The economic debate is now wide open
Until George Osborne’s hara-kiri budget it was widely assumed that the economic battle lines for the next election had been firmly set. The Conservatives would eliminate the structural deficit by taking an axe to the public sector and go to the polls on the back of a modest giveaway budget and claims to have sorted out Labour’s mess.
Okay, things were already off track before Osborne declared war on grannies and pasty-eaters. Vanishing growth meant that austerity would be prolonged and the deficit battle would carry over into next parliament. But none of this dented the assumption that public opinion was settled and that the politics of austerity would continue to favour right over left.
The real picture was always more complex. Public attitudes on important aspects of the economic debate have remained pretty constant over the past eighteen months, yet there have also been some notable changes revealed in the polling data regularly gathered by YouGov.
One of the most interesting statistics is that in November 2010 the public believed that cuts were good for the economy by a proportion of 43% to 42%. In the latest YouGov poll voters say cuts are bad for the economy by a margin of 51% to 31%. It’s hardly surprising given the collapse in economic growth since the third quarter of 2010, but it does suggests that people recognise the link between cuts and growth.
Most voters also agree with Labour that the cuts are too deep (45%) and being implemented too quickly (50%), compared those who think they are too shallow or just right (12% and 24%) and being implemented too slowly or at the right pace (10% and 24%). This has been true since YouGov started asking these questions a year ago, but there was a distinct narrowing of the margin during the peak of the Eurozone crisis late last year.
The same is also true of the proportion saying that the cuts are necessary, which runs at 54% compared to 32% who think they are unnecessary. The figures were 52% against 34% in January 2010 and 59% against 27% last December. This is Labour’s greatest problem. The public may agree that cuts are economically damaging, but the Eurozone crisis makes it seem like a choice between something bad and something far worse.
There have been two significant changes. First, the number of people who think the cuts are being implemented unfairly compared to fairly has grown markedly from 52% against 34% in November 2010 to 64% against 22% today. Second, the number of people blaming Labour for the cuts has fallen in the same period from 45% to 33%, while the proportion blaming the government has risen from 21% to 28%. Incumbency is clearly having an impact on the blame game.
Labour will also be encouraged that the Conservative party’s lead on the economy has shrunk from 11 points at the end of 2010 to 4 points today. The bad news is that this is entirely due to declining confidence in the Conservatives. While the proportion of people favouring the Conservatives on the economy has shrunk from 37% to 30%, the proportion favouring Labour has remained static on 26%. Unless Labour can move this figure closer to the 41% it is currently averaging in national opinion polls, its underlying electoral position will remain fragile.
There are several things Labour can take from this, but four stand out for me.
First, there is far more to be gained by questioning the way the burden of deficit reduction is being shared than by questioning its pace and depth. ‘Too far, too fast’ collides with the brick wall of necessity. ‘We’re not all in this together’ damns the government with its own words. Ed Miliband has already signalled this shift with his budget response and local election speech in Southampton, posing the question of what Britain would look like if we really were all in it together. The point now needs to be pressed home relentlessly. The economic crisis is a national emergency and Labour should make the call for equality of sacrifice in unashamedly egalitarian and patriotic terms.
Second, Labour will need to go into the next election with a credible promise of fiscal restraint. Miliband’s pledge that a Labour government would deal with the deficit in the next parliament if the Conservatives failed in this one was a start. But plans for a new ‘golden rule’ on spending will meet with scepticism because the last Labour government changed its own rules mid-term. Responsibility for policing the rules will have to be given to an independent body.
Third, Labour should move on from ‘too far, too fast’ as its topline argument. The Conservatives have been much better at framing the debate with language the public can relate to. Compared to the image of the ‘maxed out credit card’, an argument about counter-cyclical demand management doesn’t work. People don’t believe that you can spend your way out of debt, but they do think you can work your way out debt. The language needs to focus much less on aggregate demand and much more on the investments needed to get the country back to work.
Fourth, Labour can’t expect to win the economic argument by default. The gap has narrowed as growth has fizzled out, but will widen again if the economy picks up or the Eurozone crisis comes roaring back. Labour needs to start fleshing out a positive economic vision that links the arguments about recovery, living standards and a better capitalism into a coherent package. Ideas like a national investment bank and a living wage are good examples of fresh thinking, but they need to be part of a much wider programme for creating a more productive, stable and equitable economy.
Public opinion is movable and the economic debate is now wide open. Labour can win it if it has the confidence and imagination.
David Clark is editor of Shifting Grounds.