Peter Kenyon

Labour's first post-election budget: how to avoid a Balls up

Britain needs a payrise. I would go further. The world needs a pay rise. The challenge is where to start. With less than 200 days to go to the next UK General Election, there is much to do. As set out the UK Labour Party's economic policies do not add up. This is not because of profligate, irresponsible policy commitments. Labour as the only prospective party of government post-May 2015 can not afford that luxury.

Extravagant tax giveaways as proclaimed by outgoing Conservative Prime Minister David Cameron at his party Conference last month are just that, giveaways that you have no hope of delivering. His only hope and that of his flailing party is that enough of the electorate will believe him to reduce an inevitable loss of seats in just over six months' time.

So the electorate needs help to refocus on jobs and growth. Ed Miliband made an interesting appointment last night bringing back Pat McFadden MP on to Labour's frontbench to lead on Europe. Britain's membership of the European Union is the bedrock of future jobs and growth. Miliband reminded people of that in his Conference speech, remembered sadly more for what he forgot to say than what he uttered.

Unless I'm mistaken, he did say:

David Cameron doesn’t lie awake at night thinking about the United Kingdom. He lies awake at night thinking about the United Kingdom Independence Party. UKIP. That is why he is doing it friends and I say pandering to them is just one more reason why he is not fit to be the Prime Minister of this great country.

Better together, across the United Kingdom. But also better together, true to our traditions of internationalism. And nowhere is that more true than when it comes to Europe and the European Union. Friends, let me say it plainly: our future lies inside not outside the European Union.

We need to reform Europe. We need to reform Europe on the economy, on immigration, on benefits, on all of these big issues. But here is the question for Britain. How do we reform Europe? Do we reform Europe by building alliances or by burning alliances?

Indeed. So Labour is up for a head-to-head on EU membership with UKIP and UKIP-lite (formerly the Conservative and Unionist Party). Cameron's kami-kazi tactics over EU immigration levels are a big boost for Labour general election strategists. As suggested by Polly Toynbee in today's Guardian newspaper,  Cameron has reached a point of no return:

David Cameron has crossed the Rubicon. There is no going back. By proposing to limit free movement of labour from the EU he has planted himself on the side of the outs, as José Manuel Barroso made crystal clear in his Chatham House speech on Monday. The other 27 nations will never agree: if limiting national insurance numbers for EU workers is Cameron’s new red line then he has joined the Ukip wing of his party, who won’t let him renege.

This is very unsettling for UK jobs and growth. But every cloud has a silver lining. Labour has an opportunity to be much clearer about its relationship with business, and the role of markets.

Miliband set out a theme in his 2011 Conference speech, a year after being elected Leader:

Let me tell you what the 21st century choice is:

 Are you on the side of the wealth creators or the asset strippers? The producers or the predators? Producers train, invest, invent, sell. Things Britain does brilliantly.

Predators are just interested in the fast buck, taking what they can out of the business.

This isn’t about one industry that’s good and another that isn’t. Or one firm always destined to be a predator and another to be a producer.It’s about different ways of doing business, ways that the rules of our economy can favour or discourage.

Now is the time to spell out more precisely what that means for UK-based businesses and what is in store in terms of an emergency budget next summer. Will it be austerity-lite or Growth4All?

Miliband has to create scope for liberating the UK economy, and local government in particular from the tyranny of Conservative and Liberal Democrat budget cuts. That in part depends on building alliances in the EU that encourage the SDP, Labour's sister party in Germany, and part of a grand coalition led by Chancellor Angela Merkel to back growth measures to help the Eurozone avoid Japanese-style deflation.

Miliband's uncompromising stance pro-EU membership is a start. This will be welcomed by British business. But as they would say: "There is no such thing as a free-lunch." The relative "success" of the UK economy in terms of growth, compared to our EU-partners, masks a dirty little secret - a historic prolonged fall in real wages in the UK, which directly affects millions of UK voters.

