Jonathan Todd

Philip Stephens makes a striking observation in the FT noting the harshness of the coalition’s rhetoric on the public sector and public servants:

“The government’s tone of voice is one that suggests all public spending is wasteful, and all those working in central or local government are on the make or take. Perhaps, given his goal of a smaller state, this is Mr Cameron’s intention. If so, it is neither sensible nor politically astute. It also happens to be unfair.”

How long before this unfairness jars with the public?

I have a childhood memory (perhaps, I mean nightmare) of a member of the public describing themselves as a civil servant on Noel’s House Party and Noel doing nothing to discourage the booing which came from the audience as a result. I didn’t even know what a civil servant was at the time but this booing didn’t seem fair to me. Of course, this may all be false memory. There is no doubt, however, that this government wants to bring public servant bashing back into vogue.

I’ve written for Labour Uncut that Alan Milburn is wrong to take up a post advising David Cameron on social mobility.

Iain Dale doesn’t get these Labour appointments to the coalition. The implication of them, he writes, “is that there are no Conservatives with the capability or talent to carry out these roles.” But Cameron, having spent a lifetime battling Labour and seeking to deny us power, isn’t now going to cede genuine power to us or acknowledge that we might have had a point after all.   

Cameron has devoted his life to preventing Labour having power because he sees himself as part of a governing class that knows better than the oiks that Labour represents. This governing class has a duty to stop the oiks getting power and wrecking everything for everyone. Noblesse oblige, old boy. There is nothing in the water at Number 10 which is going to cause him to say “I’ve been wrong all my life. What’s Alan Milburn’s number?”

But Dale isn’t the only deluded one. Milburn is too. And reporting on social mobility to this most patrician of PMs is the cruellest delusion. He seems, like Dale, to think that Cameron admires his intellect and wants to give him real power to act upon his ideas. Instead, he’s been set up.

The Liberal Democrats have made themselves a human shield for Cameron’s Thatcherite Blitzkrieg. Milburn is now providing Cameron with additional cover. He will politely accept Milburn’s recommendations and do whatever he was planning to do anyways. He will have surrendered zero power but varnished his subsequent actions with a sense that he is above tribalism.

While Milburn has enabled this sense, the reality is that Cameron is leading a profoundly ideological crusade to shrink the state. As this puts at risk everything the Labour Party has achieved, no Labour person should be doing anything to assist him.

I had the piece below published on Labour Uncut on 28 July 2010:

Rahm Emanuel never wastes a crisis and neither does the Tory-Lib Dem government. The Thatcherite ends which this government use crises to advance would be anathema to President Obama’s chief of staff. Idealists who cheered Obama’s election have been frustrated by subsequent pragmatism. David Cameron, in contrast, has been much more of an ideologue as Prime Minister than previously; though one more concerned with the low cunning of making his beliefs real than with their principles.

Such an ideologue in Downing Street is more frightening than anything Labour has to offer. After a generation of New Labour, the contemporary meaning of Labour’s values needs restatement. However, the candidates’ visions of the socialist uplands are less important than resisting a PM who threatens the achievements of not just the last Labour government, but every Labour government.

“Dripping wet” was how right-wingers described Cameron a few years ago. The Harold MacMillan picture in his office seemed, in opposition, to prefigure a one-nation PM. His detoxification project accepted that mistrust of Thatcherism was holding back Tory electoral success; an understanding that every other Tory leader since Thatcher either didn’t share or was too weak to act upon. He was, consequently, the first of these leaders to make a determined pitch for the centre ground.

When this didn’t secure a majority government Cameron faced crisis. Tories who never accepted the need for repositioning felt vindicated. This wouldn’t have happened with a more solidly Thatcherite leader like David Davis, they thought. But this crisis created various opportunities.

First, Liberal Democrat cohabitation achieved a detoxification more profound than any previous. “If he agrees with Nick, then Dave can’t be so bad, can he?” Second, in acquiescing Clegg made his party human shields in Cameron’s public spending Blitzkrieg.

