New Times,
New Thinking.

13 November 2010

Is Labour running scared from the “deficit denial” tag?

Alan “Enforcer” Johnson, the shadow chancellor, speaks to the Times.

By Mehdi Hasan

The rise and rise of Alan Johnson continues. The former postman, who served as secretary of state in several different departments in government, was defeated by Harriet Harman in the race for the deputy leadership of the Labour Party in 2007 and failed to topple and replace Gordon Brown between 2007 and the election in May 2010. But, in October, in a surprise move by the new Labour leader, Ed Miliband, he was appointed shadow chancellor.

Reports have since emerged of his growing influence on Miliband and the direction of party policy in opposition. On Wednesday, it emerged that the shadow chancellor, nicknamed “Ed’s Enforcer”, had asked his front-bench colleagues to apply in writing to his office every time they plan to make a policy announcement.

Regular readers of this blog will know that I wanted Ed Miliband to make Ed Balls his shadow chancellor. I remain a committed critic of the consensus on cuts and various New Labour politicians’ indulgence of deficit hawkery in government and, now, in opposition, too. But I’m also an admirer of Johnson – I’ve always found him to be an intelligent, shrewd, engaging and humorous politician, with superb communication skills and a fascinating backstory. His recent column in the New Statesman was a masterful demolition of the coalition’s myths on the economy and, specifically, the deficit.

Today’s Times (£) also features an interesting interview with Johnson by Rachel Sylvester and Alice Thomson, headlined “No more Mr Nice Guy”, in which the shadow chancellor actually embraces the “Enforcer” nickname. Johnson comes across as confident, focused and across his brief. He attacks the coalition for taking more money from children than from the banks and criticises the “huge bonuses” of the bankers as “wrong”.

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His “mantra” vis-à-vis the Tories, say Sylvester and Thomson, is: “We got us out of the recession, we built up the momentum for a recovery, you are in danger of wrecking it.” Spot on.

But two lines stand out from the piece. The first is:

The former cabinet minister insists he is actually an instinctive cutter.

Ugh! Sounds like Johnson is desperate to avoid being labelled by George Osborne and his supporters in the Tory commentariat and blogosphere as a “deficit denier”. But it is a dangerous road to go down, both in terms of politics and economics.

Politically, it makes no sense to sound as hawkish on cuts, and the deficit, as the coalition. I predict there’ll be a huge backlash against the cuts when they begin to bite in 2011, and people lose their jobs, homes, benefits, public services, etc. Labour needs to be position to exploit, and benefit from, the (legitimate!) anger and discontent of the general public towards the coalition’s “age of austerity”. It can’t do that if the party’s chief spokesman on the economy portrays himself, à la Cameron and Osborne, as an “instinctive cutter”. Lest we forget, Johnson’s predecessor tried this approach in the run-up to the general election (“Alistair Darling: we will cut deeper than Margaret Thatcher“) and it didn’t work.

In terms of economics, cuts aren’t the right strategy. They won’t work. See Martin Wolf, Paul Krugman, Joseph Stiglitz and our very own Danny Blanchflower. With banks not lending, consumers not spending and businesses not investing, “fiscal consolidation” is a big mistake. Fiscal policy should always be based on empirical evidence, not “instinct”, ideological or otherwise.

The other line that stood out in the Times interview with Johnson is this one:

I am only backing 50p for the times we are in. It is not ideal; five years ago (we) wouldn’t have done it. Our policy has to be based on fairness and what encourages people to do well.

But this is the David Miliband position, not the Ed Miliband position. During his leadership campaign, Mili-E made it clear that he wanted to make the 50p tax “permanent”:

I would keep the 50p rate permanently. It’s not just about reducing the deficit, it’s about fairness in our society and that’s why I’d keep the 50p tax rate, not just for a parliament.

So which is it – permanent or not?

Ed Miliband and Alan Johnson need to have a strong and close relationship if Labour is to succeed in opposition. I do hope, however, that Miliband doesn’t renege on pledges and promises he made during his leadership campaign under the influence of his more Blairite and perhaps cautious shadow chancellor. As I write in my column this week, Labour in opposition can’t afford a “business as usual” approach to politics, or the economy.

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