Ed Balls’s sudden embrace of austerity and the public-sector pay squeeze represents a victory for discredited Blairism at the expense of the party’s core supporters. It also challenges the whole course Ed Miliband has set for the party, and perhaps his leadership itself. Unions in the public sector are bound to unite to oppose the real pay cuts for public-sector workers over the next year. When we do so, it seems we will now be fighting the Labour frontbench as well as the government.
The political elite that was united in promoting the City-first deregulation policies that led to the crash is now united in asserting that ordinary people must pick up the tab for it. It leaves the country with something like a “national government” consensus where, as in 1931, the leaders of the three main parties agree on a common agenda of austerity to get capitalism – be it “good” or “bad” – back on its feet.
The only justification offered for supporting the pay freeze is that “jobs must be the priority”, thereby buying into the hoary old fallacy that increasing the wages of the low-paid risks unemployment. The view that deficit reduction through spending cuts must be a priority in order to keep the financial speculators onside has been the road to ruin for Labour chancellors from Philip Snowden to Denis Healey.
This is the last gasp of the neoliberalism which led to 2008, and the final point on the arc of “new Labour” politics – from “things can only get better” to “heaven knows we’re miserable now” and will be for the foreseeable future.
A teaching assistant will be £2,600 worse off as a result of the coalition’s pay squeeze by next year – that does not create a single extra job. Rather, it represents a further squeezing of demand out of the economy during a recession, and will lengthen dole queues. Even the ratings agencies acknowledge that austerity is damaging the economy in Europe.
Of course, for Labour to say it cannot make spending commitments now, and will only make a judgment as to what cuts are reversed in which order nearer the general election, is absolutely reasonable. But this is going much further. As Ed Balls told this newspaper, the “starting point” is “we’re going to have to keep all these cuts”. And this year we have seen one shadow minister after another falling over themselves to endorse savage spending cuts which are hurting real people. Liam Byrne, Jim Murphy, Stephen Twigg and now Ed Balls: four horsemen of the austerity apocalypse.
Where does this leave the half a million people who joined the TUC’s march for an alternative last year, and the half of the country at least who are against the cuts? Disenfranchised.
The real points of differentiation between Labour and the government on the economy are now very hard to identify, the more so since Cameron and Clegg are cutely, if insincerely, positioning themselves as proactive on tax avoidance and executive pay.
No effort was made by Labour to consult with trade unions before making the shift, notwithstanding that it impacts on millions of our members. It is hard to imagine the City being treated in such a cavalier way in relation to a change in banking policy.
This confronts those of us who have supported Ed Miliband’s bold attempt to move on from Blairism with a challenge. His leadership has been undermined as he is being dragged back into the swamp of bond market orthodoxy. And this policy coup may not be the end of the matter. Having won on the measures, new Labour will likely come for the man sooner or later. And that way lies the destruction of the Labour party as constituted, as well as certain general election defeat in my view. It is time for those who want a real alternative centred on investment, job creation and public intervention to end the slump – and a Labour party that will articulate that to get organised in parliament and outside.
Len McCluskey speaks out on the ‘Blairite policy coup’
January 17, 2012 by friendlylefty
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