Still, what we might loosely call the Davis faction has never been wholly won over. They continue to attack the leadership, while Simon Hughes and other left-leaning Liberal Democrats do so from a different perspective. Being attacked from right and left makes Cameron appear reasonable and a creature of the centre ground, as does being leader of a coalition, with its attendant compromises and trade-offs.

While Cameron’s solid approval ratings suggest he is taken to be a pretty straight kind of guy, the substance of these compromises can be questioned. Raising the income tax threshold was once a Tory right policy. It is now debatable, given recent polling, whether the Alternative Vote would be to the Tory’s electoral disadvantage, if, as Kevin Meagher doubts, the referendum is even won at all. Certainly, the Bill which Clegg will pilot to secure this referendum contains proposals distinctly to the Tories’ advantage, such as reducing the number of MPs and the boundary review.

Clegg is undoubtedly being taken for a ride, but, as Peter Hoskin notes, he has transformed his party in ways that indicate willingly so. The small-state zeal of this transformation meant Danny Alexander didn’t hold George Osborne to the more even-handed trajectories for deficit reduction that the Liberal Democrats and Labour had proposed. The office of budget responsibility has confirmed that Labour’s plan would eliminate the bulk of the structural deficit over this parliament – George Osborne’s stated objective before the election. Yet he is executing £40bn of additional cuts. It requires blind faith in the capacities of private enterprise, once ‘liberated’ from the ‘dead hand’ of the state, to believe this wise.

The NHS White Paper proclaimed liberation, but it requires similar faith to be convincing. What is proposed, in giving such power to GPs, as the SMF’s David Furness notes, is “like asking your waiter to manage a restaurant. They might know what you want to eat but they won’t necessarily be any good at ordering stock, designing a menu or controlling the chef.”

What kind of faith sustains such action? The kind of faith that rashly and incompetently decimates the successful building schools for the future programme to fund the untried experiment of ‘free schools’. A faith in doctrinal conviction over the lessons of experience. A faith that isn’t conservative but Thatcherite.

This is a dangerous psychosis, which we must resist. But, as we do, we must avoid excessive defence of an imperfect status quo or being unrealistic about public finances. Cameron has proposed a new dividing line: “Is this Labour’s great new tactic, to be left defending the bureaucracy of PCTs and SHAs and all the quangos and all the bureaucrats, all of whom are paid vast salaries and huge pensions? They back the bureaucracy. We back the NHS.” We can expect this line to be run alongside the long-established coalition claim that our economic vandalism made cuts unavoidable.

Pat McFadden has highlighted the nonsense of this claim. Ed Balls has impressively opposed Michael Gove. Andy Burnham is equally forceful in taking on Andrew Lansley.  We need to join up the departmental dots and craft a narrative that exposes Cameron’s government across the piece. Joined-up opposition, if you will.

The deficit crisis is real. However, as McFadden has shown, there is a Labour response between Thatcherism and denial. While the government wants us to think differently, there are no crises in education and health. Nonetheless, for us to simply defend the status quo makes it easier for Cameron to caricature us as big state dinosaurs.

There is a Labour response between swivel-eyed, small-state evangelism and defending the status quo. This would distinguish public service reform grounded in past results from reform grounded in blind faith. The former builds upon 13 years of Labour success, and some disappointments, and the later senselessly risks all of these successes. A candidate able to convincingly deliver this response would have a strong claim both on leadership and the centre ground of British politics; the territory that Labour needs to dominate to return to government.

I had the piece below published on Labour Uncut on 16 June 2010:

The Daily Telegraph isn’t normally essential reading for Labourites. But yesterday it should have been, especially for Harriet Harman. Fraser Nelson set the backdrop to the politics of the deficit and the “emergency” Budget, to which she, as acting leader, will respond. This week’s report from the new Office of Budget Responsibility (OBR) dramatically changes this political context. Nelson has been quick to realise this and, while our instincts differ markedly from his, we need to be equally fleet-footed.

