The Tories want only to talk about the deficit- which, by the way, they’re not reducing- when the real issue at this election is jobs, living standards, and sustainable growth. So why isn’t Labour attacking far harder the disastrous Tory economic record?
The facts are clear. Osborne’s expansionary fiscal contraction has squeezed wages by an unprecedented 8-10% in real terms. Productivity, on which all future growth depends, is almost the lowest in the G20. Business investment is anaemic with the FTSE 100 companies sitting on cash stockpiles of nearly £700bn because they don’t believe either that Osborne’s ‘recovery’ has legs. The balance of payments deficit in traded goods is the worst in British history because with Tory neglect of manufacturing we cannot pay our way in the world. Unemployment is still nearly two million, and even the jobs that have been created are low paid, insecure, and often subject to zero hours contracts. Household indebtedness is now over £2 trillion and increasing.
To cap it all, bringing down the deficit, which is allegedly the whole purpose of this burgeoning economic disaster, isn’t happening either. Osborne predicted this year it would be £37 billion, it’s actually nearly £100 billion. More worrying still, the reason it’s not fallen, because contracting wages has contracted the Governments tax receipts as well, mean that it won’t fall significantly in future years, and may even rise. So why does Osborne continue to make such a totem of it? Because the real Tory aim is not to reduce the deficit as such at all, but rather to shrink the State (as he has himself said, to 1930s levels,) to squeeze the public sector, and to shift from public services to a fully marketised private State.
So why doesn’t Labour attach this hammer and tongs instead of just saying we’ll cut a little less than the Tories- the same policies as the Tories, but a little less painful? If it’s fear of being taken as profligate, why doesn’t Labour retaliate that in Labours 11 years to the crash (1997-2008) the deficit was never higher than 3.3% of GDP, whereas Thatcher-Major racked up deficits bigger than this in 10 out of their 18 years?
So what should Labour be saying? When private investment is flat on its back, public investment is needed to kick-start the economy into sustainable growth, jobs, rising incomes, and the growing tax receipts to really pay down the deficit. We need public investment in house building, infrastructure, and a low carbon economy. At 0.5% interest rates a £30 billion investment package sufficient to create 1-1.5 million jobs within 2-3 years can be paid for at a cost of only £150 million a year.
Better still, it could be funded at no increase in public borrowing at all either by instructing the public banks, RBS and Lloyds, to prioritise lending to British industry rather than overseas speculation, or by a further tranche of quantitative easing targeted directly to industry rather than the banks, or by taxing the ultra-rich whose wealth, according to the Sunday Times Rich List, has expanded from a cool £250 billion to a scarcely imaginable £500 billion