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11 March 2016

Can John McDonnell settle Labour’s seven-year-itch?

The shadow chancellor's approach is a more full-throated version of what Ed Miliband offered - and a more disciplined approach, too.

By Stephen Bush

“We can’t make the next election our cuts versus their cuts,” Gordon Brown raged at James Purnell, “Take it from me. I’ve won elections on this. It’s got to be Labour investment versus Tory cuts.”

That’s the big tactical argument that has plagued Labour since Purnell and Brown clashed at a fraught Cabinet meeting in 2009. The party is united in its conviction that Osbornomics doesn’t work – that the “long-term economic plan” goes on forever, that the British finances cannot be repaired through cuts alone, but divided on whether the best argument to make is between being trusted to reduce spending compassionately or on the case for greater “investment” (trans: spending) on public services.

Under Gordon Brown, Labour ended up doing a bit of both. The party’s official platform was, in the words of one senior figur from that contest, a fear message, based on the idea that “the Tories are coming for you, your children and your home”. But in the heat of the campaign, the idea that Labour wouldn’t also make cuts unravelled – Alistair Darling admitted that he would reduce spending by a greater margin than that of Thatcher.

What followed was a heavy defeat. There are three schools of thought on this: that it was because the party didn’t “fess up” to the fact there would be severe cuts in expenditure, or because it conceded that there would be severe cuts, or that by 2010 the Labour government was simply so knackered and unpopular that the hung parliament was the best result it could have got, regardless of message.

Under Ed Miliband, the party again went for “a best of both worlds” option, spending the bulk of the parliament criticising the government for cutting “too far, too fast”, going into the election with the largest fiscal gap betweeen the parties since 1992 – leaving the party room to borrow an extra £90bn – but making a virtue of the party’s “fiscal responsibility lock” and pledging to only borrow for “investment”, ie. Infrastructure programmes like railways, roads, renewable energy projects, and so forth.

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But the problem with much of the Miliband programme – at least, according to all the polling – is that it occupied a sort of political version of the “uncanny valley” (the gap in which robots with a near-human apppearance unnerve observers more than robots with an entirely robotic one and do not reassure them as those that appear authentically human do). Milibandism looked like profilgate spending to the electorate at large, and to Diet Conservatism to Labour activists.

Much of “Corbynism” is effectively “Milibandism plus”, as I wrote after Corbyn’s speech to the British Chambers of Commerce.  John McDonnell’s speech is that twice over. The argument for greater room to invest in infrastructure is being made more explicit than it was under Miliband and Ed Balls, when it was largely kept out of speeches. But the rule is actually more rigorous than that proposed under the Eds – the Office for Budget Responsibility will be given greater power to oversee the rule and prevent the govenrment from ignoring it, while parliament’s power will be strengthened, too. 

What it means is that Labour has come to a decisive conclusion about that Purnell-Brown row. Even following Purnell’s resignation, Brown’s Chancellor, Darling, favoured a “their cuts versus our cuts” approach, as did Balls. The unity between Labour’s two principals – for the first time since the early years of Blair-Brown – means that the party will go into the battles ahead and next week’s budget tussle with a much clearer offer than it has had since the financial crash. For Corbyn and his allies, that clarity will further affirm that they made the right choice in appointing McDonnell to the post of shadow chancellor.