Labour’s Deficit Hawk
Will Gordon Brown’s increased presence in the referendum debate help stem the flow of working class voters away from the Union and towards independence?
I’m not convinced.
Yes, Labour’s vote rose in Scotland at the 2010 election as it slumped across the rest of the UK. But that probably had more to do with the Scottish electorate’s fear of a resurgent Tory party than it did any deep-seated attachment to Brown.
By that stage Brown had, after all, spectacularly crashed the UK economy, raided British pension pots, presided over the expenses scandal and abolished the 10p starting rate, making millions of low-income families worse off.
I’m not trying to diminish what Brown achieved in office, such as slashing child poverty rates and over-seeing the implementation of the minimum wage. But by the end of his premiership he was clearly a spent force, even in Scotland. In April 2010, Brown’s approval rating among Scot was just +4 – 3 points below Alex Salmond’s and (unbelievably) a full 8 points below Nick Clegg’s.
So the Yes campaign has little reason to be worried about the former prime minister. At any rate, prior to his big pensions speech last Tuesday, the Kirkcaldy MP had already made a series of relatively high-profile interventions in the campaign, none of which had any discernible effect on the polls.
The current Labour leader, however, is a rather different proposition.
Ed Miliband has nothing remotely original to say about Scotland, as his trip north yesterday confirmed. But there are elements of the broader Miliband project that could help shore-up unionist support, particularly in working class communities, ahead of the September referendum.
More than any other mainstream British politician, Miliband recognises that the 2008 crash changed the dynamics of UK politics. By breaking the link between living standards and GDP growth, the financial crisis robbed trickle-down economics, dominant since the 1980s, of its popular legitimacy.
Miliband has used this opportunity to attack previously untouchable private interest groups. Corporate tax-avoiders, monopolistic energy companies and right-wing media barons have all come under heavy fire from Labour over the last four years.
Miliband has also set out a programme designed to tackle what he calls the ‘cost of living crisis’. This includes plans to increase taxes on bankers, corporations, high-earners and mansion-owners, as well as freeze energy prices, improve childcare services and encourage employers to adopt the living wage.
These are precisely the sorts of things Labour should be doing. They suggest the party (part of it, anyway) is very tentatively rediscovering its radical spirit. More importantly from a Scottish perspective, they stand in sharp contrast to the SNP’s relative conservatism on a number of key economic issues.
The SNP’s pledge to cut corporation tax can’t be reconciled with its desire to reduce social inequality. Neither can its refusal to commit to the reintroduction of the 50p top rate of income tax, nor its efforts to attract zero-hours employers such as Amazon to Scottish shores.
These policies are flawed in their own right. But in a campaign fought increasingly on left-of-centre territory, they are also strategic liabilities. Undecided Labour voters aren’t going to vote Yes in large numbers if Alex Salmond can’t produce a fiscal plan that matches his vision of a socially democratic independent Scotland.
And yet, despite the progress the party has made under Miliband, Labour still carries a pretty substantial strategic liability of its own – one the Yes campaign should do more to exploit.
Ed Balls, the shadow chancellor, is a deficit hawk, and always has been. As an influential Treasury adviser during the early years of the New Labour government, Balls was one of the driving forces behind Brown’s decision to grant the Bank of England ’operational independence’, a move that signalled Labour’s shift away from post-war Keynesianism and towards a form of monetarism built around ‘sound money ‘ and ’rule-based spending constraints’.
It was at this point that New Labour effectively gave up on an active fiscal policy as a means of securing growth. Credibility with the financial markets – something Brown tried to secure by sticking to Tory spending limits for two years and pledging to reduce the national debt over five – replaced the party’s traditional support for full employment as the guiding principle of its economic strategy.
This remains the case today. Under Balls’ guidance, Labour has again promised to work within the Tories’ ‘fiscal envelope’ during its first 12 months in office (meaning it intends to implement, pound for pound, every one of George Osborne’s planned 2015/16 cuts) and eliminate (that’s eliminate, not reduce) the deficit if it wins the UK general election next year.
Try selling that on the doorsteps of Easterhouse and Craigmillar.
Miliband and Balls represent two different faces of the contemporary Labour Party: a kind of revived centre-left radicalism and a hard-nosed fiscal ‘realism’. The Yes campaign’s chances of winning over working-class swing voters – and therefore of winning – will skyrocket if it succeeds in emphasising the latter at the expense of the former.