This £1 trillion row leaves voters shortchanged

The parties need to stop squabbling over spending and get back to Brexit.

Phil Mullan

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Topics Brexit Politics UK

The squabble over the cost of the Labour Party’s policies, started by the Tories at the weekend, tells us next to nothing about the potential impact of either party’s economic programme. But it does reveal the decrepit state of the parties that were once the two big beasts of British politics.

Spending figures – large or small – do not tell us if either party is planning an economic transformation of the country. In themselves, the numbers even say very little about how profligate or prudent either party is being. When it comes to future economic performance, the impact of public spending has much more to do with what the money is being spent on, and the circumstances in which it is being spent, rather than simply how much.

The row over these figures suggests that both the Tories and Labour have yet to appreciate what this General Election is really about. It also alerts us to how little meaningful distance there is between the two parties’ economic proposals. The huffing and puffing about numbers provides camouflage rather than clarity.

‘Bandying around’ figures – in the telling words of an unfortunate Tory minister who was being grilled about his party’s ‘£1.2 trillion’ claim against Labour – is seldom an edifying exercise. For a start, General Elections are rarely decided on the economy, never mind on public-spending plans, despite the now clichéd presumption that ‘It’s the economy, stupid’. Of course, what is happening in the economy is of interest to everyone. The economic fundamentals underpin our living standards and our life prospects. But that doesn’t mean that most people vote in elections based on how much they have in their wallets or on the state of the economy.

This is even more true of this particular election, which is only happening because of the inability of parliament to follow through on the 2016 vote to leave the EU. Most Westminster politicians remain blinded to the fact that this election is less about the economy than it is about where control and agency lie – currently expressed through the prism of Brexit.

The public is rightly sceptical about pre-election ‘pledges’ (or bribes). For the past few decades, politicians of all stripes have made a virtue of delegating economic responsibilities to expert regulators, commissioners and central bankers. In effect, politicians have been telling us not to expect too much from them because modern globalised economies are ‘too complex’ and are therefore best left to specialists to understand and oversee.

The propensity to delegate authority on economic matters is best understood as a symptom of the political exhaustion that has increasingly defined the traditional parties. Ever since Margaret Thatcher’s embrace of the slogan ‘There Is No Alternative’ in the 1980s, both Labour and the Conservatives have adopted similar Third Way politics. The parties have tended to emphasise their managerial competence instead of offering alternative visions for the future of the economy. This lack of serious choice is bad news for the electorate.

This abdication has added to the growing public dissatisfaction and anger with mainstream politics. Many feel that the mainstream parties have failed to do anything that benefits them. Public scepticism about pre-election ‘pledges’ (or bribes) seems more justified than ever. The Tories and Labour are largely oblivious to these developments.

The ‘£1.2 trillion’ headline estimate by chancellor Sajid Javid of the cost of a Labour government seems to be a rather crude attempt to emphasise a political difference over economic matters when, in reality, so much unites the two parties on economics. The pre-manifesto announcements from both parties suggest that they both have adopted the new consensus in Western economic circles. Most international institutions, central banks and think-tanks are calling for a return to government-led fiscal activism and this is exactly what both parties are promising. Technocrat supremo Christine Lagarde, the former French finance minister, ex-head of the International Monetary Fund, and now the president of the European Central Bank, epitomises this approach with her many calls for European governments, led by Germany, to open up the fiscal pumps.

In reality, despite the fact that Keynesianism was said to be discredited by the 1970s, no government of any advanced industrialised country – even Germany with its famous ‘balanced budget’ – has ever stopped using the resources of its state treasury to prop up its economy. The big difference between now and just a few years ago is that most economists and politicians are unable to pretend that central banks alone can contain downward economic pressures.

After years of warning that high public debt was one of the biggest economic dangers facing Western countries, policymakers now say that government borrowing to finance public investment is not such a bad thing, after all – especially when interest costs are so low (and are often negative in real terms). That the Conservatives and Labour are promising to spend more shows that they have both embraced this new wisdom.

However, this approach has caused problems for the Tories’ election messaging. Having explicitly abandoned the rhetoric of austerity, managerially minded Tories are finding it much harder than usual to counterpose their alleged ‘responsibility’ in overseeing the public finances against Labour’s ‘irresponsibility’. And so they have concocted a £1 trillion estimate that just about every commentator agrees is an exaggeration – if not an outright fabrication, given that Labour’s manifesto has not even been published yet.

