The budget: Osbornism holds sway. It needs a bold response
|
Version 0 of 1. On Wednesday, the deputy prime minister, Nick Clegg, for the Liberal Democrats and Ukip's Nigel Farage engage in the first of two one-hour debates on Europe, on LBC radio, responding to questions from the audience. The prime minister, David Cameron, and Labour's Ed Miliband have absented themselves from the proceedings. One critic is reported to have said that the occasion is now like a grand prix with a Reliant Robin and a Skoda on the starting grid. It's easy to mock, but what the debates ought to ensure is a thorough examination of this country's relationship with the European Union – an exercise in healthy democracy. It's a level of scrutiny that was patently missing from Ed Miliband's response to the budget last week. Osbornism took on its clearest shape yet. If given a mandate beyond 2015, the chancellor will mount a further savage attack on the welfare state, shrink the public sector to a level unprecedented since the post-war era and come close to causing the demise of local authorities because they will be so underfunded they may be unable to comply with their statutory duties. In the libertarian Osbornian world, traditional Tory paternalism is dead; the individual stands alone. Major public institutions such as the BBC and the NHS, currently constantly criticised, are increasingly subject to the bracing discipline of the market, liberally supported by state intervention when needs must. Osbornism was distilled in the liberalising of the pensions industry, challenging one of the key foundations of the welfare state – the collective sharing of risk. So how did Miliband respond to this most potent of challenges? His response was a tired reprise of his riff on the Bullingdon Club and the justified point that the majority of taxpayers are in the middle of a cost-of-living crisis. What was needed, however, was a compelling counter-narrative; a vision of a different society. A vision that hammered home the fragility of the current "recovery"; the desperate export figures; the housing bubble; low investment; poor manufacturing and productivity rates and the spiralling levels of household debt. In particular, he could have unpicked the vote-harvesting, ideological message behind the chancellor's changes to how we all face retirement. The broken system of annuities undoubtedly deserved to be thoroughly reformed. A pension pot of £250,000 will buy an annuity of only £12,900 a year, until death – substantially less than a decade ago. We are all living longer. So how do we make the money stretch? The Dutch have a collectivised system that works reasonably well and as late as January was favoured by the pensions minister, the Lib Dem Steve Webb. Instead, Mr Osborne's solution is classically Thatcherite, albeit even more extreme. It is down to the individual to deal with the challenges of financing old age, supported by the state pension (or, at least, until the pension market comes up with a new set of products). The budget trio of pension changes, tax cuts and a potential reduction of public spending to an unprecedented 38% of gross domestic product and lower (it is 43.5% now) cumulatively slices away at the role of the state to promote the economic and social wellbeing of all its citizens. That is both socially unjust and poor economic management. As even the International Monetary Fund concedes, the cost of inequality is too high: collectivism matters. So where is Labour's coherent alternative? The party's already slim lead has narrowed in one poll to just 1%. Wages are predicted to rise and the gamble on the cost-of-living argument for Labour is whether voters care more about small signs of recovery than the extent to which their incomes have fallen since 2007. And whether they concern themselves about the kind of society of which they are a part. Do they want corporate and banking bad behaviour constrained; investment in the public infrastructure; affordable housing; attention to the needs of the regions and incomes boosted to generate growth, all of which require a strong and active state? Or do they prefer Mr Osborne's conviction that the market knows best? The task for Miliband is to make that choice dynamic, relevant, clear and translatable into the shorthand of electoral politics. So, what does Mr Miliband have to say? He has some sound individual policies – freezing energy prices and creating a state investment bank. But because he has accepted the framework of austerity as drawn up by the coalition, because he is manacled by Labour's "tax and spend" reputation and is wary of showing enthusiasm for substantial state involvement and collective action, he is mute when he should be more forthright. So, for instance, in housing, the issue is of supply and not just demand; 250,000 affordable new homes are required annually, but the private market can't and isn't meeting the need. Again, as the TUC's Fair Pay Fortnight, launched tomorrow, will drive home, the job opportunities in private sector employment too often exclude security, training and prospects and come at a cost to the health of the workplace – bullying can become the norm when employees are fearful of losing their jobs. Many employers also dislike these terms of engagement. It leads to higher recruitment costs, low skills and underused talent. In other parts of Europe, trade unions are in a positive partnership with employers. In Wales, that social compact is founded in law. In Brussels, the European Central Bank and the European Commission meet twice a year with the CBI and the TUC. If Labour weren't so fearful of the accusation of being too chummy with the brothers, Miliband could point out that this is the modern way to run an economy and it works for Germany. Instead, Osbornism rules and positive, collective co-operation is regarded as anathema because it interferes with employment "flexibility". Mr Osborne hides nothing. He wants a weak and wizened state that is mainly the HQ for outsourced services run by the private sector, services that are frequently paid for by citizens who are benefiting from a very low tax regime. Civic life is sickly and the rich grow very much richer. Alternatives to Osbornism deserve to be better explained. Some within Labour argue that the election can be won if Mr Miliband says little. Depressingly, that may be correct – but it is not democracy. The Labour leader needs to do as Mr Osborne advocated at the budget: "trust in the people", articulate a much-needed different direction for society and take his chance in the polling booth. |