Labour has let Tories win argument on economy

The Conservatives have been busy trying to recreate the political choices of the 1980s
  • @GeraintDaviesMP

Despite the pain of cuts and division over Europe, the outcome of the next election is in the balance. The public will decide who to vote for based on which party they think will deliver a stronger economy to pay for a fairer Britain. At present, the jury is out.

“Labour messed up the economy and the Tories are making it worse so why should I vote for either?” one voter asked. “And now that Labour says it won’t reverse the cuts and will spend the same as the Tories, what’s the point of Labour?” another demanded.

The party’s challenge is to provide a compelling case as to why Britain would be better off with Labour. Firstly, the problem is that the electorate doesn’t yet see a clear choice between the parties on cuts vs growth. Secondly, the Tories have been relentless in asserting that Labour messed up the economy.

Not rebutting this charge makes us look like a shamefaced schoolboy admitting responsibility by omission. And if we don’t rebut the accusation, it will simply amplify as the election approaches. 

True, the deficit went up once the sub-prime tsunami hit our shores but it was Gordon Brown’s and Barack Obama’s fiscal stimulus that ensured a mild recession in 2008-09 instead of a depression and meant GDP was growing again by 2010.

Only a third of the 2010 deficit was due to Labour investing above earnings to keep the economy moving forward, with two-thirds caused by the bankers. In a downturn, that is the correct economic strategy. To cut in a downturn makes things worse but that is exactly what the Coalition has done.

In his 2010 Budget, George Osborne announced 500,000 job cuts in the public sector, which ensured public-sector workers started saving instead of spending in case they lost their jobs. The switch from growth to cuts will mean the debt to GDP ratio will grow from 55 per cent in 2010 to 85 per cent by 2015.

The Tories are cutting deepest in the North and Wales – where there are more public servants – and spending most in London and the South-east – where there are more Tory voters.

Meanwhile, the poor who spend all their money by necessity and help the local economy are being hit hardest to pay for the bankers’ folly.

Labour needs to set out a vision of a stronger Britain that provides the economic confidence to invest and consume to stimulate jobs and growth. The Conservatives have been busy trying to recreate the political choices of the 1980s – between an “all heart and no mind” Labour which would tax and spend Britain into bankruptcy vs the hard-nosed business sense of the Tories making tough choices in the nation’s interests.

Labour needs to talk the talk of UK plc – boosting the UK’s productive capacity by linking industry, universities and councils. We need a sharper focus on the growing export opportunities to China, India, Brazil and Russia. We must invest in homes and transport, use public procurement as an engine to grow small and medium-sized firms.

The European elections next year are an opportunity to put growth and jobs centre stage. The central question is the cost to trade, investment and jobs of spending four years arguing about whether to walk away from Europe. Inward investors from growing economies want access to the world’s biggest market – Europe – and not to pay a 14 per cent tariff to export from a detached island. We need to continue a journey towards jobs and growth, not to be diverted into a cul-de-sac of more cuts.

Geraint Davies, MP for Swansea West