Labour: I agree with Vince

Whisper it, but Labour’s economic policy is now Vince Cable’s economic policy, delayed a few years.

Mansion tax, proposed by Vince in 2009? Check.

Yes, it’s the Ed and Vince show! (But did they run out of t-shirts for the bearded man?)

 

Industrial/Infrastructure bank (again proposed by Vince in 2009)? Check.

Support for more vocational training and skills? Check

An emphasis on radical banking reform? Check

An emphasis on regional business structures to support private sector growth? Check

Reform of markets through more activist regulation on key issues like Takeovers? Check

Deficit reduction over the medium term, but not while the economy is slumping (a key part of ‘The Storm and probably best expressed politically here)? Check

I suppose one point of difference is that Labour wants to introduce a 10p tax band for the lowest non-tax-payers, while Cable wanted to lift them out of tax altogether.That doesn’t seem an insurmountable difference.

I don’t mention this as a snipe.

I think Vince Cable’s economic policy in 2010 was broadly right, and the twin tragedy of the 2010 election is that Labour didn’t really try to steal it (because the future cuts needed were too painful to embrace), and that the Tories and Nick Clegg refused to steal it when they had the chance (because they were wedded to the stupidity of immediate austerity.

The reason Labour didn’t embrace the cable approach fully at the last election is that we were not prepared to do some of the things he proposed to create the fiscal space to allow this to happen. We weren’t willing to squeeze tax credits or pension tax relief for example. I happen to think we were right on tax credits, wrong on pensions tax relief.  Conversely, I think the Lib Dems were wrong to propose extra spending on pensions while abolishing the Child Trust Fund.

Besides, Labour lost the last election. I don’t have a problem with appealing to voters who liked the sound of this sort of thing.

One thought, though: However far this approach takes us, however attractive it is, it still leaves us with the question of how we manage to achieve these goals within an eye-watering overall fiscal envelope.

For Cable, stuck helpless in government as Osborne reins his ideas in, that is frustrating today.

We have to find a way to ensure it is not equally frustrating for a future Labour Prime Minister.

4 Responses to “Labour: I agree with Vince”

  1. Nick

    The real meat is not the tax stuff. That’s just fiddling and politicking for the amusement of commentators and bloggers! (With the greatest respect of course).
    The beef is what EdM said on skills and education. Improving the perception, status and quality of vocational education and training is the key to the future prosperity of the country. It is also vital for social justice, addressing youth unemployment, reducing crime and just about everything else! Ending the “university for all” obsession and making people feel proud of their technical qualifications. It is not easy to achieve, but Ed at least understands what the big challenge is.

    Reply
  2. aragon

    Unless you expand the fiscal envelope then the sums are too small to make any impact.

    Osbourne/Cable investment bank is the Govt Guarantee for the Banks.

    Radical banking reforms don’t address the underlying issues.

    Regional Development funds, well some regional development is needed.

    It does confirm Miliband and Balls are really empty suits. And with a tight fiscal envelope will have no impact on the country and have no understanding of the fundamentals

    Reply
  3. Writengle

    Interesting to see the views of Draghi at http://www.reuters.com/article/2013/02/15/us-g20-draghi-idUSBRE91E0AE20130215
    to quote
    …made it clear that he favored structural reforms as a path to growth rather than ramping up state borrowing.
    “We don’t believe that inflating budget deficits to create demand is sustainable,” Draghi said.
    “We believe that the primary factor creating jobs and growth is, for the euro area, structural reforms.”

    The UK public sector debt is predicted to reach around 100%of GDP by 2015 (i.e. ramping up state borrowing)

    Reply

Leave a Reply