‘There but for the grace of…’ A couple of things Lib Dems should consider before joining the attacks on Ed Balls

Tempting though the schadenfreude is, I think Lib Dems would be wise not to enjoy too much Labour’s discomfort at Ed Balls’ decision to declare Labour cannot promise to reverse any of the Coalition’s cuts.

I can of course entirely understand the urge to shout ‘Ha! Told you so’ at the shadow chancellor. In an interview for The Guardian published on Saturday, Mr Balls stated categorically:

“My starting point is, I am afraid, we are going to have keep all these cuts. There is a big squeeze happening on budgets across the piece. The squeeze on defence spending, for instance, is £15bn by 2015. We are going to have to start from that being the baseline. At this stage, we can make no commitments to reverse any of that, on spending or on tax. So I am being absolutely clear about that.”

The economy? It’s what you believe, stupid

For those Lib Dems who are daily having to defend the party against Labour’s condemnation of the Coalition’s policies, it is hard not to raise a cheer at this apparent climbdown. Of course, as Mr Balls’ defenders would be quick to point out, he is simply stating reality: with the UK economy faltering there is quite simply no public money to throw around. He and they would also argue that this is the Coalition’s fault: the Government cut “too hard, too fast” and is now paying the penalty.

As with many economic arguments, your interpretation of Mr Balls’ speech will turn less on the facts and more on your beliefs. If you think the deficit is the greater long-term threat to the UK’s prospects of economic growth you’ll trust the Coalition’s policies. If you think growth will be harmed by cutting the deficit too quickly you’ll be more inclined to Labour’s approach.

Coalition supporters will point to the fact that the UK has avoided the fate of many of our European neighbours, including now France, and has maintained its triple-A credit rating, keeping the cost of government borrowing low.

But, in the absence of a parallel universe, we have no way of knowing how the economy might have fared had the Coalition stuck to Labour’s plan only to halve the deficit within one parliament rather than to eliminate it. Would the UK have bucked the European trend? Or would we now be facing far more bitter-tasting austerity medicine?

No-one knows, or can ever know, for sure.

Why Labour’s economic narrative is failing

Over at his ‘thinking liberal’ blog, Matthew Green has a fantastic, must-read post analysing as neutrally as possible (despite the trenchant headline, ‘Ballsed up – Labour’s economic narrative implodes’) the perception of Labour’s economic narrative:

The angry brigade hears what it wants to from the “too far, too fast” mantra and thinks that the Labour front bench is on its side. But the Labour leaders also know that the economy has shrunk so much that many, indeed, most, of the cuts will have to be made eventually. Labour’s plans to cut the deficit before they left office weren’t so very different to the current government’s, and very little at all compared the surprisingly slow pace at which the deficit has actually been cut. Their plan is actually to win back and exercise power again, rather than simply have fun as an opposition party. …

But Labour have encountered a wider political problem. The passion and anger of their activists burns as bright ever, but the public are simply not convinced. Why? It is tempting to blame economic naivety, which allows the government and its supporters to present the government’s finances as if they were a household budget. Actually I think the feeling runs deep that the economic prosperity of the late Labour years was unsustainable. There is no naivety about that standpoint. Government debt catches the blame – but in fact it was private sector debt that was more to blame. And for those that did not have a government job, the suspicion the state was too big and benefits too generous ran deep. …

And so the two Eds have started to reach out to the sceptics by emphasising … that the cuts will have to stay. The hope is that this will then give them an opportunity to get a hearing for whatever else they have to say, on corporate greed, the NHS reforms and so on. But the activists are apoplectic. The Guardian‘s weekend article has attracted a whole host of disbelieving and hostile comments from a group of people that is now feeling disenfranchised.

But the narrative is too complex to be accepted by the sceptics either. Only a confession that the economy before 2008 and unsustainable, even without a financial crisis, will do that. Alas the two Ed’s don’t think they can say that. And so politically the narrative falls apart.

That all seems fair to me. And to be fair to both Eds, Balls and Miliband, I’m not sure how they can create a winning narrative given the still-dominant perception that the Coalition is clearing up Labour’s mess. Voters will gib at this or that cut, and would like to see more aggressive government action on top pay to make them feel like we genuinely are all it in together — but overall the current austerity is seen as an unpleasant necessity to be got over and done with as soon as possible, rather than stretched out.

But what of the Lib Dems’ own economic narrative?

So there are a few Lib Dems feeling relieved that the flak for facing up to economic reality is now being flung in Labour’s direction. But it’s worth considering the following two points:

1) We agreed with Labour’s spending plans in 2005

The Lib Dems were as signed-up as Labour to the government spending that saw the UK economy running an unsustainable deficit at a time of growth.

