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28 February 2020

It’s not the Conservatives’ success that should worry Labour – but their failure

The economic experiment that the UK is embarking on is not guaranteed to end well – and that is likely more of a headache for everyone than the reverse.

By Stephen Bush

One of the questions I get asked a lot at the moment is “how worried should Labour be about what happens if Boris Johnson is successful?” What happens if he does manage to close the north-south divide, successfully negotiate a new EU trade deal, and get the public realm back on its feet?

I think this is a fundamentally flawed question for a couple of reasons. The first is that to be honest, the answer isn’t very interesting. When the incumbent government succeeds, two things happen to it. The first is that the government is re-elected: think Tony Blair 2001, Harold Macmillan in 1956 or Margaret Thatcher in 1987. The second is that public attention shifts to a new area or demand, which boosts the opposition party: think 1945, or this year’s Irish general election.

In both of the latter cases, the government’s “success” didn’t matter very much, because they had also failed on the issues that came to dominate the election. When a government is broadly successful, and is seen to be, they tend to be re-elected. I’m not saying that this government is doomed to failure but ultimately, the consequences of its success aren’t really something Labour should give too much headspace to. It’s a bit like worrying that eventually, the tendency of the people in the flat above to overfill their bath will cause the ceiling to collapse, killing me while I’m on the loo. It could happen, but if it happens, I will die and there is really very little that can be done about it – or much point fretting one way or the other.

In addition, to be frank, Labour has more to gain from the government succeeding than failing. The single biggest policy challenge facing the party is that if it wants to reverse the spending cuts of recent years, as opposed to merely calling them to a halt, it needs to unpick two of the biggest spending decisions made since 2010. The first os the package of tax cuts overseen by successive chancellors since 2010 – the second is the commitment to lower immigration. Both have major implications for the amount that governments can borrow and spend in normal times. To overcome that, as it stands, Labour would need to win an election promising either higher taxes, more immigration, or both. That’s a fairly tall order.

If the government succeeds, then either a) taxes will have risen and immigration will have stayed at roughly the same level or b) the Tory party’s economic experiment will have been a success, freeing both the Conservatives and Labour from those tricky trade-offs. That’s a far more benign electoral environment for Labour than the current one.

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What should worry Labour is not “will the Conservatives’ new approach work?” but “what happens if it doesn’t?” It’s a bold experiment to increase government spending at the top of the economic cycle without accompanying tax rises – and it is not certain that the result won’t be that Labour go into the next election not only having to win arguments for more tax and more immigration, but with inflationary pressures and higher levels of government debt to contend with too. That’s a far more difficult prospectus for any party than facing a successful government.