It could have been the economy, stupid

One of the strangest things about this last election was how little the economy featured. Philip Hammond, the Chancellor, was unseen. The Conservatives didn’t bother to cost their manifesto. Nobody wanted to talk about the Brexit black hole – not even the Liberal Democrats much, I mean couldn’t we have promised to fund £60bn of spending by not leaving the EU? It would have made the point.

Why? Theresa May and her advisers never really understood the economy, only that it was something that the Conservatives generally get the credit for being sounder on with the larger part of the electorate, and that if you say nothing, you have more freedom of action after you have won your big majority.

Labour, expecting to lose, promised the most cynical ‘retail offer’ of unaffordable spending commitments largely to middle income voters. In a normal election this would have been better scrutinised, but all they had to say was ‘fully costed’ and the Conservative attack failed.

More cynically still, Labour promised to go ahead with most of the Conservative welfare freeze, making a complete mockery of seven years of self-righteousness over food banks, and giving the poorest in society a right kicking, barely better than the Conservatives.

If you talk enough about fairness, you don’t actually have to do anything about it, and you can spend public money more efficiently to buy votes where they will have more electoral impact.

The Conservatives, meanwhile, neglected the ‘retail offer’ to the point of virtually admitting that everything under them would be terrible, making the electorate feel taken for granted, and making Corbyn’s false hope more attractive – even if you knew it was probably false.

Might it have been different if we had maintained the “Stronger Economy, Fairer Society” message all this time, to condemn Labour innumeracy, to condemn the Brexit black hole, to claim continuity from the strong and stable coalition years which delivered the fastest growth in the G7 and record numbers of jobs. We’ll never know. Who could have foretold how weak both the other parties were going to be on the economy.

But just as Labour never stop talking about the NHS, as a substitute for good policy, to entrench the perception that it is their issue, the Conservatives needed to talk about the economy. And for that they need a leader who understands the economy.

Labour, who lost the election facing a terrible Conservative campaign, may well have won with a decent leader, a credible offer on the economy, and some ability to show restraint when it comes to public spending.

Until then, it is only the Liberal Democrats that are for a stronger economy or a fairer society.

* Joe Otten was the candidate for Sheffield Heeley in June 2017 and Doncaster North in December 2019 and is a councillor in Sheffield.

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11 Comments

  • Peter Martin 12th Jun '17 - 4:09pm

    @ Joe “And for that they need a leader who understands the economy.”

    I’m not sure any of them do! Do you? You say “the Conservatives didn’t bother to cost their manifesto.”

    I won’t ask you about the cost of their or your manifesto but I’ll try you out on what might seem to be a very simple costing.

    Say the Govt wanted to directly employ a teacher, a soldier, or a policeman who would expect a salary of about £30k pa. How much would he/she cost? Would you take into account that they pay £10k back straightaway in tax and NI? Would you take into account that the remaining £20k is then spent into the economy and so VAT receipts are thereby increased? Would you take into account the increase in taxation due to the multiplier effect of that money being spent and respent in the economy? So is the answer (approximately)?

    a) £30k b) £20k c) £10k d) Nothing

    So if we are proposing to recruit, say, 10,000 of such people how would you calculate how much income tax would need to be increased by?

    If it was say 1p would you then take into account how the loss of the spending power imposed on everyone by that increase in taxation would impact on the revenue raised in VAT and other taxes?

    See the problem? It’s not quite so easy as it may first appear!

  • David Evershed 12th Jun '17 - 5:31pm

    Peter Martin

    You make a good point about the net cost of a public sector employee, although the cost of the employee goes well beyond their salary of course, with pension (25% ish of salary), employers NI (paid to the government), workspace, work tools (computer, truncheon, etc)

  • Dave Orbison 12th Jun '17 - 6:47pm

    Joe Otten “Labour lost the election”. “Maybe they would have won with a better leader”.

    Really? Well as a LibDem you of all people should know the error of judging a result and popularity based simply on the number of seats in the HofC. Do you really think Liz Kendall or Owen Smith would have had people attending large rallies, mobilising the youth vote and adding 4m ? As for ‘they [Labour] are always going on about the NHS’ – yes!!! Thank goodness someone is, it’s a damn sight better than the NHS wasting money in an unnecessary Top-down reorganisation or opening it further to privatisation – remember those so happy Coalition days and such policies?

    LibDems have gained success by building upon successive elections so what makes you so sure this Labour ‘loss’ will not transform into a win next time around? Let’s face it they are closer to their electoral aspirations than the LibDems.

    In reality the LibDems have wasted the last two years. They still have not bottomed out whether or not to apologise for the Coalition. They haven’t reconciled the Orange-bookers and those who support Keynesian economics and can’t decide who holds sway over policy.

    In the last two years LibDems leaders and some on here have contented themselves with mocking Corbyn instead of preparing the LibDem by redefining what LibDems are all about and what that ‘brand’ should stand for in the eyes of voters. As for this election LibDems and Corbyn losing, well the story of the hare and the tortoise come to mind. My bet is Corbyn have more smiles than LibDems.

    But by all means blame LibDems misfortunes on Corbyn and his promises, or the stupid electorate or goodness knows what, after all the very last people to blame would be……. the LibDems themselves.

  • Peter Martin 12th Jun '17 - 7:15pm

    @ David Evershed,

    Yes of course there’s overheads. But you can say about them too. Some of the spending on those will come straight back, some of it will come back in a subsequent transaction. Some of it won’t come back at all if someone saves the money. Maybe in their piggy banks or by buying gilts! But the rest will come back.