True, it can be argued that years of under-investment in public services required a correction. But the fact remains that we — along with the Conservatives (remember Messrs Cameron and Osborne’s “sharing the proceeds of growth” triangulating mantra? — were just as culpabale as Messrs Blair, Brown, Miliband and Balls in advocating policies which left the British economy especially vulnerable when the world economy collapsed.

Yes, Vince was a voice in the wilderness warning of high and unsustainable levels of private debt. But his warnings were taken rather more seriously in retrospect than they were at the time, including by the Lib Dems ourselves.

2) We opposed the scale of Tory cuts in 2010

We fought the 2010 general election on an economic platform which was somewhere between Labour’s and the Tories’, but was generally closer to Labour’s in terms of fiscal tightening, both in the phasing of deficit reduction, and also its balance between tax rises and spending cuts.

Had the electoral arithmetic been different, and a Labour-Lib Dem coalition been formed, there’s little doubt the parties would have agreed a less austere economic package than the one we signed-up to with the Tories. There’s no doubt that would have pleased many Lib Dem activists. However, having now committed to the Coalition’s austerity measures, members have in the main got behind it, as the results from our recent surveys have shown.

But we shouldn’t kid ourselves that the position the party now stands for is driven more by Realpolitik than it has been by our 2010 manifesto.

Conclusion

Such has been the visceral unpleasantness of the attacks mounted on the Lib Dems by left-leaning critics for the party’s decision to back the Coalition and the austerity package which was agreed, it’s no surprise that Ed Balls’ semi-U-turn has left many in the Lib Dems feeling vindicated.

And let me be clear here: I personally back the Coalition’s austerity programme. I believe it is the only responsible economic option for the UK at this time.

But I think it’s also important that we remember that the policies we’ve ended up supporting are not the ones that were in our manifesto. There’s a simple reason for that — we didn’t win the election — and also a less simple reason: the economic conditions have altered pretty drastically in the past 18 months.

So before we take pleasure in castigating Mr Balls it seems only fair to ask ourselves two hard questions.

First, given the Lib Dems backed Labour’s spending plans in 2005, indeed in many areas urged they went further, how far can we plausibly attack the mess Messrs Blair and Brown got the UK into?

And secondly, if we think Labour’s economic narrative is not credible, what would we have said about our own if we had been elected to govern (either on our own or in partnership with Labour) in 2010 given the similarities in our economic programmes?

* Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.

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30 Comments

  • @Stephen Tall
    Thanks for writing an intelligent article.

    @Simon Shaw
    “We were not “just as culpable”. Labour were the Government then. We weren’t.”

    Hilarious.

    Vote for us – we had the same policies but we weren’t in government, so it’ not our fault!

    Labour’s mess, Labour’s mess, Labour’s mess. Repeat a thousand times.

    Getting back to serious debate. The argument about cutting too fast was that it was likely to cause (a) a recession and (b) therefore prolong the period required to reduce the deficit. So, what’s changed since the coalition took over the management of the economy? (a) it looks like we’re heading into recession and (b) the coalition is now planning on reducing the defecit by 2017 rather than 2015 due to the unequivocable failure of their economic policy. To be honest, the opposition is facing an open goal, but, unfortunately for them, they’ve got Miliband and Balls playing up front.

    The thing I don’t get about so many Lib Dem supporters is that they don’t realise that all those angry commenters on the Grauniad’s CiF are their voters. Slagging off the very people that voted Lib Dem as a centre-left alternative to Labour (on the basis of the Lib Dem’s centre-left manifestos) isn’t the most intelligent of strategies. In fact, I would call it suicidal. The Guardian IS the paper of the Lib Dems – it supported the party at the general election and it’s readers are middle class, liberal and educated (as are most former Lib Dem voters).

  • “unequivocal” !

  • ARTHUR COLLINGE 16th Jan '12 - 11:10am

    Simon Shaw is right for another reason.It was the Labour government that acquiesced in the financial jerrymandering that led to the massive and costly bale-out of the banks. Without the bale -out the debts would have been far more easily manageable.

  • Malcolm Todd 16th Jan '12 - 11:24am

    @Simon Shaw — presumably, then, you were happy with the Labour Party attacking any and every spending cut and significant tax increase over the last 18 months? Since you don’t think opposition parties have any responsibility to swim against the tide of public opinion and tell uncomfortable truths?

