In today’s guest post, Peter Hain, author of Back to the Future of Socialism, implores the new Labour leader, whoever they may be, to defend the party’s pre-crisis spending plan and provide a radical alternative to Tory austerity.
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Whichever candidate Labour members support for the leadership, everyone in the Party should insist on backing a radical alternative to five more years of Tory austerity. In truth our Party has been too timid for too long on the economic agenda.
After 2010, our leadership allowed the big Tory Deceit to go unchallenged: namely that it was the last Labour Government ‘over spending’ rather than the banking collapse that produced mountainous levels of debt and borrowing, bequeathing a large deficit. As I demonstrate with detailed evidence in Back to the Future of Socialism, that is simply not true.
“Our Party has been too timid for too long on the economic agenda.”
Labour’s borrowing, the deficit and the national debt was low before the global banking crisis – lower than most of our competitor countries from America to Japan and France, and significantly lower than levels inherited from the Tories in 1997: we did ‘fix the roof when the sun was shining’. Otherwise why did Cameron and Osborne sign up in September 2007 to Labour’s three year spending plan?
It was the colossal cost of bailing out the banks and the unemployment and business collapses triggering recession which caused the extra spending. Labour’s pre-crisis deficit in 2007 was 2.7% of GDP. The bank bailout cost 90% of GDP. A slightly lower deficit would have been irrelevant.
“Labour’s pre-crisis deficit in 2007 was 2.7% of GDP. The bank bailout cost 90% of GDP.”
Our Party’s new leadership needs to trumpet that because otherwise we will be dragged along behind the Tory austerity bandwagon. We also need to rebut the charge that the alternative is some wild, irresponsible, unelectable platform of ‘tax and spend’ as critics will doubtless attempt to claim.
Back to the Future of Socialism offers a practical, financially prudent but economically robust alternative to austerity. Investment in faster, fairer, greener growth is the way to reduce the deficit and the national debt, just as it was in the 1950s when both Tory and Labour governments built double the number of houses each year than today and founded the NHS – at a time when the post-Second World War national debt and deficit was much higher than it is today. They went for growth, not cuts. That’s exactly what we should now do.
“In the decades ahead, Labour should be about securing a growing economy.”
Faster sustained growth would also allow us to tackle both insecurity and aspiration, and not have to choose between them. There is no political necessity for spurning Left-Behind Britain in order to appeal to Middle Britain: the interests of both can be advanced together by Labour.
In the decades ahead, Labour should be about securing a growing economy, with policies to ensure that living standards for all rise, quality of life improves, our environment is nurtured instead of destroyed and everyone shares in the proceeds of growth Democratic socialism, not neoliberalism, should remain both the source of our inspiration and the vision for our age.
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