John Hemming's Web Log John's Reference Website
Wednesday, September 15, 2010
  Turnbull and Blair
The comments by Lord Turnbull and Tony Blair are key simply because the former was the top civil servant and the latter the Prime minister at the time when things started going particularly wrong for the country's finances.

I have extracted elements from Tony Blair's memoirs which basically talk about the economic problems we face now and how they were exacerbated by the government whilst he was Prime Minister and then when Gordon Brown took over.

They speak for themselves. However, basically he accepts that
a) The financial problems were exacerbated because Labour overspent.
b) That making serious cuts is inevitable and that Labour cannot challenge the overall envelope of public spending.
c) That Labour should have put up VAT.
d) That a Labour - Lib Dem coalition was a non-starter.
e) That the target public spending of 42% of GDP is actually not that low.

He argues that Labour should avoid going into opposition mode.
From p679 onwards

The economic crisis, strangely enough, was an opportunity. At first, we took it. It was here Gordon acted at his best, intellectually rigorous, totally driven, sure in his touch. The plan for the banks was right.

But then he decided that a paradigm shift had occurred. He bought completely the so-called Keynesian 'state is back in fashion' thesis that appeared dominant.

Alistair Darling was an excellent Chancellor but (I would hazard a guess) he was not given the chance to implement policy in the way he wanted.

the 2009 Budget signalled a return to tax and spend;


What should we have done? As I suggested in my analysis of the economy earlier, in my view we should have taken a New Labour way out of the economic crisis: kept direct tax rates competitive, had a gradual rise in VAT and other indirect taxes to close the deficit, and used the crisis to push further and faster on reform.

I believe such a programme is economically right.

There's been lots of speculation about the possibility that there could have been a Labour-Lib Dem coalition. In my view, it was never on.

The danger for Labour now is that we drift off or even move decisively off, to the left. If we do, we will lose even bigger next time. We have to buck the historical trend and face up to the reasons for defeat squarely and honestly.

If Labour wants to come back, it has to realise just how quickly defeat has altered the political landscape. It means the Tories get to clear up the economic deficit and define its nature, and can do so while pointing the finger of blame at the previous government.

If Labour simply defaults to a 'Tory cutters, Lib Dem collaborators' mantra, it may well benefit in the short term; however, it will lose any possibility of being chosen as an alternative government. Instead, it has to stand up for its record in the many areas it can do so, but also explain where the criticism of the thirteen years is valid. It should criticise the composition but not the thrust of the Tory deficit reductions.

This is incredibly difficult Of course, the key factor in our economy as elsewhere, is the global economic crisis and all nations are having to cut back and adjust. However, we should also accept that from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit. The failure to embrace the Fundamental Savings review of 2005-6 was, in retrospect, a much bigger error than I ever thought at the time. An analysis of the pros and cons of putting so much into tax credits is essential. All of this only has to be stated to seem unconscionably hard. Yet unless we do this, we cannot get the correct analysis of what we did right, what we did wrong, and where we go now.

Attacking the nature of the Tory-Lib Dem changes to public spending requires greater Intellectual depth and determination, and each detail has to be carefully considered. So, for example, if we attack as we should the cuts to school investment, we have to be prepared to say where we would also make more radical savings than the new government. But it is better than mounting a general attack on macro policy - 'putting the recovery at risk' - and ending up betting the shop that the recovery fails to materialise. It is correct that the withdrawal of the stimulus in each country's case is a delicate question of judgement, but if you study the figures for government projections in the UK, by the end of 2014 public spending will still be 42 per cent of GDP.

Such an approach is the reverse of what is easy for Oppositions, who get dragged almost unconsciously, almost unwillingly, into wholesale opposition. It's where the short-term market in votes is. It is where the party feels most comfortable. It's what gets the biggest cheer. The trouble is, it also chains the Opposition to positions that in the longer term look irresponsible, short-sighted or just plain wrong.



Labour has no option but to be credible in its own right. That means as I say having a coherent position on the deficit. It means remaining flexible enough to attack the government from left and from right. It means being ready at any time to assume the mantle of government.



From this it can be seen that I still favour the third-way progressive politics, still believe it represents the best chance, nor just for the centre left but for the country; and indeed not just for the UK but for others too.

Many people on the progressive wing of politics, however, will read the analysis of the financial crisis and the security threat and say: But there are those on the right who can agree with that, so what's progressive about it?
The question is vital, decisive even of the fate of progressive politics. First, what makes you a progressive? I would say: belief in social justice, ie using the power of society as a whole to bring opportunity prosperity and hope to those without it; to do so not just within our national boundaries but outside of them; to judge our societies by the condition of the weak as much as the strong; to stand up at all times for the principle that all human beings are of equal worth, irrespective of race, religion, gender (I would add of sexuality) or ability; and never to forget and always to strive for those at the bottom, the poorest, the most disadvantaged, the ones others forget.

Notice these are all values, not policies. They may beget policies.



Fourth - and tactically hardest of all for the centre left - progressives have to be proud of policies that lead to efficiency as much as those that lead to justice. Why? Because the lesson learned since 1945 is that driving value for money through public services is not a question of being efficient rather than just - it is just. Spend less on bureaucracy and you spend more on front-line care. To me, reform of health care, education, welfare and pensions was based on both efficiency and justice. Better services were also fairer. Likewise I was as keen on Bank of England independence as on a minimum wage; on encouraging business as on giving people the right to be union members; on growth as much as on tackling poverty Now it is true some of those policies and even sentiments are sometimes more associated with the right; but that's our fault - and our bane, actually This will focus especially around the role of the state, which is why it is so important not to misread the political consequences of the financial crisis. Big-state politics today will fail. In fact if you offer small state vs big state', small will win.
 
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