Support 100 years of independent journalism.

  1. Politics
  2. /
17 January 2012

McCluskey ignores the deficit that Osborne will leave

Nowhere does the Unite general secretary acknowledge the £79bn deficit that Labour would inherit.

By George Eaton

“Union chief attacks Labour leader” is rarely a headline worthy of much attention but then Len McCluskey is not any trade union leader. As general secretary of Unite he leads the country’s biggest trade union and Labour’s biggest donor, responsible for a quarter of all donations to the party. And, lest we forget, had it not been for McCluskey’s union, among others, David Miliband, not Ed, would now be wearing the crown.

But the younger Miliband has little to thank McCluskey for this morning. His article in today’s Guardian is a full-frontal attack on the Labour leader and Ed Balls for their “embrace of austerity” and the government’s public sector pay squeeze. Anti-cuts protesters, he writes, have been left “disenfranchised” by a Blairite “policy coup” that threatens Miliband’s leadership.

To which Balls and Miliband should reply, we have changed our mind because the facts have changed. The failure of George Osborne’s plan means that, based on Office for Budget Responsibility forecasts, the next government will inherit a deficit of £79bn. As growth continues to fall below target, this figure will continue to soar upwards. Yet nowhere in his piece does McCluskey acknowledge this new fiscal reality. Ball’s statement that the “starting point” for Labour (note the wriggle room) is “we’re going to have to keep all these cuts” is simply an acknowledgement that the country has a lot less money than it thought. Labour cannot credibly pledge not only to avoid further cuts if elected in 2015 (Osborne would stretch his into 2017) but to reverse those that have already been made.

Contrary to what McCluskey writes, the shadow chancellor has not embraced “deficit reduction through spending cuts”. He continues to oppose both the speed and the scale of the coalition’s cuts, warning that they mean a reduced level of growth, higher unemployment and, consequently, a higher deficit. Osborne is now set to borrow more than Alistair Darling would have. But we cannot rerun the 2010 general election. The Chancellor plainly has no intention of changing course and the country will suffer for it. Balls’s intervention was, to coin a phrase, an attempt to look forward, not back. Whether this will benefit Labour politically is an open question. At a time when some forecasters say the country is already in recession, the party’s shift of emphasis risks appearing irrelevant at best and eccentric at worst. Labour’s new position (cuts are harming the economy, so we won’t be able to reverse them) cannot easily be sold on the doorstep. Moreover, McCluskey is right to assail Balls for buying “into the hoary old fallacy that increasing the wages of the low-paid risks unemployment.” Keynes’s rottweiler has endorsed a pay policy that will further squeeze demand out of the economy.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s global affairs newsletter, every Monday and Friday. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.
I consent to New Statesman Media Group collecting my details provided via this form in accordance with the Privacy Policy

Balls’s wager is that while Labour may lose short-term popularity it will win long-term credibility. His model appears to be the 1997 spending freeze (devised by the man himself) that reassured nagging doubts about “spendthrift” Labour. We will never know how the party would have fared had it simply played the “too far, too fast” tune. McCluskey’s fears, then, are not ungrounded. But until he shows some awareness of the dramatically altered economic reality, he will not be an honest participant in this debate.