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Rishi Sunak doesn’t have an economic strategy – he has a PR strategy

The Chancellor only laid the foundations for his party’s political survival: an excuse for future economic failure.  

By Paul Mason

With the launch of Rishi Sunak’s Nando’s voucher scheme, the shape of the political argument over Covid-19 just became a lot clearer. The government was prepared to spend £330bn propping up businesses during the lockdown, and to pay the salaries of nine million workers as the economy marked time. But it has no clue as to the end-state it is aiming for.

The government will end the furlough scheme in October, in the hope that by paying employers £1,000 per worker it can defer the coming jobs collapse until after Christmas. As I listened to Sunak list his gimmicks one by one – the VAT cut for hospitality and tourism, the jobs scheme for under-24s and the restaurant vouchers, it dawned on me that this was not an economic strategy but a PR strategy.

[see also: Rishi Sunak makes a big bet on the cause of the United Kingdom’s economic woes]

The Organisation for Economic Cooperation and Development (OECD) predicts that if the UK suffers a double hit of Covid-19, with a second wave in the autumn-winter of 2020-21, unemployment will rise to 15 per cent by the new year. Even with the ongoing bounceback, under this worst-case scenario the UK’s economy will shrink by 14 per cent over the whole of 2020 – a catastrophe unparalleled by any slump in the history of industrial capitalism.

What Sunak laid today were not the foundations for an economic recovery but for his party’s political survival: an excuse for the failure that’s about to happen. If, in the autumn, the headlines are dominated by a string of business failures and mass redundancies, the Tories will say as they’ve said about their catastrophic public health strategy – that they have “done well” and come up with a “world-beating” solution. If it didn’t work, that’s because of some strands of RNA and people’s fecklessness.

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Labour is right to emphasise that, to avoid a deeper slump and a long economic depression, we have to start with the handling of the virus itself. A comprehensive track-and-track operation, with a workable app, would do more to repopulate our hotels, restaurants and theatres than Sunak’’s food giveaway. We have to be prepared to impose hard local lockdowns and, if necessary, do the whole thing over again nationally, only this time early and correctly.

Seen in this light, the government’s continual chivvying of consumers to spend, go to the pub and “eat out” looks irresponsible. The future of the economy depends on avoiding a second wave, even if that means a slower reopening leads some businesses to fail because their quarterly rent becomes due, or their credit lines expire.

But there’s a lesson for Labour in Sunak’s gimmickry. Unless you are able to spell out a vision of where you’re going, handing out vouchers for Pizza Margherita is where you end up. What we need is not home insulation and job creation schemes priced in the low billions: it is a route map to a new and more resilient model of economic growth.

Throwing £330bn at a frozen economy in March was not the Tories showing radicalism but bowing to necessity. Radicalism would be raising – through a combination of government borrowing, central bank intervention and wealth taxes – a similar amount, and using it to transform Britain.

You might have hoped the Conservatives realised this when they started reading up on Franklin D Roosevelt’s New Deal. One of the most aptly named books about Roosevelt’s turn to state intervention and welfarism is titled A Traitor to his Class (by HW Brands). To revive an economy in which one in four adults was out of work, Roosevelt had to attack the interests of the privileged elite that he’d developed among. 

The New Deal was a redistribution of both wealth and power – and involved public investment of an order of magnitude greater than anything envisaged by the Tories. It also involved a conscious act of class warfare against financial speculation.

Labour’s front bench clearly understand the scale of the opportunity. The Tufton Street ideology most Tories have been reared on tells them to use this moment as an opportunity for a grand shakeout of failing businesses, wage suppression, and the transfer of lucrative public contracts to private companies. But it would be madness. 

So as they effectively part-nationalise the low-budget food chains of Britain, the Tories have to keep telling themselves that this is “not communism”. And yet it is not normal – and cannot be normalised unless the UK adopts a wholly new economic regime under which growth is based on domestic demand and state-led investment, with a rising share of income going to wage earners and a falling share going to the owners of capital.

There are literally only three people in Britain who can make that happen: Keir Starmer, Anneliese Dodds and Ed Miliband. It’s clear from the never-silent world of Labour’s Zoom-call networks that they understand this. But almost on cue, at the moment where supply and demand for radicalism start to interact, we’ve had the first shot across the bows from within the shadow cabinet against the instinct for radicalism. 

One shadow minister told Times columnist Rachel Sylvester that Starmer needs to “wipe the slate clean” of the 2019 manifesto – which would be hard to do without wiping the slate clean of the democratic processes through which it was drawn up. Another “senior Labour figure” told the same journalist that Miliband is trying to saddle the party with an anti-capitalist agenda. 

[see also: Anneliese Dodds interview: “We can’t return to business as usual”]

If the Tories’ turn away from austerity is genuine – and we will not know until Sunak delivers a regular budget with a non-fiction Office for Budget Responsibility report – then the space will open up for a genuine debate on economic regime change. There can be a right-wing version of the entrepreneurial state, delivering for big business and the elderly working-class Tories of northern English towns; and there can be a left-wing version, delivering a carbon-free future and a dramatic cut in living costs for the under-35s. 

What there cannot be is a successful, privatised, outsourced, low-tax, deregulated market economy. The pandemic, and its threatened waves of recurrence, makes that impossible. The need for rapid decarbonisation makes it irresponsible. 

But the lessons of every economic transformation – from David Lloyd George to Clement Attlee to Margaret Thatcher – is that you do not reach the destination unless you define it clearly in your head, explain it to your followers, and face down its opponents confidently.

That’s the bind Sunak finds himself in. The more inconsistent modern Conservatism becomes, the glossier the photographs and typography have to be on Treasury press releases.

Labour’s front bench is right to be wary of sounding radical –  because a long list of good ideas was scorned at the polls in December. But during his leadership campaign (which I worked on) Starmer had already moved beyond this – an effects-based policy agenda focused on social justice and well-being.

[see also: How Keir Starmer has transformed Labour into a credible opposition]

Labour has derided Sunak’s offering as “a Meal Deal, not a New Deal”. Bravo to the person who thought up that zinger. But as hundreds of thousands of jobs hang in the balance, what the people about to lose them want to know is: what is your alternative and who will pay for it? Anybody who thought Labour could get away without answering that question is going to be proved mistaken.