There’s no doubt about it – the Labour Party has reached a fork in the road and on 12 September the fate of the progressive centre-left in Britain will be sealed. There are millions whose living standards and working conditions depend on Labour winning government in 2020 to fight for power, wealth and opportunity in the hands of the many not the few. If we get this wrong, the Tories could be in office for a generation. So I urge Labour members to think incredibly carefully and look at the detail before they cast their vote.
The superficial appeal of those on the hard left may be tempting at one level; big bold rhetoric presents a ‘clear choice’ to motivate the currently unenthused. But we have a duty to scrutinise the consequences of those policies being espoused with such sweeping certainty. Take, for example, the proposal for a ‘People’s Quantitative Easing’ where the Bank of England is instructed to use QE to directly finance infrastructure and public service projects. At one level it sounds so easy – if there’s a shortage of money, just print some more!
But ending the Bank of England’s independence and reversing one of Labour’s most enduringly successful reforms would risk a major hike in lending rates, taking money away from schools and hospitals as debt servicing becomes more expensive. And resorting to the printing press to artificially create money for public expenditure purposes would be a major distortion for the economy. Such a new monetarism would spark higher inflation and make it harder for those on lower incomes to afford goods and services, provoking a rise in mortgage rates to counteract the effect. You can’t magically abolish the deficit with printed money and expect zero repercussions for the least well-off and those already struggling with loans and debts.
Of course there’s always more to be done to clamp down on tax avoidance. But if you base your economic policy by vastly over-estimating the amount you can get from tax loopholes, you cannot deliver on the promises you are making. The people in need of real help will be the ones who pay the price.
It is vital the policy options being proposed are rigorous and can stand up to scrutiny. Labour members must not choose a Leader only to discover they have backed a policy agenda whose small print could end up hurting the very people we want to stand up for.
It is true that the Tories have used this period to shrink levels of public investment under the guise of deficit eradication. But that doesn’t mean there is anything ‘left wing’ about wanting to run a deficit in perpetuity. In fact, for those of us who believe in the virtues of collectively purchased public services, we have a duty to prove that the state can be a sound steward of taxpayer resources. If we fail to show we can live within our means in the long run, taxpayers will lose confidence in the pooling of collectively providing health, education or policing – and they will increasingly lose faith the public realm. Any Labour Leader who thinks budgets can always be in the red will discover taxpayers are distinctly unimpressed by the idea – and that Leader will in turn be responsible for permanently damaging the coalition of support we need to sustain decent levels of public investment.
Economic credibility isn’t just about winning elections – it is about securing the resources we need to invest in public services, improve education and abolish child poverty. It is about retaining public consent for the collective pursuit of those ambitions. And ill-considered policies that drive up the cost of living and inflation will hurt the poorest people in society.
Britain needs a credible Labour Prime Minister, not the Tories in government for a generation. Labour members must weigh up carefully what is now at stake.