  • Simon Hebditch 16th Jan '12 - 12:20pm

    I can understand the usual mantra of opposition politicians that they cannot make commitments in advance of knowing the details of the economic state of the nation in 2015. However, in terms of beliefs and principles I remain committed to creating a centre left alliance. The fact that cuts had to be made in the deficit is not particularly contentious. The two main issues are how quickly they needed to be enacted and which areas of the social landscape should bear the brunt of such reductions in expenditure. The current concerns about welfare reform illustrate these problems.

    There is a practical piece of work to be done between now and the GE in 2015 to see whether a coherent political programme, including on economic and fiscal policy, can be created which could command the adherence of the Lib Dems, Labour and the Greens. The party leadership and representative bodies may have set this process in motion although I can’t see much sign of it. If they won’t, others will have take up that challenge.

    We simply need less posturing and more policy development work across party divides.

  • Malcolm Todd 16th Jan '12 - 12:58pm

    If we need growth — by which I guess we mean growth of at least 2–3% per annum — then we’re almost certainly stuffed. Where do you suppose this growth is going to come from? The West has an effectively saturated economy, with growth in consumption overwhelmingly expressed in waste and pointless gadgetry because real needs are long since met, and overwhelmingly paid for through credit and fantasy wealth in property because there aren’t enough game-changing advances in technology or uncovering of new sources of energy to enable us to produce more for real than we could before. Insofar as the world will continue to be able to produce more every year, the demand will come from the newly industrialising countries and will be met from there as well.

    There’s no reason to suppose that growth of 2–3% a year is natural and inevitable just because it was the norm in the West for 30 years or so. We’d better start working out how to live in a low- or zero-growth economy (and hope that that’s as bad as it gets…).

  • paul barker 16th Jan '12 - 4:59pm

    The problem with New Labour wasnt high spending but their belief that it could be combined with Low Taxation. They werent Social Democrats so much as con-artists. We should have stood out more against this at the time but so should lots of other people.
    Its the New Labour heritage of plausible lies that causing Labour trouble now.

  • Culpability remains with Labour, they were the party of Government.

    But that does not mean that either of the other major parties can gloat the way Cameron and Osbourne appear to at every opportunity. It’s not Labour’s mess it’s Britain’s mess, it happened on their watch and they were punished by the electorate but looking at every budget response the difference had another party been in power would not drastically alter the current situation.

    Even had the economy been OK I think the electorate would have punished them they were a tired government led by a bully…

    The coalition do the public a disservice by continuing to frame the argument in the causation of the problem and not on the alternative solutions. Labour do the public a disservice by offering partial alternatives lacking the required detail.

    There is a sensible argument to be had on whether the pace of cuts should be amended according to the economic circumstances. My reading of the Lib Dem manifesto was that was the proposal on offer. Osbourne wanted to end the parliament with a tax give away – some of this is ideological for him. These would only have benefited the Tories vote wise so are no real loss.

    I disagreed with the pace of cuts, but who knows they could have worked had the situation not worsened. As it is there is no disgrace in changing tack. Only in politics is a U-Turn seen as always bad. In business people do see reacting to changing circumstances as a weakness but a strength.

  • ARTHUR COLLINGE 16th Jan '12 - 7:32pm

    I agree with Geoffrey-the vicious spiral from debt to austerity to lower GDP then to even bigger debts gets the nation nowhere.You have to break this spiral of misery somewhere.The whizz kids in the the City would tackle the problem with financial engineering-I’m surprised that Osborne has’nt cottoned onto this.Take a leaf out of Keynes’s book and do some financial reconstruction-that is re-finance your debts with longer maturity debt.After all our credit is good -the ratings agencies say so and so does the Chancellor.The resulting windfall from lower repayments of capital and interest could be invested in targeted infrastructure projects particularly in the regions where spare capacity is at its greatest

  • The problem the Liberal Democrats have is not with Labour. We should not obsess with Labour at the moment. They are losing the argument and are seen to be doing so.

    The problem we have is with the Tories. They are stealing votes from the Liberal Democrats and have not taken any hit whatsoever in the polls. Rather they have crept up to 40% in the latest Yougov polls, in the process taking another 4% chunk out of our rating. Instead of being at 14-15%, we are down at 9-10%. For us as a smaller party this makes a huge difference.

    There is something weird going on, with Coalition policies being seen as Conservative policies and the Tories taking the credit. The public is being allowed to forget how right wing they really are because Cameron is stealing our clothes.

    That is what we should be worrying about.

  • ………..Labour had 3 majority governments from 1997 and could have introduced AV for Westminster elections – but didn’t, despite their promises……..

