A sketchy start to solving Britain's economic problems
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Version 0 of 1. There are two ways of looking at John McDonnell’s speech to the Labour party conference. One was to see it as a throwback to the 1970s, a return to the days of picking winners, demands for the state to control the commanding heights of the economy, and overmighty trade unions. In a sense, the shadow chancellor encouraged this impression. He used the “S” word – socialism – without embarrassment. He castigated Mike Ashley for the way he treats workers at Sports Direct. He got a standing ovation when he said a Jeremy Corbyn-led government would repeal the latest Trade Union Act, which puts fresh curbs on the right to strike. There was, though, a slightly hidden subtext to McDonnell’s oration. He talked about productivity. He talked about his desire to ensure that the City of London continued to get access to the single market. He talked about an entrepreneurial state, under which the government would enable business to prosper. None of this was remotely scary, and it was taken seriously by the leaders of the business organisations present in Liverpool. Carolyn Fairbairn, the director general of the CBI, thought McDonnell made some good points. As he did. McDonnell’s argument is that there is something fundamentally wrong with the way modern British capitalism works. It invests too little, relies too heavily on low-cost labour, and this has resulted in a unhealthy concentration of wealth. On the debit side, McDonnell’s policy prescription was a bit sketchy. He said a Labour government would borrow an extra £250bn for investment, but omitted to say whether this would be over one, five, 10 or 20 years. Similarly, the idea of levying the national living wage at £10-plus was not accompanied by a timescale. Ultimately, these things matter. One of the chief negatives for Labour is that voters – whether justifiably or not – think the party is too cavalier with taxpayers’ money and tends to think borrowing is the answer to every problem. McDonnell got a rousing reception inside the conference hall, but that’s not the audience he needs to woo if Labour is to win a general election. More work – a lot more work – will be needed to flesh out Labour’s programme and make it appear a sensible, pragmatic solution to the UK’s real economic weaknesses. |