut with care.