    Labour’s manifesto included a clause on a referendum on proportional representation. However, with large majorities, they had everything to lose and nothing to gain. The phrase, “depite their promises” rings rather hollow from a coalition supporter.
    Strangely you see no contradiction in praising the coalition’s record as “reacting to circumstances”, whist condemning Labour for the same.

  • The main reason we should avoid trying to rubbish Ed Balls or any other of the Labour leadership is that we may well need to work with them after the next election. Labour’s attacks on the Lib Dems after the formation of the coalition seem to be losing some of their vehemence now. Let’s welcome that and stick to constructive criticism – not echo their ill-advised earlier diatribe.

    As for schadenfreude – a bit early for that with the problems we still face.

  • Tony Dawson 17th Jan '12 - 6:17pm

    @jason

    ““Labour’s manifesto included a clause on a referendum on proportional representation. “”

    No, actually it did not.

    It included “a commitment to a referendums on the alternative vote method of electing MPs” before 2011″. Precisely what they opposed in the referendum only 12 months later!

    The PR promise was for the House of Lords. In case you didn’t know, AV is nothing like PR!

  • Simon Shaw writes: “Labour could have supported AV in the 2011 referendum – but didn’t, despite their 2010 manifesto commitments.”

    As I recall, Ed Miliband spoke in support of AV as did some other senior Labour figures – others opposed it. By contrast, your coalition allies, the Conservatives, mounted a ferocious campaign against AV, aided by their attack dogs in the press. I’m not clear why you are so contemptuous of Labour’s (partial) opposition to AV whilst so accepting of the Conservatives (total) opposition to AV.

  • Simon Shaw writes: “I agree with you that the Conservatives have a higher opinion poll rating than you would expect and we have a lower one, but i think that one of the main reasons for that is that we spend rather too much time trying to “distance” ourselves from the Coalition.”

    Surely it is not a question of distancing the LibDems from the coalition but rather asserting their status as an independent party? The strategy you espouse was tried in the first year of the coalition and ended with disastrous results in the May 2011 local elections. Since then, there have been some modest attempts by the party leadership to assert their own identity although many would argue they don’t go far enough.

  • “But my position is that Labour were just plain stupid (in not supporting AV). This is on the basis that FPTP helps the Tories more than anyone.”

    Incorrect. FPTP helps LABOUR more than anyone, given that they can win a majority on the lowest proportion of the vote. Ditching FPTP would be suicide for Labour; their rotten boroughs are sustained by it.

    The Tories are the really stupid ones given the way the system works against them.

  • Matthew Huntbach 19th Jan '12 - 2:06pm

    I’d go along with Dane Clouston on inheritance tax.

    The real point is not that there is no alternative, but there is no easy alternative. I agree with Stephen Tall, indeed I already said it elsewhere, that would be wrong for us to react with a “yah boo sucks” to Labour’s admission that they cannot promise to reverse any of the Coalition’s cuts. It’s an admission which is helpful to us as it means we can no longer be attacked by them, as we have been, as being evil people for going along with these cuts. Instead it means we now start form a common basis.

    The default position from that basis is the austerity programme of the coalition – Labour have now admitted that. Given that the Conservatives won the election in terms of coming “first past the post” in number of seats, it seems to me to be just and democratic (especially as Britain gave massive endorsement to the FPTP principle by rejecting AV) that they should have the right to take the lead, and they have done so with the default line – we’re spending more than we’re raising, so make cuts. How can Labour now attack us for being mad or evil or lacking principles or whatever for that? It’s the easy option in the sense it does not require much thought from above (just a lot of thought from the poor sods below who have to implement the cuts).

    The correct response to the British people ought now to be “OK, if you don’t like the default, what else would you like?” This is where options which might at first have been rejected out of hand, such as a much increased inheritance tax, come into play. Such options could be swept away as unthinkable all the time Labour played the game of pretending we could somehow muddle by with no expenditure cuts and no radical changes in the tax regime. They should now be made thinkable – the point is, as with agreement to the coalition and its austerity measures, you might no like them but they are a way forward.

    So, there we are, hold the axe, ask the British people “OK, how about a much bigger inheritance tax?” and if they say “No”, the axe swings again. This is easier to do when those of us who are not Conservatives are not throwing abuse at each other. We may come up with different solutions, and if we don’t the one in place (i.e. the coalition and its austerity measures) carries on, but we are more able to air solutions if the reaction of the other one isn’t “yah booh sucks, you’re evil for suggesting that”.

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