Patrick Diamond says Labour party needs to do more to show voters it can manage the economy competently and tax fairly
Labour is still hampered by “potentially crippling strategic weaknesses” on the economy that could harm its chances of winning the 2015 general election, according to the man who wrote the party’s 2010 manifesto with Ed Miliband.
Patrick Diamond, who worked for Gordon Brown in Downing Street and is now an academic at Queen Mary University of London, says Labour is “generally not trusted to manage the economy”, which means that many of its policies on other issues are not believed.
In a pamphlet for the Policy Network thinktank, Diamond argues that the economic recovery may benefit Labour because voters believe the recovery is likely to benefit the wealthy. Voters also favour a tax system in which people on higher incomes make a greater contribution to the eliminating of the structural budget deficit.
But Diamond warns that Labour needs to do more to shore up its economic credibility before it can win a wider hearing. He writes: “If Labour is to define the politics of recovery on its own terms, however, it has to address two potentially crippling strategic weaknesses. The first is that Labour is generally not trusted to manage the economy, so there is a danger that its wider arguments are not heard by voters.
“Having conceded its reputation for economic competence in the wake of the financial crisis, the party faces an uphill battle to convince a sceptical electorate that it can govern in hard times. Labour is regarded by voters as a party of fair distribution, not of production and economic growth – yet its entire governing prospectus is predicated on the party’s capacity to return the British economy to expansion.”
Diamond qualifies his criticisms by saying Labour holds several “potential trump cards”. Polling by Ipsos Mori shows that 51% of voters favour the return of the 50p higher rate of income tax on people earning more than £150,000. “There is a ‘progressive majority’ who endorse a fairer system of taxation in Britain,” he says.
Diamond adds that Labour should not place too much emphasis on the cost of living, Ed Miliband’s signature theme in recent months. He writes: “The party would be ill-advised to put so much emphasis on the living standards agenda, since there are limits to how far national governments can affect fundamental movements of prices in globally interdependent energy, housing and retail markets. Moreover, the freedom of manoeuvre available to any government will inevitably be circumscribed: it is possible that further tax rises and spending cuts might be necessary depending on the sustainability of the recovery.
“If Labour is to address the strategic weaknesses in its position, it has to reinforce its credentials as an economically competent party with a coherent growth strategy for the UK economy which does not falsely raise expectations about what Labour can achieve in office.”
He adds: “Labour ought to remember that suspicion of the party’s motives still runs deep within the British electorate, only temporarily alleviated by Tony Blair and Gordon Brown in the 1990s and 2000s. The charge that Labour governments always run out of money evokes powerful historical memories of past crises in 1931, 1947, 1967, and 1976, for which the party was allegedly responsible.
“Labour cannot afford for the electorate to have a hazy view of its credentials for judicious economic management. In truth, Labour will not win power unless voters trust it to manage the economy competently, spend responsibly, and tax fairly.”
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