    And the speed at which it will come back depends on the level of taxes. If taxes are high it will come back quickly in fewer transactions. If taxes are low it will come back slowly after more transactions.

    That’s the right way to look at it. But I’m not sure how this can be easily explained in terms of “costings”.

  • Peter Watson 12th Jun '17 - 8:23pm

    @Dave Orbison “In the last two years LibDems leaders and some on here have contented themselves with mocking Corbyn instead of preparing the LibDem by redefining what LibDems are all about and what that ‘brand’ should stand for in the eyes of voters.”
    There is a lot of truth in that. Perhaps one of the flaws in the Lib Dem campaign was an assumption that an unelectable Jeremy Corbyn would push large numbers of disaffected center-left voters towards the Lib Dems so the best strategy was to say nothing that would risk scaring them or Tory Remainers away.

  • According to Oxford Economics (who “provide economic forecasting and modelling to UK companies and financial institutions” https://www.oxfordeconomics.com/about-us ) under Labour’s plans the economy will grow 0.9% more than under the Conservative plans, while under our plans the economy would grow by 1% more than under Labour’s plans.

    Joe, you are correct to criticise Labour for not reversing all the Tory Welfare Cuts, or even to stop the ones we are stopping (about 75%).

    However Labour’s shopping list of spending commitments was not unaffordable which of course you would know if you had actually listened to the IFS presentation, Joe.

  • “More cynically still, Labour promised to go ahead with most of the Conservative welfare freeze, making a complete mockery of seven years of self-righteousness over food banks, and giving the poorest in society a right kicking, barely better than the Conservatives.”

    Oh, come off it Joe. Your pal the ex member for Hallam and his pal Sir Daniel had their fingerprints all over the welfare cuts. As the Trustee of a Food Bank I know full well what the impact was and when and where it came from.

    Unfortunately for you, Dave Orbison has pointed out exactly what happened. As to recent events, if you know your Shakespeare, you’ll understand exactly what hoist with his own petard means.

    @ Michael BG ” Joe, you are correct to criticise Labour for not reversing all the Tory Welfare Cuts, or even to stop the ones we are stopping (about 75%).”

    And which Labour or Lib Dem Government would that be, Mikey ?

  • Sue Sutherland 13th Jun '17 - 2:23pm

    I agree with much of what Dave Orbison says. As Lib Dems we have to decide what sort of society we want and then cost it rather than following an economic theory which leads to more and more government debt AND fewer decent services and provisions for the population as a whole. Abandoning economics altogether would seem to hold out the possibility of a fairer society than the one we have now. Of course being a staid and sober Lib Dem I’d never really do that but we have to stop being bogged down by the policies of the Coalition. Teresa May has just announced the end of Austerity and Corbyn will give us policies for the Many not the Few so for goodness sake Joe please use your experience and expertise to get our country and our party out of this mess in a fair and sensible way.

  • @Dave Orbison ……..“In the last two years LibDems leaders and some on here have contented themselves with mocking Corbyn instead of preparing the LibDem by redefining what LibDems are all about and what that ‘brand’ should stand for in the eyes of voters.”……..

    Of course they did…After all, we had a FTP deal that prevented a GE being called for political advantage…Everyone knew that Corbyn would be gone in weeks/months and, certainly, wouldn’t be around in 2020…The only people on LDV who wanted Corbyn to stay as leader were those hoping/expecting that he’d drag the Labour party to hell with him!

  • Well, next election we should increase the £100 billion spending on infrastructures to £200-£250 billion, with £50 billion on increasing AUTOMATION (state clear that “we will spend £50 billion on boosting automation technology”). At the same time, reduce the working hours to 6 hrs per day.

    http://www.newsroom.barclays.com/r/3273/investment_in_manufacturing_robotics_could_boost_british
    According to Barclays, investing an additional £1.2bn in automation has the potential to add as much as £60.5bn to the UK economy over the next decade; this represents a return on investment of £49 in economic output for the every £1 invested in manufacturing automation.

    Next, state that ” we would introduce a series export-oriented policies to achieve trade balance in goods and to balance the current account” (not goods and services but just GOODS ONLY, this is another way of talking about achieving trade surplus). Voters may be against either austerity or Corbynomics, but nobody is going to oppose boosting export.

    Next, increase the capitalization of British Business Bank to £20-£25 billion, which is still a joke compared with German KfW Bank. By the end of 2016, the capitalization of BBB was only £708m, which is a total joke. Also, allow BBB to raise funds on capital markets by issuing state-backed bonds like KfW.

    Finally, renationalize railway in the long run.

  • Peter Martin 14th Jun '17 - 9:58am

    @ Sue,

    then cost it rather than following an economic theory which leads to more and more government debt AND fewer decent services and provisions for the population as a whole.

    It’s not just more Government debt that’s the problem. In fact it may not even be a problem at all. The looming recession in the UK economy will no doubt be attributed to Brexit but it’s really the build up of private debt which is the worry. It’s not Government debt that has caused house prices to rise sharply. Or the car industry to do well with ultra low credit schemes on new car sales. The Govt has encouraged ultra low interest rates to encourage ever higher levels of private sector debt. What we have to spend is what we earn plus what we can borrow. Or the change in our personal levels of debt.

    So Aggregate Demand (of the private sector) = Income + Change in Private Debt

    While the change in debt is positive, aggregate demand is high and the economy seems healthy. But that can’t continue. It has to turn negative soon as the Govt can’t reduce interest rates any further. When that happens stand by for big problems! Which you’ll be happy to blame on Brexit.

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