The limited discussion on the deficit in the leadership election has denied our candidates the opportunity to demonstrate this quality. Though, of course, they could engineer such an opportunity for themselves. I’d be impressed if any of them do flesh out a more substantial economic platform, not least as The Economist is right to note that, “nothing will make or break the next leader of the opposition like his response to the government’s austerity programme”.

The coalition, preparing the ground for the scorched earth to come, has grasped any and every opportunity to exclaim their horror that “it is even worse than we thought”. Labour, apparently, have not just cooked the national books, but eaten and spat them out again. It’s what we always do. We can’t help ourselves. It is the coalition’s duty to pick up the pieces; in the national interest, of course.

The coalition has pushed this story since its creation. It matters whether it is believed. It wasn’t until after black Wednesday that the spectre of the winter of discontent stopped being a drag on Labour’s support. If the deficit is perceived as Labour’s deficit, then the pain of reducing it will be a similar drag. However, a major spanner has been thrown in the coalition’s attempts to embed this perception. As Nelson observes, “something is going badly right” for the British economy.

The OBR reported earlier in the week, as Nelson noted, that unemployment “will be almost 200,000 lower than had been feared. Economic growth will not be quite as strong but the tax revenues – which are far more important – will come in much more strongly than Mr Darling gloomily forecast.” So, the reality is that public finances are in better shape than the Treasury forecasts bequeathed to the coalition gave them to expect.

How troubled George Osborne must be that this reality, so out of kilter with his desired spin, has been presented by the OBR. After all, he established this body, as Nelson puts it, with the intention to “demolish the economic Potemkin Village that Gordon Brown built during his time in Downing Street and reveal the full extent of his fiscal vandalism”. Yet, rather than exposing Labour irresponsibility, the OBR has shown “Mr Osborne’s election goal – to abolish “the bulk” of the structural deficit by 2014 – would have been easily achieved had Mr Darling remained in place. No more taxes need to be raised, or budgets cut, to honour this Tory manifesto pledge.”

This is a tremendous vindication for Darling and inconvenience for Osborne. If Osborne now persists with plans to cut further and faster than intended by Darling, he will be doing so for reasons of political belief, not economic pragmatism. Nelson understands this and urges him to press on “because he wishes to restore the power balance between state and society. A true liberal believes that people spend their own money more wisely and effectively than government can do on their behalf.”

While Rachel Reeves has expertly explained why comparisons – encouraged by the scaremongering spin of the coalition – between the UK and Greece are spurious, our deficit does require careful management. However, there is a world of difference between the careful prudence of Darling’s plan and the ideological, small-state zeal that would carry Osborne beyond it. Nelson encourages Osborne in this direction because “with Labour embroiled in a five-way leadership contest, he will never face weaker opposition”. Precisely why we must be vigilant against him.

What the formation of the coalition told Philip Stephens about David Cameron was that “he is a Conservative in the centrist tradition of Harold Macmillan rather than a radical such as Margaret Thatcher”. However, we need to be ready for his Chancellor leading the coalition on a distinctly Thatcherite course in his first Budget. Having scrapped the Child Trust Fund and the Future Jobs Fund this might be no surprise, particularly after the coalition agreement made, as James Purnell noted, “no mention of abolishing child poverty. Of reducing inequality. Of protecting education funding. Of guaranteeing jobs for the long-term unemployed.”

In responding to Osborne’s Budget, the key distinction is between actions that can be justified as decisions of economic necessity and those that are driven by political belief. We strip ourselves of credibility if we do not acknowledge the necessity of some pain. We can absorb more of this pain in the form of taxes than Osborne will propose, but we can’t hide from the need for some spending cuts. To remain credible we need openly to concede this, but we also need clearly to identify the areas in which Osborne is acting as the ideological vanguardist that Fraser Nelson wants him to be, losing sight of the sober economic reality presented by the OBR.

That this reality is much brighter than the coalition’s spin is a credit to the decisions we made in office. We need to be equally strategic and forensic in our economic decision making in opposition.