While the sums are certainly dodgy, to dwell too much on this would miss the reason the figure is being deployed. This election’s ‘£1.2 trillion’ is the equivalent of the infamous ‘£350 million a week’ on Boris’s bus during the EU referendum campaign. What matters for the Conservatives’ election campaign is that the media will spend days – perhaps longer – arguing over the figures. Very few of us really understand what a trillion pounds means. But the message we are supposed to get is that it is a rather large number which must be a lot higher than the Tories’s own extra spending pledges.

When shadow chancellor John McDonnell announces the Labour Party’s ‘fully costed’ economic programme next week, we should ignore the tiff over numbers. Instead we should assess how Labour’s plans to transform the economy differ from those of the Tories – or don’t.

Phil Mullan’s latest book, Creative Destruction: How to Start an Economic Renaissance, is published by Policy Press.

Pictures by: Getty Images

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Comments

Stephen Gwynne

14th November 2019 at 7:55 am

Part of the problem is that politicians think the economy is a financial system when it is an energy system that is driven by surplus energy. As the costs of surplus energy increases, so does the squeeze on discretionary spending. This squeeze is made more acute when accompanied by debt.

https://surplusenergyeconomics.wordpress.com/2019/11/11/158-an-air-of-unreality/

Steve Roberts

13th November 2019 at 6:50 pm

Yet another excellent article from Mullan.
“…that doesn’t mean that most people vote in elections based on how much they have in their wallets or on the state of the economy ”
In a nutshell this is what the political elite fail to understand, they cannot understand, they are entirely estranged from most people, there is no greater example of this than the referendum result of 2016.
In the past the connection between the elite and ordinary folk was maintained, and some semblance of reality “on the streets” was passed along the mediating chain from the bottom to the top by political/union activists and the labour movement bureaucracy in turn.
That chain is now broken, these labourites , even in working class areas are completely consumed by the same political outlook of the elites, this is not just a problem in the metropolitan areas , this is not simply a London centric issue.
And of course there is less than a cigarette paper thickness between the xmas present offerings been made, everyone knows they will never bear fruit, rarely have, that’s why people have had enough, wanted change, the main driver in the referendum result, a manifestation in a particular form from decades of betrayal.
Speaking of betrayal, it is true that “This lack of serious choice is bad news for the electorate” but they thought they had one, one based on something more important than immediate self centred concerns, the fight to determine our own futures and be rid of the past, one that is so ridiculed among ordinary folk, they wanted to defend democracy, and the content of the referendum result, they thought they had TBP, people built that party from nothing , not the financiers, not the slick operators , people themselves provided the democratic surge for change, the beginnings of at least the possibility of a new social force emerging.
And now that force has been castrated, millions disenfranchised by TBP, not a tactical manoeuvre but a political capitulation when all was before it, to let people express there will again, to make their stamp on society again.
And now we are left with a possible, only a possible, pressure group rump on the remainer Tory Party, once again the people are left with a “.. lack of serious choice”
Already a need to change again, this time from the bottom up, that we control, based on some basic parameters, not some top down unspecified broad church

Geoff Cox

13th November 2019 at 5:50 pm

Funnily enough, there has been no bribing of the electorate in recent years as the amount spent by Government has far outstripped anything they promised – even in the so-called years of austerity.

But I don’t know why people expect the Government to have a role in the economic management of the country? Firstly, “the economy” is a massively complicated interconnected system that no government could ever manage and secondly why would anyone expect the government to be any good at it anyway? This is a great lie which suits politicians so as to portray them as important.

In my view, government should not be allowed to borrow and such spending as they undertake on defence, social security and the like should be paid for out of taxes in that year – and that includes capital sums.

michael savell

13th November 2019 at 4:55 pm

Hey,negative rates don’t matter ha,don’t you wonder what might happen not so long in the future when China discloses it has some 20,000 tons of Gold and everybody else goes onto the gold standard.It’s going to happen and then debt really does mean debt,unless ,of course we have masses of gold buried somewhere.

Dominic Straiton

13th November 2019 at 4:37 pm

Poor old Winstons off on one again. Dont head towards the light.
Wouldnt it be novel if a political democratic party didnt bribe the voters with our own money. Rome fell because of the bread dole. This one is on the way out.

