Does Labour have a ‘Plan B’ for the economy at the next election?

The question is repeatedly asked of the Coalition and its economic policy of deficit reduction: do you have a Plan B? (It is, by the way, a ludicrous question to ask — Steve Richards, the left-leaning Independent commentator, has acknowledged as much: ‘The debate is silly because no Chancellor can acknowledge an alternative route in advance.’)

But if the question’s going to continue to be asked, let’s at least do it the justice of turning it round: does Labour have a Plan B? The thought was in particular prompted by this excellent post — unambiguously titled, Labour must stop fighting the cuts — by former Labour general secretary Peter Watt over at Labour Uncut:

… the Labour party is obsessed with the cuts. It is us, not the Tories, who are being defined by them. We talk about them all the time. We protest against them, predict the horrors that will unfold as their impact is felt and condemn the government for implementing them. We are so completely stuck in the cuts’ headlights, that we are virtually paralysed. And this paralysis is damaging our prospects for the next election. …

For many voters, our vociferous opposition to the cuts reinforces our perceived economic incompetence. But worse, in their eyes it also makes us look cynical, as we seem unable to take responsibility for, and deal with, the consequences of the mess that we caused. Typical politicians. …

We need to move on, and fast. Perceptions of the party are being formed and reinforced in people’s minds right now. Perceptions will only slowly change and it is these perceptions, rather than detailed policy, that will determine where votes are cast at the next general election. But in order to move on we need to stop fighting the cuts. We can’t actually stop them, as we don’t have the votes. And the very act of fighting them is hurting our electoral prospects. We feel better in the short term but no one else, apart from our opponents, benefits from our opposition.

Lots of Labour supporters, and a decent chunk of Lib Dems too, will dispute Peter’s analysis. They will argue, passionately, that those on the left (and centre/liberal-left) must unite to denounce cuts that they regard as destructive to both our economic recovery, and to the fabric of British society.

I disagree with them, but that’s not the point of this post. I simply want to pose the hypothetical asked of the Coalition: what is Labour’s ‘Plan B’? What happens if the Coalition’s economic policies deliver steady economic growth, based on a sustained recovery in an expanding private sector? If that happens, what will Labour say to the voters in 2015?

If the Coalition’s ‘Plan A’ works (or, at least, is seen to have worked well enough; or, at the very least, no-one can prove another plan would have worked better), then Labour faces a deeply problematic scenario. The Coalition will say: we cleared up Labour’s mess; we eliminated the deficit; we cut taxes for the low-paid; and now we’re in a sound economic position. Oh, and by the way, if it’d been done Labour’s way you’d still be facing another few years of public spending cuts.

What will Labour say in response to that? I guess, at least if Ed Balls is still shadow chancellor, they’ll claim the Coalition’s policies have come at a terrible price, that Labour would’ve been more caring cutters (even if by Alistair Darling’s own admission Labour’s cuts would have been more severe than Mrs Thatcher’s), and that economic growth would’ve been higher. Is that a vote-winning claim, a ‘Plan A’ that will guarantee victory for Labour in 2015? The party seems to think so.

But not Peter Watt, who wants a pre-emptive Labour ‘Plan B’:

… the first thing that we should do is just accept the Tory spending plans as set out in the spending review. We might not like them, but in reality we can do nothing about them. It would be bold and brave and, at a stroke, we will give ourselves permission to be heard again on the economy. Instead of deficit reduction strategy (and cuts) we can talk about our priorities for government as opposed to theirs. We can talk about innovative ways to stimulate growth and enterprise. We can talk about how we would develop modernised, leaner public services that are responsive to the needs of a changing world. In other words, we could start talking about the future rather than been held hostage by our economic past.

I cannot see Labour adopting such an approach, not yet at any rate. When I re-tweeted Peter’s post with the comment that he is “perhaps the only Labour figure talking sense right now”, he (very politely) replied claiming “there are lots of us though!”. He may be right; but they’re not the people in the Labour movement being listened to.

It was often said that the 2010 general election was an election all parties should want to lose; that, so dire was the economic legacy, any political party which attempted the economic correction needed would condemn itself to opposition for a generation.

It doesn’t feel that way. What it does feel like is that Labour is boxing itself into a corner where it’s entire strategy for the next general election depends on the economy tanking. That may still happen, it’s true.

But if it doesn’t it’s Labour which needs to start thinking, and soon, on what economic basis it’s going to fight the Lib Dems and Conservatives at the next general election.

