Seumas Milne gives an uncharacteristally favourable assessment of the government’s approach in today’s Guardian article on yesterday’s Pre Budget Report.
But taxing bankers’ bonuses to guarantee work or training after six months for what are now nearly a million young unemployed sends a powerful message about who is responsible for the crisis and who is paying the price.
And on the deferral of spending cuts:
By resisting the siren calls for early cuts in spending while modestly boosting public investment, Darling has also not only made the right economic choice – any early withdrawal of the stimulus would almost certainly drive whatever modest recovery might be in store into a deeper slump. But he has also underlined the widening divide with the Tories, who continue to demand that the government start cutting without further delay.
Seumas is of course right to point out that the Tories would be far worse. Labour are constrained – by their links with the trade union movement and their traditional base of support amongst lower paid workers – to enforce immediate cuts. To do so this close to a general election would be very damaging anyway. But by conceding earlier this year to the Tory claims that huge cuts in public spending are necessary to rescue the economy – which is simply not true – Alastair Darling yesterday appeared the man who knows what the right thing to do is but lacks the courage to do it. This is certainly the pitch that the right wing media’s response has made, from a position of strength.
Alongside this were a whole raft of cuts and regressive measures to be implemented in the meantime. A blanket increase in National Insurance contributions will hit middle earners hard. The public sector pay freeze sets the government on a collision course with the Unions just when their ability to mobilise volunteers and voters for the election is most needed.
The bankers’ bonus tax is the most overplayed element of yesterday’s announcements. Despite the predictable howls of anguish from those whose job it is to howl in anguish on behalf of the banks, this was an incredibly tame move. It is to the shame of Neal Lawson of Compass that he welcomed this so gushingly. The tax is forecast to raise £500million by the Government’s rather optimistic figures. The public sector pay freeze in contrast will raise £3billion. It is very difficult to see, as Seumas does, how this “sends a powerful message about who is responsible for the crisis and who is paying the price”.
As the PBR failed to resolve the main issues that the country faces – how to raise investment levels in order to spend our way out of further recession – it cannot provide a solution to Labour’s political problems. A radical, progressive approach could have arrested the decline in the polls and pointed to a new orientation for the govenment. As it was, yesterday saw another example of Labour’s dogmatic self-sabotage.