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

by Stephen Tall on June 19, 2011

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.