Any preconceptions around the myth of Labour fiscal irresponsibility vs Conservative rectitude have been forcefully rebutted by the recent Mais lecture delivered by shadow chancellor Anneliese Dodds. Far from being a potential kid running amok in a sweet shop, the lecture reveals a shadow chancellor more like a mixture of stern sergeant-major and propeller-headed economic policy wonk. For the rest of us ordinary mortals, political commentator Ian Dunt has written up a readable overview explaining the significance of the lecture’s content.
The measures set out include a plan for greater resilience following a policy framework designed by the Institute for Fiscal Studies. Ideas like stress on value for money in public spending along with 5 and 10 year plans for a balanced budget allowing flexibility around the business cycle and potential future external shocks, don’t sound imprudent and irresponsible. On the contrary they sound measured and rational in stark contrast to the current government’s incoherent muddle.
This was no easy sell preaching to party faithful, but rather an exposition of the shadow chancellor’s thinking in front of an expert audience of the great and the good in the banking and finance community of the City of London. The roll-call of previous speakers is impressive.
Before the onset of the Covid-19 pandemic, the Conservative government had grand plans whose inherent flaws we’ve examined here previously. The impossibility of reconciling a big, ambitious ‘levelling-up’ agenda with the Tories’ traditional small government and tax reducing instincts, not to mention manifesto commitments, has only been brought into sharper focus by the health emergency. To date, £400 billion of extra government borrowing has been funded by QE (quantitative easing) whereby the Bank of England effectively ‘prints money’ to purchase gilts, under cover of stabilising the financial markets.
Bear in mind that this is before any extra money has been raised to implement the big infrastructure improvements and investment planned for neglected parts of the country.
To be fair, the chancellor and the Bank had no choice in the matter. But in effect a Conservative government has lurched economically far to the left of that party’s traditional comfort zone. It might be pushing it a bit to describe the government as socialist but many in the party will be deeply unsettled with such a jolt against the grain of their beliefs. As the year unfolds, fault lines will start to open within the Conservative Party between the right-wing free marketeers typified by the home secretary and foreign secretary in the Britannia Unchained faction and the newer cohort of MPs from the ‘Red Wall’ constituencies. The latter need to see some tangible evidence of levelling-up to retain their seats and thus also the Conservative majority in the House of Commons. The chancellor has his work cut out to sell an effective budget in March that will have to contain measures to address the big increase in deficit and debt he has presided over.
Of course the grave circumstances of the pandemic call for thoughtful and constructive opposition rather than politics-as-usual disputation. Nevertheless there’s no doubt that Labour’s shadow chancellor has set a new bar and demonstrated a degree of economic competence to bolster the clear superiority in leadership that has opened up.
This blog article is the personal view of a member of the Meon Valley Constituency Labour Party (CLP) and may not represent the official policy or views of the Labour Party.