As I emerge, blinking from a few weeks of political seclusion into the frenzy of a party conference, forgive me for feeling a little, disconnected, a little isolated from the currents and eddies that lie beneath the Labour tide at Brighton. I’ve spent my conference so far almost in retreat, trying to avoid conversation, debate, argument. Just listening, quietly.
From this oddly distant vantage point, It feels like Labour’s 2013 conference is a battle of competing truths. One big one and a swarm of little ones.
It is the swarm of little truths that Labour people highlight in speeches and press releases. They are the pleasant policy changes a Labour government would make – more housebuilding, better childcare, lower energy costs, a reversal of the bedroom tax. All to be paid for my marginal changes in the taxation of those few outcasts and anti-socials who don’t fit in one nation, like bankers, rail companies and the very wealthy. (Ed Miliband described the train companies as ‘taking people for a ride’ yesterday, which is my private favourite moment of Conference so far.)
Looked at individually, all these policies are sensible, popular and relatively straightforward reforms. They, and the various levies and ringfences that pay for them, are the direct heirs of the windfall tax on privatised utilities, which paid for much of early New Labour’s pledges.
No wonder then that Labour people from all wings of the party are enthusiastically endorsing them.
Yet lurking next to this shoal of happy promises, we find the Big truth casting a long shadow.
The Big Truth, as Ed Balls will have to make clear today, is that Labour is committed to strong deficit reduction. That, the Tories spending plans in 2015-16 will Labour’s starting point.
The problem this presents for Labour is this. As a result of Osborne’s failures and slow global recovery, the post 2015 Deficit reduction plan will be painful in the extreme. Even after 2015-16, there will be a need for up to £25 billion of spending cuts or tax rises. Without tax income increasing or welfare and pension cuts, then the second and third years of the next government will see departmental spending cuts of almost 8%. That’s on top of what has already happened, and what will happen in the first year of the Labour government.
All those cuts we hate? Add some more, then add some more, then add some more.
That’s the horrible scenario. It’s possible that growth will mean that money can be shifted from welfare budgets to public services to cushion this blow. After all, that’s what happened from 1997-99, allowing Gordon Brown to pursue ‘Prudence with a purpose’. However, for where we stand today, that looks an incredibly optimistic scenario.
The Government are absolutely culpable for this mess. To pick just one example, the idea that the deficit can be closed with no tax increases as all is one of the reasons the spending projections look so awful. As the IFS have pointed out, even returning to a 80-20 split between spending cuts and tax increases raises £6 billion a year.
However, Osborne’s folly doesn’t get Labour off the hook. The next Labour government is going to inherit a fiscal squeeze of unprecedented proportions. It will likely have to simultaneously increase taxes, cut spending and limit welfare provision.
Labour will especially have to do this if it wishes to increase spending in those areas of the economy which are Labour’s priorities for reforming the economy – like business banks, investment plans, help for apprenticeships, local growth support and so on. ((This is one reason I was slightly surprised that the Bedroom Tax announcement was so central to Labour’s pre-conference policy agenda. It is a good, humane, compassionate policy, but it is the very opposite of ‘predistribution’, or switching funding to investment in skills, resilience and so on. That doesn’t mean it shouldn’t be done, but it highlights the difficult choices Labour is navigating))
This is why the Big Truth threatens to overshadow everything else Labour has to say, which is perhaps why debate about it has been so muted.
Perhaps the implications of the Big Truth will be clearer today, after Ed Balls speech and the opposition of the Unions to the public sector pay freeze continuing., but until now, it has been quiet, unless used as a defensive line against journalist claims of reckless over-spending. Those questions go to the wrong target. The problem for Labour is not over-spending, but how it will cut, once in power.
For me, the tension between Labour’s big truth of fiscal restraint, and the little truths of the difference Labour could still make is the hidden story of this conference. Labour people seem reluctant to focus on the big truth that lurks alongside their happy promises.
Yet they are not contradictory. Far from it. Indeed, I think a political position that accepts the necessity for sustained fiscal restraint while making clear that the suffering should be both fairer and help given too would be broadly popular.
To make that argument requires confronting the unpleasant implications of the big truth. It requires drawing the pain into the spotlight, accepting it, and then discussing how to best reduce it.
Do that, I think, and the big truth stops casting a shadow of the shoal of little truths, preventing them from glitteringly attractively.