Tuesday, June 16, 2009

Cuts and priming: Labour prepares for 2014

Contrary to popular criticism, the Labour leadership isn’t re-fighting the last election; it’s anticipating the next but one. It may not be the intention, but the latest wave of ‘Labour investment vs Tory cuts’ noise may be less useful at the coming election than it would be to a Labour opposition fighting the election after that.

People are loath to listen to a deeply unpopular government, and unlikely to trust what it says when they do chance to hear. So almost anything that Labour tries now is going to struggle to get traction with the public. But it could lay down a few markers that will help to set the political tone in years to come.

The next government will become unpopular because of what it will do to reduce the budget deficit. This imperative will be a painful constraint on either a Labour or a Tory government. The parties still differ, though: Labour would almost certainly cut services less, raises taxes more and reduce the deficit less quickly than the Tories. It’s risible for Ed Balls to imply that Labour won’t have to cut spending and for George Osborne to imply that the cuts would be the same under either party.

A Tory government, which does seem rather likely, would let public-sector cuts take most of the strain. Many Tories will secretly be very happy about this. Many voters will suspect this.

A Labour opposition, after a couple of years, will find a much readier audience for denunciations of cuts – particularly if the groundwork for such a campaign has been laid, which the current ‘Tory cuts’ attacks may be doing.

There’s a parallel between this and one of the Tories’ recent tactics: as well as opposing short-term stimulus such as the VAT cut, they’ve urged immediate spending cuts. This sort of fiscal tightening mid-recession would have been madness, and it’s our good luck that they haven’t had a chance to do it. But this makes more political sense if the Tories, knowing that they’ll not be in power before the recession is over, are making such proposals purely to create a general impression that public debt is bad and that it needs to be brought under control. This would prime people to be more receptive to the cuts in services that would follow under a Tory government.

Conversely, while Labour attacks on ideologically driven Tory cuts may make precious little difference at the moment, they could prime people to be more resentful of such cuts once underway, and to be more inclined to agree that Labour had indeed warned them about exactly this.

It’s a bit like Tony Blair and spin: he got regular criticism for being slippery throughout the 1990s, which many people nodded along to even while they generally supported him. Then, with the presentational shenanigans around the Iraq war, people turned against him all the more because it fitted with what they’d always been warned about. They’d been primed to suspect that he was a liar, and so, when it mattered, the charge stuck all the more damningly.

Labour is now priming people to believe that David Cameron is a cutter. It could well work, but perhaps not yet.


John B said...

I like that theory a lot.

(although I think I've spent too much time reading swearbloggers: I kept misreading 'Tory cuts' as, erm, something similar but with an extra letter)

The Provisional BBC said...

I agree with this, but there are also areas where a robust message on Tory cuts will have a strong effect right now. Particularly on defence, where the loss of big contracts would mean large job cuts.

It's also a message that is likely to motivate Labour activists.

Finally I'd point out that it's not just that the two parties would pay back the debt at different speeds, and take different positions on the ratio of cutting services/raising taxes. They also almost certainly disagree on the size of the debt, with Labour probably believing in (but wisely only hinting at) a quicker recovery and higher growth when we do come out of recession. That may well mean that Ed Balls believes that a smaller debt can be paid back over an extended period and so departments will see budget rises even if they experience real-terms cuts.

Tom Freeman said...

"quicker recovery and higher growth when we do come out of recession"

Yes, this is key. All the deficit forecasts for the coming years are subject to great uncertainty depending on how the economy performs. As Chris points out, from 1999 to 2007 there was an average £11bn error in borrowing forecasts for the year after next.

And Jeremy Warner's very interesting in the Indy today:

"even deep cuts in public spending wouldn't come anywhere close to delivering the same long-term fix to the fiscal deficit that a sustained economic recovery is capable of. To the contrary, they might make the economic malaise and therefore state of the public finances even worse. Deep cuts in public spending could end up a zero sum game as far as the deficit is concerned, or even completely counterproductive"

It's basically the Laffer curve argument as applied to spending cuts rather than tax rises.

Falco said...

"It's basically the Laffer curve argument as applied to spending cuts rather than tax rises."

Then we're a long way down the far end of that curve at the moment given that increases in spending currently result in lower efficiency. Glad to have you on the pro side of the cuts argument.

Tom Freeman said...