Hello again Alex,
A few reactions to your response.
AS: "Labour’s proactive response - the £20 billion fiscal stimulus, quantitative easing, the VAT cut – has been widely applauded. Those policies, oft-derided by the Tories, have saved jobs and helped begin the process of rebooting the economy. Even the right wing press are beginning to admit that!"
The gamble on quantitative easing - very much a Bank of England initiative - may indeed pay off but I cannot agree with you on the fiscal stimulus nor with your contention that the VAT cut has been "widely applauded". Leading retailers from Next and Marks & Spencer said the VAT cut made little to no difference to the economy. What it has done, of course, is leave Britain with an even bigger budget deficit. Voters and consumers aren't stupid. They know that the VAT cut was a temporary thing that would lead to higher taxation soon after. The feeble recovery may get even more feeble when Labour's taxes rise.
AS: "This wasn’t big, meddling government; it was just good government, targeted government."
There was nothing targeted about the VAT cut. It was given to consumers visiting shops where sales were already discounting by 10%, 15% and more. Some of the more targeted initiatives have not been successful. Grant Shapps recently exposed the failure of Brown's repossession programme. Insured lending for corporates took far too long to be delivered.
AS: "As you point out, the line “Labour investment over Tory cuts” has troubled me for some time; it's a line more suited to 2001, 2005 or even 2008. But in 2009, it appears deliberately deceitful and doesn’t add value to the sort of politics I subscribe to. Whatever the Labour government has done to reduce the effects of the downturn today, it is clear that we will have to pay off our debts tomorrow."
As I wrote yesterday your own candour on this issue is a refreshing contrast to your dishonest leader.
AS: "Today, Britain has a budget deficit of nearly £100 billion. Our public sector net debt is at £798 billion compared with £641 billion a year ago. Things are not good. But we continue to have a sound infrastructure for future growth and London remains of the world’s largest financial centre. I used to live in New York, and people there say “as long as this is a centre of global finance, America will do OK.” It’s the same here."
Of course Britain has many strengths but you are far too relaxed about the budget deficit. Brown loves to say the downturn started in America but that does not explain why the IMF thinks Britain is going to have the biggest deficit.
AS: "Government investments in green jobs and in skills are preparing us for that economic tussle with the emerging economies that will surely follow shortly after the imminent upturn."
I have never liked the idea of government 'picking winners' and I don't like the talk of green jobs either (from you or my own party). So much greenery is very expensive and it's the poor - eg through higher energy costs - that end up paying the long-term bills for this.
AS: "You have to remember that I’m a socialist, and I believe in sharing wealth amongst all those who contributed to its creation, including teachers, nurses and cleaners. I would favour a small increase on corporations tax to help pay for the training and infrastructure investments, and I would also support bringing the inheritance tax threshold down to £250,000."
I believe in sharing wealth too but that's what Labour has done for most of the last 12 years and average public sector remuneration now exceeds (according to some estimates) private sector remuneration. That's not fair and your priority is completely the wrong priority at this time. Creating wealth must now become the over-riding goal and your suggestion of higher corporation tax is only going to disincentivise that.
And in terms of spending even more - now on training and infrastructure - you first need to end the waste in what you already spend.
AS: "I would also like to see - in the longer term - the decriminalisation of soft drugs and prostitution - subject to regulation that will improve education and health measures on those tricky issues, and with a tax levied accordingly."
Wow! Some of my libertarian members will probably agree with you on that policy but I can't. You're only likely to increase the use of soft drugs while leaving the illegal market in harder drugs even more active and predatory. But that's a whole other discussion!
AS: "I do not approve of sending 50% of young people to university. It’s a utopian ideal, but the government should remember that we need vocational training as much as academic training. When we are re-growing our economy, we will need plumbers and mechanics and builders more than ever. So I would like to see more investment in early years learning and I would like to see the current upside-down pyramid of educational investment – with more money going to universities than early years – turned on its head."
We are in agreement! Have you seen the work done by Iain Duncan Smith and your party's Graham Allen MP on early intervention? Very persuasive.
AS: "If I were elected Prime Minister tomorrow, the first thing I would do would be to reduce my salary from £197,000 to the national average income of £27,000. I think Parliamentarians get enough of our money, don’t you?"
Gulp. Is this your secret plan to discourage all other contenders for the post-defeat Labour leadership contest and claim the crown yourself?!
***
At this point in our discussion I'm left with the suspicion that you don't appreciate the scale of the budget deficit and the sacrifices that are going to be necessary. I don't think you realise that - once again - Labour has led Britain into economic crisis. There was nothing in your response that makes me think that there is a real programme within the Labour Party that will return Britain to budget balance.
Over to you...
Tim