Winston Stanley

13th November 2019 at 1:18 pm

Smoke sensimelia and LOVE one another

https://www.youtube.com/watch?v=6Aq_nuRjY7I

Winston Stanley

13th November 2019 at 1:14 pm

Lone one another and keep out of danger

Smoke marijuana and love one another

https://www.youtube.com/watch?v=6Aq_nuRjY7I

Forlorn Dream

13th November 2019 at 1:09 pm

Why not just ask Commie Corbyn what happened to his last manifesto pledge to scrap all student debt? It was only two years ago when the promise was made and in reality Commie Corbyn has been in charge in parliament for the last year so why didn’t he uphold his promise?

Anyone would think politicians tell lies to fool the naive into voting for them. Many years ago Billy Connolly said of politicians, ‘don’t vote, it just encourages them’. Too true.

Winston Stanley

13th November 2019 at 1:04 pm

Give thanks to JAH and smoke sensimilia

Up town down town all around town fally ranking

https://www.youtube.com/watch?v=LuLp1_Hb8qI

Winston Stanley

13th November 2019 at 1:15 pm

* LOVE

Winston Stanley

13th November 2019 at 12:37 pm

Once in the fields of Athens

https://www.youtube.com/watch?v=_NlrsmEvv1Q

Asif Qadir

13th November 2019 at 12:46 pm

I is actually Jerry Oven-Kraut, but I’m using a stolen phone. We is totally off the molly now for your info, and I’m gonna be reporting you to my supervisor.
https://youtu.be/cn7wj7ylrzU

Asif Qadir

13th November 2019 at 12:48 pm

We is on the PCP now.

https://youtu.be/vYlScxOxs5Y

Asif Qadir

13th November 2019 at 12:55 pm

I is Jerry Oven-Kraut from the British-German State, and l is reporting you.

https://youtu.be/8PaoLy7PHwk

Winston Stanley

13th November 2019 at 12:22 pm

In Dublin’s sweet city

I first set my eyes on sweet Molly

https://www.youtube.com/watch?v=ocxyqLfHFqk

Winston Stanley

13th November 2019 at 12:08 pm

Here is a LOVELY song for you.

No prostitution in IRELAND and NO SURRENDER of OUR WOMEN to the BRITISH STATE soldiers

https://www.youtube.com/watch?v=ruNdU6bGE5E

Mark Bretherton

13th November 2019 at 12:19 pm

Wow! You sure told him..

Winston Stanley

13th November 2019 at 12:21 pm

We will always fight your cheek

Come on Ireland

Winston Stanley

13th November 2019 at 11:31 am

H McLean

How about if I shoot you, would that be “coherent” enough for you?

We is the IRISH REPUBLICAN ARMY

https://www.youtube.com/watch?v=YPaz0p2dpEk

Winston Stanley

13th November 2019 at 11:29 am

F the British State, we IS the Irish Republic

No Surrender to the British State

https://www.youtube.com/watch?v=YPaz0p2dpEk

Winston Stanley

13th November 2019 at 10:42 am

As I warned you, do not f with me or I will f you up.

https://www.youtube.com/watch?v=FYH8DsU2WCk

H McLean

13th November 2019 at 10:52 am

Winston Stanley

13th November 2019 at 10:32 am

Well, f censorship
3 x post a comment
As GOD as MY WITNESS
Yeeep, I ALWAYS told the English that NOW YOU IS gone.
Now they know that I ALWAYS spoked the TRUTH.
https://www.youtube.com/watch?v=U4zA0xnBEJU

Winston Stanley

13th November 2019 at 10:31 am

Ahhhuuumm, f censorship
3 x post a comment
As GOD as MY WITNESS
Yeeep, I ALWAYS told the English that NOW YOU IS gone.
Now they know that I ALWAYS spoked the TRUTH.
https://www.youtube.com/watch?v=U4zA0xnBEJU

Winston Stanley

13th November 2019 at 10:30 am

f censorship

3 x post a comment

As GOD as MY WITNESS

Yeeep, I ALWAYS told the English that NOW YOU IS gone.

Now they know that I ALWAYS spoked the TRUTH.

https://www.youtube.com/watch?v=U4zA0xnBEJU

Winston Stanley

13th November 2019 at 10:28 am

Yeeep, I ALWAYS told the English that NOW YOU IS gone.

Now they know that I ALWAYS spoked the TRUTH.

https://www.youtube.com/watch?v=U4zA0xnBEJU

Winston Stanley

13th November 2019 at 10:23 am

I always told the English that now you is gone.

