IF HE had been intending to deliver the bold Budget which the nation cries out for, Chancellor Alistair Darling had a ready-made agenda staring the Government in the face. Banking – wholesale nationalisation with Government directors setting strategy to ensure the banks deliver on the taxpayers’ money. Jobs – a comprehensive job creation programme through house building, transport and other public works and expansion of the green economy. Housing – a massive programme of building to help tackle the homeless crisis, create jobs and stimulate the economy. Taxation – a chance to take advantage of the new appetite for redistribution by taxing the wealthier more and introduced more tax advantages for the less well-off. In his own mantra: “You grow your way out of recession, you can’t cut your way out.” So how well does the real thing measure up to the wish list?
Facing one of the most difficult Budget decisions in the harshest economic climate for decades, with unemployment rising at a record rate to 2.1 million and climbing, Mr Darling appears to have taken some welcome first steps in the direction of the bold agenda. They were not the bold steps which might protect more people from the effects of recession quicker, but they represented a significant change in direction towards what a Labour Budget should look like.
Action on youth unemployment is critical if we are not to witness another lost generation and Mr Darling’s measures recognise that, though their efficacy remains to be tested. But what about the other lost generation of workers in their 40s and 50s whose chances of ever working again are diminishing daily? The additional resources and expansion of Jobcentre Plus is to be heartily welcomed. But what purpose do the offices serve if the jobs aren’t out there to be found? Raking back what’s left of the £12 billion VAT reduction for spending on infrastructure projects and green economy programmes would have been a good idea.
An additional 250,000 jobs in deprived areas is good but a small proportion of the three million or more who may be looking for work in two years time if the economy is not stabilised.
The commitment on social, low-carbon home building is an important signal of a change in direction, though it is not big enough. Crucially, there is precious little sign of any further mechanisms for putting greater institutional pressure on the banks to led the money that will be need to build houses and retain manufacturing jobs before they are lost forever, though there was some help for the construction industry.
Politically, the Budget has successfully positioned Labour as the party for jobs and social justice while fixing the Tories in a double-bind of cuts and inequality. Mr Darling evidently resisted the siren calls of Cabinet colleagues and others urging more swingeing cuts in public spending on the basis that the recession-weary public has now turned to embrace the policy.
That was a sort of boldness that we did not want to see. It was both economically and politically wise to resist stepping onto the Tory coat tails. The public may not be recoiling as strongly against spending cuts but when they think about it more deeply, and start to wonder whether it’s their child’s education that is going to suffer or their operation that will have to wait, reality begins to be restored. But there are sufficient cuts in the Budget package to arouse fears that jobs and not just nebulous efficiency savings are under threat in the public sector which is the wrong policy, not least at a time when there is a collapse in demand in the private sector.
As the Chancellor said himself, it was a Budget “to help people through the recession” and that it may do, for some. It addressed issues such as housing that have been screaming out for action, recession or no recession. Its message was the right one in terms of jobs and fairness. But in not going further in using these extraordinary economic times for bolder, radical steps it will surely be seen by history as a lost opportunity for Labour’s aims.
