Acceptable in the Eighties

Protest the way we used to do it. But times have moved on

TOMORROW sees the end of the phoney war over spending cuts with the announcement of the Comprehensive Spending Review. The coalition has made a number of announcements regarding where the axe will fall. However, much of the debate so far has had a theoretical feel about it.

For the government the cuts are essential if the UK is to avoid the fate of Greece and Spain and to restore confidence in the economy. But as the historian and biographer of Keynes, Robert Skidelsky points out: “It is the most audacious axe cutting exercise in almost a century, double the size of the cuts in the 1930s, equalled only by the 1921 Geddes Axe which cut government spending by 11% in two years.”

For the opponents of the cuts – and they include not just the opposition parties but economic commentators such as Martin Wolf of the FT and Anatole Kaletsky of The Times - the fear is that the Government is going to cut too much and at too fast a rate, with the result that the UK could face a double dip recession.  The Labour Party might move under its new Leader Ed Miliband from the Darling position on how to reduce the deficit, and I hope he does. In particular, I believe that Labour made a major mistake in arguing that there should be cuts to infrastructure spending. Reading last weekend that the cuts were inserted to make the figures add up rather than for strategic reasons was pretty shocking. Ultimately, however, Labour – like all mainstream parties – believes that there has to be a reduction in public expenditure in the future. Probably in the future one of the major counterfactual historical arguments will be what would a Labour government have done if it had won the election on May 6.

But in many ways, all the above debate is pretty academic because the UK Coalition is determined to carry out its deficit strategy come hell or high water. There might be rebellions from some Liberal Democrat MPs and even greater anguish among Liberal Democrat activists, but the die is cast and most will surely be mindful of Benjamin Franklin’s dictum that: “We must indeed all hang together, or, most assuredly, we shall all hang separately.” The strategy is first to exaggerate the pain with talk of cuts as high as 40% in some departments, and then blame it all on the last Labour government with the phrase “the economic mess we have inherited” now seen as a part of any speech by any Tory or Liberal Democrat.

A majority of the Government also see the crisis as an opportunity to shrink the state and finally end the consensus that has dominated politics since 1945. Its members also hope that a combination of their policies and international factors will see the economy pick up and they will reap the political reward at the next election in 2015. Those who hope that the Coalition will collapse under the weight of the cuts are I believe guilty of wishful thinking. Some Liberal Democrats might not stay the course but those who matter at the top like their predecessors the Liberal Unionists in the 19^th Century and the National Liberals in the 1930s have found their natural political bed fellows in their Coalition partners and are in this for the long haul.

How all of this will affect Welsh politics is interesting. For many in Welsh Labour it is a repeat of the 1980s and it just a matter of implementing a ‘dog whistle’ strategy as the core voters lost between 1997 and 2010 return to the fold. For some Plaid activists the cuts environment provides the ideal background to win a Yes vote in next March’s referendum and then to press on to the ultimate goal of independence. It might be tough for those on the receiving end of the cuts but as any good Marxist might argue, it will raise “national consciousness”. It will strip away from Welsh voters the false consciousness that they could ever expect anything from the “London based” parties.

The only problem with this scenario (besides the fact that many Welsh voters probably support the UK Coalition and believe that public expenditure should be cut) is that we are not living in the 1980s. Many of the cuts particularly such as to the passport agency and to benefits cuts can be laid directly at the feet of the UK Coalition. Although ironically in all the heat and smoke generated by the issue of increased university tuition fees for the minority the more important decision to use CPI instead of RPI to increase benefits and pensions in the future was announced with hardly a protest. The major change from the 1980s is we now have an Assembly, which will decide where the cuts in other public services in Wales will be made. We might know the total amount Wales will receive in the next three years on October 20 but it will not be until November that the Assembly government will announce its draft budget and divide up the cake.

Welsh politicians who have to decide how the Welsh block is allocated shouldn’t assume that everyone in Wales will be persuaded by the argument that it is all the fault of the Westminster Coalition. In the 1990s when the national Liberal Government cut Canada’s budget deficit it was often the  provincial governments controlled by the Liberals’ opponents, the Tories, who took the blame . The Assembly will also benefit via Barnett, for example, from the fact that the NHS in England is being ring fenced and Education will also probably not take as big a hit as other departments. In fact, the Coalition government is already arguing that education spending in England will increase. In contrast, some Assembly politicians argue that it is impossible to ring fence health in Wales, which is already heading for a black hole of £1.8billion. In England, the Coalition has promised an extra £7 billion for the pupil premium for pupils from poorer backgrounds. Getting most of their information from the UK media, many Welsh voters will expect similar policies to be implemented in Wales. When they realise that this isn’t going to be the case it will be interesting to see the reaction. When they also read that Council tax is to be frozen in England many will probably ask when they are due to receive another increase of between 3-5% why the Assembly hasn’t introduced a similar policy. Simply blaming the Tories and the Liberal Democrats might not wash with many voters.