I had the piece below published on Comment is Free on 12 June 2010:

David Cameron has argued that our economic fortunes have become “hitched to a few industries in one corner of the country, while we let other sectors like manufacturing slide”. His business secretary, Vince Cable, has since bemoaned “deep-seated problems: a dysfunctional banking system; an economy that is seriously unbalanced”. The previous business secretary, Peter Mandelson, wanted “more real engineering and less financial engineering”. The political consensus seems clear: our economy should be rebalanced away from finance and in favour of manufacturing.

This seeming either/or approach to finance and manufacturing says nothing about business services, which fall into neither category. London’s streets remain, as the Economist notes, “thronged with lawyers, management consultants, accountants and ubiquitous marketing types”. Statistically, these “types” may be classified in our blossoming creative industries, not business services. Concluding that comparative advantage can only accrue to us in finance or manufacturing risks missed opportunities in other sectors. This will be increasingly detrimental as technological advances make ever more goods and services internationally tradable.

 Another problem with an either/or approach is that it presumes finance and manufacturing are substitutes. As we have more of one, it is thought, we must have less of another. The scale of the City of London supposedly explains the decline of British manufacturing. This thinking contains two kinds of misconceptions.

 First, that British manufacturing is in decline. It isn’t. We’re the world’s sixth largest manufacturer. This isn’t to say that performance can’t be improved. But this objective isn’t helped by a false narrative of decline.

 Second, that finance and manufacturing cannot be complements. It makes no more sense to argue that the sectors are inevitably complementary than to argue that they must be substitutes. What we should be asking is: what kind of financial sector would be most complementary to our manufacturing in particular and our wider economy in general? And how can public policy best encourage such a financial sector?

 The passions of political debate on the future of banking generate more heat than light when it comes to these questions. If this were not the case, perhaps, the consensus on rebalancing would give way to divergent views on the proper role of finance in developing manufacturing.

 Green manufacturing is heralded by politicians of all stripes as a manufacturing sector ripe for advancement. Blythe Masters, global head of commodities at JP Morgan, claims: “You can’t have a successful climate policy” – nor, by implication, a successful green manufacturing sector – “without the heavy, heavy involvement of financial institutions.”

 Precisely how heavy and in what form are debates that are being played out on both sides of the Atlantic, particularly in deliberations over carbon trading. Green manufacturers will require capital and ability to manage risk, especially around the price of carbon. These requirements create important roles for financial institutions; no matter what exact form these carbon trading mechanisms take.

 Given the significance of these mechanisms, the relative lack of protest and comment on the highly disappointing European Union emission trading scheme (EU-ETS) by British politicians is as depressing as it is deafening. We are more likely to be treated to glib remarks on the sexiness and potential of biosciences and such like. But, we are unlikely to be told that it is no coincidence the world’s most successful biosciences industry is found in the country – the USA – with the largest venture-capital industry. And we certainly shouldn’t hold out any expectation that the policy implications for British industry of this will be unpicked. Yet, it is this kind of thinking which needs to be spelt out if politicians are to move beyond broad-brush commitments to rebalance our economy.

 The failure, until now, of politicians to move beyond such commitments creates an opening for Labour leadership contenders. The Milibands et al could define this terrain and, in so doing, provide part of the answer to the biggest and most pressing of economic questions: how will we generate the economic growth that will make the deficit more manageable and spread jobs and hope to our communities? Rebalancing the economy sounds good, and in a basic sense is good, but it is an incomplete response to our economic growth challenge. In addition, we require the necessary policy means for the creation of a financial sector that will do most to aid our wider economy, particularly manufacturing.

 It’s easy for Labour politicians to feel good about the provisions of the Climate Change Act 2008 and for Labour activists to cheer wind farms and similar. But without the regulatory infrastructure that will allow manufacturers, through financial institutions, to adequately manage their carbon price risk, we won’t give ourselves the best chance of meeting the emission targets contained in that act, pioneering more advanced technologies than wind farms and really growing employment in green manufacturing. Labour would be best served by a leader who understands that if we want to help manufacturing, we shouldn’t simply bash bankers, but seek to create bankers best able to serve manufacturing – and who is able to convincingly tell their party and country how they would do this.