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8 Comments

  • “‘The debate is silly because no Chancellor can acknowledge an alternative route in advance.’

    And there lies the most basic flaw with our political system, the fear of U Turns. I would not sanction a manager who reported to me taking on a significant project if all the major “what if’s” had not been considered, assessed, and a plan put in place (even if only in outline) to manage the unanticipated. I would have far more respect for a Chancellor of any party who presented such a plan. You can be confident in any plan and have it fall apart, it’s how you prepare and manage such circumstances that define good management / leadership.

    As to Labour’s policy I think you make a couple of errors in your thinking. The first is that it depends on the economy in 2015. It’s not that simple. If by 2015 people are still worse off than they were prior to the crash they will blame the Government, even if that is not fair. Cuts may be scaled back or even starting to reverse by then but in the public sector at least, the real terms position will have been adjusted. I have sympathy for the view that adjustments need to be made, I do however disagree about the pace and scale. The problem is I am not a public sector worker. They, their families and the several hundred thousand ex-public sector workers and their families will not feel better off even if the economy is booming. They are unlikely to have the generous working conditions, pensions, sick pay etc that used to have. A soaring FTSE will not change that. Labour will attempt to win these by saying it wouldn’t have been as bad had they been in power.

    Interest rates will be higher, again the thinking voter will accept this needs to happen with their head. But their heart will see higher mortgage payments and less disposable income. Labour will point, accurately if unfairly, to the longest period of stable low interest rates.

    The Tories made great play of the Labour raid on pensions. If the proposed tax relief changes go through (particularly those at lower tax rates) the coalition will be accused a raid that keeps taking. Whatever the logic behind it, it can be argued that at a time when we need to encourage more personal provision for pensions we should be encouraging pension giving through the tax system. Again Labour can make an argument, and again a proportion of those affected will be swayed by it.

    And then there is the NHS. Waiting times are slipping in more and more hospitals, it was a mistake to stop this being a target. Expect real people on posters, some who have suffered greatly due to delays in treatment. They don’t even need their to be a pattern. Individual stories can have a huge influence. Over the last few years my elderly parents have received fantastic care and currently continue to do so. However there is already a widening of the gap between tests (in this case an angiogram) and consultant appointment. Statistically it may be slight, and in terms of prognosis it may be non-existent, but to the individual it matters and their feelings can exploited.

    You base your piece on a logical interpretation of the facts at the next election. We do not insist people vote on a logical basis. Labour do not need the economy to tank, they just need enough people disaffected with their lot to want change. Oppositions don’t need a plan B they just need to exploit peoples problems with Plan A.

  • Joe Otten

    Please tell me why an opposition party needs a Plan A in detail? What was The Tories Plan A in 206 after the previous election and did it bear any relation to what they have done in Government? In fact I don’t remember seeing any policies from Cameron until the elction and even then they do not seem to know themselves having U-turned on most of them.

    I would rather have some sort of Plan B from the Government who may actually be able to implement it in case their current direction goes tits up – doesn’t seem to exist either

  • @bazsc an opposition needs to have some coherence in waht it does; its make no economic sense to oppose every cut, oppose some tax rises and propose a cut in VAT which is what Labour have done so far in opposition.

  • Peter1919

    When did any opposition have coherence? Even if they have some policies thta the say they will follow they are allc hanged in Government anyway.Their job is to challenge and oppose. I do not support any of the cuts in the way they are being proposed – can’t think of anything the Coalition have done that I support in full – there is always something that annoys. Even the AV referendum that I supported had the boundary changes tagged on which I fundamentally opposed.

    Instead of focusing what Labour do – why not try to do a little bit more yourselves?

  • David Pollard 20th Jun '11 - 8:07pm

    Peter Watt sounds like an emerging LibDem. Vince Cable was very clear well before the crash that Labour was allowing too much private debt and running up too much public debt in a very ery un-Keynsian way. If Ed Balls remains in post, then the Coalition can blame him for being the architect of the debt problem.
    What some thinking Labourites have realised is that there is nowhere for them to go. They are no longer to the right of the Tories and there is no room for them to the left of the LibDems. Conpare at the next election, a Labour Party which took away the 10p income tax band and one year raised pensions by 75p/week, with the LibDems who raised income tax thresholds for the low paid and restored the link between earnings and pensions. In 4 years time, both these major policies will be bearing fruit.
    Such a pity that Nick Clegg signed that pledge against raising tuition fees.

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