Perception is a key element in how voters will react in any given situation. For the Assembly to direct voters’ anger towards the Coalition over the cuts it has to ensure that what it spends is seen as providing good value by the majority of voters and reflects the priorities of that majority. A tall order when it is so difficult to control every item of expenditure. How do you explain, for example, to ordinary voters in my own area that there is no money for essential public services when the Assembly incredibly has just announced £187,000 for a BMX track? Recently in the Assembly, Jane Hutt told AMs that they should all have seen a powerpoint presentation which showed that local government could save £200 million without affecting frontline services. Reading this type of comment, many supporters of the Coalition might argue that local authorities in Wales should already be making these savings .Giving the impression that it is easy to make savings plays right into the hands of those like Tim Morgan of the right wing Centre for Policy Studies who, in a recent pamphlet, argued that the cuts are modest and “a shower not a hurricane”.

Those politicians who argue that it is just a matter of blaming the Tories are living in cloud cuckoo land. Some in the public sector might, because they believe that they can blame the Tories, have left it too late when it comes to actually working out where the cuts should fall.  Instead of starting the exercise when Alastair Darling sat down after delivering his pre-budget report in 2009, many went into denial about the need to reduce public expenditure and waited to see the result of the 2010 election.  To make matters worse, they have failed to engage the public in any real debate of where the cuts should fall and what role should the state play in future in the delivery of services. I hope I’m wrong but this failure to prepare for the worst case scenario could easily lead to politicians being forced to agree to cuts hastily drawn up by officials to balance the books and presented as if there is no alternative.

No one really knows how people will react to the new post-credit crunch environment. It will definitely test to destruction the 1980s argument that devolution would somehow protect Wales from another round of Tory cuts. An argument that is still it seems part of the rhetoric of some politicians on the centre left. The Assembly might be able to stop Coalition policy initiatives in devolved areas but I’ve yet to see a logical explanation of how an elected spending agency, which raises no revenue, can do anything when its main banker reduces its credit limit. While some might see this situation as an argument for more powers including tax raising powers. Others could easily argue what is the point of a political institution that can pass laws but doesn’t have the financial strength to implement them.

Just as a century ago economic and social change fundamentally changed UK politics, the next few years could crucially shape the politics of Wales and the UK for the next century. In 1910 after losing two elections, the Tories were seen as a spent force destined to never win another election against the Progressive Alliance led by the then Liberal Party. Yet only 20 years later George Dangerfield could write his famous book The Strange Death of Liberal England and the Tories went on to dominate 20^th century politics.  It was the Tories rather than their opponents who were able to adapt to the new political environment of a fully democratic UK. By concentrating on the class background of modern Tories and blinded by Tory mistakes during Labour’s 13 years in power there is a real danger that many on the centre left underestimate the ability of the Tory party to win the argument in the long run. The key isn’t what people tell opinion pollsters in 2010 – it is how they will vote at the ballot box in 2015.

Whether history will repeat itself and the Tories will dominate the 21^st century depends how the opposition parties react to the new environment created by the aftermath of the credit crunch. The centre left in Wales has to stop living in a time warp as if society had stopped in 1978. It has to move beyond an essentially conservative approach summed up by that meaningless phrase “clear red water”. It has to stop portraying Wales as the victim and start to think through ideas, which take account of the real economic environment in which we now live. Not everything can be paid for by merely cancelling Trident. Politicians on the centre left also have to be honest with voters when it comes to not only what is possible but also who is responsible for the present economic situation.  It isn’t all the fault of the bankers or the last Labour government. Yes, the bankers made huge mistakes and Labour, despite achieving a great deal, lost its way. But we all share some of the blame for believing that we could live on fantasy island forever.

Politicians have to be straight with people and stop, for example, arguing that frontline services can be protected by somehow cutting IT. It is impossible to protect all frontline services and difficult choices will have to be made. That’s what government is all about. It’s about passing as a leading political commentator has recently argued The Free Bus Pass Test.  It’s about having the courage to tell the baby boomers that they will no longer get free bus passes and winter fuel allowances because the money has to be spent on  protecting services for the under fives – who definitely are not responsible for the economic crisis. It’s about having the courage to tell students that the basic principles of the Browne report on student finance are right.

It’s also about listening to the hopes and aspirations of the majority who often don’t have a voice and not just rolling over in front of well organised campaigns by vested interests who know how to work the system. It’s about ensuring that public money is spent wisely and efficiently. If we are all in this together, it requires politicians leading, as Clem Attlee would have put it, by example. In the 1930s, the only paid politicians in the UK, MPs, took a pay cut that wasn’t restored until the 1960s. It wouldn’t be popular but I would argue we need a similar pay cut today if only to in Voltaire’s famous phrase to “encourage the others”. It’s about realising that voters are fed up with politicians who simply offer no solutions and blame each other.

Not every policy decision of the Coalition will be automatically wrong. Although it has flaws, some sort of pupil premium in my opinion should be introduced in Wales. It also requires centre left politicians to realise that no one is going to take them seriously until they develop a credible alternative economic narrative. Finally it requires politicians who in difficult times are prepared to step up to the plate, make decisions which they believe are right even if they are unpopular in the short term and take responsibility for their actions. Whether we have in Wales a political establishment capable of leading from the front and developing a style of politics situated to the 21^st Century rather than the middle of the 20^th Century only time will tell.