There is a zombie stalking the corridors of Whitehall. No, not the Prime Minister, though it undoubtedly shares her bloodless, grey-tinged complexion. This zombie is one of an army of the undead that has a presence in almost every home in the nation but is particularly strong in businesses small and large, up and down the county. By certain lights it may have something of Hammond or Cameron about it, but what it mostly resembles is the current editor of the Evening Standard. Yes, this zombie is his economic ideology – Osbornomics.
After Labour’s last electoral defeat I argued that the next party leader had to take on the ideology of Osbornomics – that cutting investment boosts the economy:
“The Osbornomic farmer wouldn’t borrow to buy a tractor unless crop prices were falling. The Osbornomic househunter would not take out a mortgage unless her salary was being cut. The Osbornomic CEO would only invest in a new product line when revenues were falling.”
And we did get a leader willing to take on Osbornomics – twice in fact. Under Jeremy Corbyn, Labour’s industrial strategy – which I worked on with Rebecca Long-Bailey and Clive Lewis – reflects the thinking of economic voices in the wilderness, such as Mariana Mazzucato, that not only should the public sector be an active player in the economy, state investment is essential to drive the kind of growth which reflects Labour values. Mazzucato says that if we want an economy and a society driven by growth which is smart, sustainable and inclusive (and we do!) then state investment has to steer the economy in that way.
That’s why our industrial strategy committed a Labour government to creating one million good new jobs through investment in infrastructure and skills, and cross sectorial national ‘missions’ such as decarbonising our energy generation by 60 per cent and creating an innovation nation with 3 per cent of GDP spent on R&D (research and development).
Labour’s industrial strategy is positive and practical, it speaks to the student anxious about their future, the single mum working two minimum wage jobs, and the Redcar steelworker wanting a job to be proud of. It addresses the productivity crisis which keeps us poor even with unemployment relatively low.
Productivity was missing from this election debate – as I pointed out in my Long Read for the New Statesman. But the other dog that did not bark in this election was business. Unlike in 2015, there were no letters to the Telegraph signed by 50 CEOs demanding a Conservative vote. That business did not endorse the Tories when their Labour opposition was proposing to nationalise major parts of the private sector speaks volumes for their desperate lack of confidence in the Prime Minister.
So while we are understandably fixated by the spectacle of a zombie Prime Minster engaged in a dance to the death with the DUP, as the European Union counts down to Brexit negotiations, don’t let’s forget the economy.
As Jeremy reiterated this weekend, Labour will be fighting for a jobs first Brexit, and we need an economy strong enough to benefit from that. I am not arguing that the British economy will be found dead in some metaphorical alley, but I know the zombie austerity economics which are Osborne’s legacy are holding back jobs, people and businesses right here, right now.
Osbornomics was on life support the moment Theresa May took over – introducing the term industrial strategy into the department for business was a blow to the heart of an ideology predicated on the state doing nothing.
But neither May nor Hammond had any ideas to actually replace it with. Their industrial strategy had ten pillars and no substance, it was more erratic than strategic. The only twist that Hammond and May added was that this wasn’t to repay the debt or pay down the deficit – when you’ve doubled the debt and are ten years late on a five-year deficit reduction strategy that is a hard argument to make – they said it was for Brexit, to change our economic model, a race to the bottom with the UK as some Trumpian alt-right tax haven for American rejects.
So austerity economics continued. The rate of corporation tax continued to fall, raising business profits, but, crucially not investment. Investment is driven by business perceptions of where the future opportunities are for growth, opportunities which a mission orientated industrial strategy creates together with the kind of national excitement which brings public and private sector investors together. The current chaos offers no positive opportunities and no long term certainty, with Standard & Poor’s already warning that the unstable political situation is likely to harm economic growth.
The Tories eat parties. They went into coalition with the Liberal Democrats and ate them. They acquired the language and policies of UKIP and ate them. If May has her way they will absorb the DUP and there may be a slightly softer Brexit with abortion and LGBTQ+ rights the price we pay, the bargaining chips of the coalition of chaos, in the way EU citizens and public services have been for the strong and stable government we have had so far.
But as this happens, the economy will have the blood drained from it by the continued austerity agenda. That is why we must make sure we have a Labour government in time to save the economy from Osborne undead.