Now you know that it is true?

https://www.youtube.com/watch?v=U4zA0xnBEJU

Winston Stanley

13th November 2019 at 10:03 am

As I said, do not f with me, b/c I will f you up.

https://www.youtube.com/watch?v=FYH8DsU2WCk

harry briggs

13th November 2019 at 9:58 am

All this electioneering nonsense about spending is just a sideshow and I hope people are not misled by these usual lies, surely we have become accustomed to it by now, this election is about brexit and nothing more, Labour will attempt to lie their way into power with their unrealistic spending promises and the Tories will attempt to counter that with their own, December 12th cannot come soon enough.

Jim Lawrie

13th November 2019 at 9:39 am

For an economic revival to happen we have to accept that in work benefits, housing subsidies, cheap immigrant labour, The NHS, etc … are keeping afloat the dead weights. Our competitors who are not burdened by this are running rings round us. South Korea’s long term unemployed rate is miniscule next to ours because its workforce accept that they have to work, and work smart. This cannot be done if employers and employees expect payment before they have done a tap.

Jim Lawrie

13th November 2019 at 9:40 am

All these subsidies are done on borrowings, with the taxpayer as the creditor of last resort.

Forlorn Dream

13th November 2019 at 12:59 pm

Jim, we need a benefits system to help those in need as the alternative would be to create a sizable group of desperate people with nothing to lose. Without a benefits system the crime rate would go through the roof.

That said I think the current system has got totally out of hand. When benefits were first introduced it was said they would never be worth more than the lowest paid full time worker could earn. I think we should go back to that founding principle.

Jim Lawrie

13th November 2019 at 6:28 pm

Forlorn I am not advocating the abolition of benefits. I am just saying that at the macro level it is not the poor who benefit.
I would replace in work benefits with training vouchers that people can use as they see fit. Providers to be compete in an open market, and results, including starting inputs, published.

The minimum wage is there to limit benefits for employers, not to help the poor. Abolishing in work benefits is as simple as racking up the minimum wage over a 5 year period.

The welfare bill will either be cut off or drag us to the bottom.
Much of what is termed benefits fraud is in fact subsidising employers.

I see so much wasted potential among people who either do not know they have it, have forgotten or given up.

Winston Stanley

13th November 2019 at 3:40 am

“That the Conservatives and Labour are promising to spend more shows that they have both embraced this new wisdom.”

Hmmm, the take away seems to be that none of the parties have got a clue what they are doing when it comes to economics. They are just following the international pack in the vagaries of its latest orthodoxy. And the TP had no clue what it was doing when it imposed austerity against the worst off in this society. It was likely just a psychological ploy to get votes that was intended to tap into primal psychological drives – “it is winter, they are the wasteful big spenders, we are the tight ones who will see you through, f the poor.”

And the international policy crowd has not got a clue what it is doing either. Capitalism is bumping along the bottom of economic development with long-term economic decline since the 1970s and a complete collapse in productivity growth across developed countries since 2008. I glanced at an OECD report tonight, the outlook for the next 60 years. These clowns actually think that this economic system is going to last for another 60 years. They have not a clue what they are doing and they have zero imagination. The status quo is sacred to them, as it is to every historical economic epoch. I call BS on this, there needs to be radical change. Capitalism is long failing and it is time to let it fail.

H McLean

13th November 2019 at 9:36 am

“…Capitalism is long failing and it is time to let it fail…”

Sure thing, Winston. The problem is as assertions go it’s blatantly false. Capitalism certainly has it’s faults, including elitist, crony capitalism which usually involves rigging the game to ensure the rich stay rich and the poor stay poor, but we cannot ignore the good because of one criticism.

Between 1970 and 2006 poverty decreased worldwide by 80 per cent. Capitalism has raised more people out of poverty in the last 30 years than any other economic system in the history of mankind. To suggest it has failed indicates your political stance rather than any objective truth-seeking.

Winston Stanley

13th November 2019 at 9:54 am

Yea RA RA capitalism – but can it take economic development FUTURE yes or no. If NO then you is a partisan of a BYGONE ERA like an “aristocrat” from da past. Don’t f with me b/c I will f you up. Anyways. I am even expected to respond to your nonsense?

H McLean

13th November 2019 at 10:49 am

At the very least, Winston, if you do feel compelled to reply can you at least make it coherent. Thanks.

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