Strange Case of the People’s Pantomime
Yesterday could have been a memorable day, when two rival political gatherings advertised different views of how Labour should fight the next election. But Ed Miliband in his speech to the party’s National Policy Forum in Birmingham finessed the sellout, and the roar of leftist fury from the People’s Assembly in London sounded like a harmless pantomime. (Photoshop of Owen Jones by General Boles.)
I have written about the Labour leadership’s burial of John Maynard Keynes in The Independent on Sunday today. So far, Ed Miliband and Ed Balls are still trying to have it both ways. They say Labour won’t promise to increase what Miliband calls “day-to-day spending” in the first year of a Labour government. They are, however, reserving the option of promising more capital spending, as Balls made admirably clear in an interview with Sophie Raworth on BBC1 this morning.
I should elaborate on my prediction in the column that this promise will be dropped before the election. There are two reasons for this.
1. It is politically dangerous. Labour can sloganise about “borrowing to invest” all they like, but going into an election promising to borrow more, at a time when the economy is growing, is not going to work.
2. It could be expensive. Even with real interest rates at today’s low levels, the cost of government debt interest is already more than the entire Ministry of Defence budget. As my esteemed colleague Hamish McRae has written today, interest rates are on their way back to normal levels. Borrowing more might have been right over the past three years; it is likely to be the wrong policy after 2015.
Of course, none of this says anything about what will happen after the first 11 months of the new government, the fiscal year 2015-16, which is the year for which George Osborne will announce departmental spending plans on Wednesday.
Beyond 2015-16, the Labour Party hides behind the zero-based review of spending that it says it would carry out in government, although it will promise, at the election, a target for reducing the overall deficit over the following years.
Against such important questions, yesterday’s People’s Assembly was an utter irrelevance.economics, ed miliband, keynesianism
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