There is an understanding to be reached with both business and voters. Labour will set out a strategy to ensure a payrise for Britain. In doing so it will help make the case for a payrise in Europe too. Business can not be expected to agree a living wage plan if government is not practising what it preaches. Ed Balls should be tasked with setting out a budgetary plan to enable all government departments and other levels of government to pay a living wage by 2020, or sooner should economic conditions permit. Firms willing to pay their staff a living wage should be offered a tax break for each financial year the government works towards its own implementation target. Firms that claim poverty beyond that date should be put on notice of the introduction of an Ecuadorian.

That's the moment HMRC will be empowered to check the books of any business claiming poverty to see just where its money is going.

In the meantime, any business with staff obliged to claim working tax credits to make ends meet should expect to have the details of what the wage subsidy adds up to published annually in a report to the House of Commons Public Accounts Committee. That should keep journalists on the red-tops busy with business scrounger stories in the meantime.

Over to you, Ed.

PS. I leave you to draw your own conclusions about the role of collective bargaining and sectoral arrangements in helping people secure better terms and conditions to cope with cost of living increases.

Ditto: investment especially in housing.

 

 

 

An austerity Parliament: Labour's opportunity

Baying for blood might increase newspaper circulation. It is not going to save parliamentary democracy. Calls for Speaker Martin's head are an inglorious distraction from thinking though who and what must follow the rotten, corrupt state of our party politics.

Rank-and-file members of political parties are virtually the only people who remain truly honorable in our party political democracy. It is they who should have a dominant say in how events unfold. The industrial wing of the Labour  Party - the trade unions will hopeful take the opportunity to remind both government ministers and PLP representatives of how many of their members are at risk of summary dismissal for making an error on an expenses claim, let alone an extravagant or fraudulent one.

Weeding out the wannabees in Labour's ranks is the task of the moment. But not on the back of Torygraph reports. I'm currently getting stick from Labour Party members for putting too much faith in the review of MPs expenses back five-years to be overseen (I understand) by the National Audit Office. The Labour Party (whether it's Head Office, regional offices or CLPs) does not have the resources to weed out the possible frauds and even the property scams. Extravagant claims are probably easier to spot. I first called for NEC action involving CLPs last Sunday here. The 'within the rules' defence was shot long before this scandal broke by the Green Book guide to parliamentary allowances, for anyone who had bothered to read it. Ministers who persist in using that defence deserve summary dismissal from government. Failure to repay must occasion deselection, with the worst offenders banned from restanding at all. I have admiration for the voluntary repayers where there is no question of misleading the Fees Office. But it should be left to CLPs to decide in the first instance.

However, that only deals with the past. What about the future? Is the public really going to stomach second-home purchases at the tax-payers expenses? That's a subject about which the Tories are currently unremarkably quiet. Oh yes, extravagant claims must be repaid, but building a property portfolio from the public purse, oh, no - wholly and necessarily incurred on parliamentary duties. Does the Labour Party want to continue to field candidates for Parliament that have Establishment aspirations? This touches on levels of pay, as well as expectations about London accommodation for out-of-London MPs. I suggested a lodging allowance linked to voting records here. Then there are questions about the size of Parliament itself and the Executive (or government). Personally, I would not follow the Conservative herd demanding a cull - fewer MPs in the next Parliament. Instead there should be a major reduction in members of the second chamber. A constitutional reform package ending prime ministerial patronage, slashing the size of the Executive and minsters pay and perks, abolition of the House of Lords, the creation of an-elected slimmed down second chamber, recall rights to enable citizens to demand by-elections to hold elected members of both chambers to account, reduced roles for the Whips would all seem essential to improve accountability and reduce costs. This is a national debate Labour should be leading. 

Austerity for the nation demands an austerity Parliament and executive starting now. If that means some MPs have to take out new mortgages to pay back some of their ill-gotten gains - tough. At least they will learn first hand another practical lesson about what the credit crunch means for working people when your income is frozen, cut, or gone.