THE TORIES WILL STICK TO PLAN A – BUT THAT'S NOT THE ONLY BATTLE

The events of the past two days have seemed like a rerun of the debate last summer, says Pat McFadden MP.

In the blue corner is George Osborne saying the Government inherited a mess and there is no alternative to the path of deficit reduction he has set out. Any sniff of Plan B would put Britain in a similar position to Greece, Ireland or Portugal, so the argument goes.

In the red corner is Ed Balls, now joined by those who signed this weekend’s letter to the Observer, saying the cuts are too deep and too fast and will be self defeating because they will lead to anaemic growth, higher unemployment and therefore a deficit bigger than would otherwise be the case.

In the cake and eat it corner is Vince cable who both lectures Labour on economic illiteracy and justifying his Damascene conversion with reference to Greece and bond yields and then lets it be known that it’s all a bit hard line and that he’s exercising a civilising influence on these born again Thatcherites. In the end though, he’s in the blue corner as any watcher of any House of Commons debate on these matters over the past year would see.

George Osborne was clear on the Today programme this morning that there won’t be a Plan B. He has bet the farm on Plan A. He’s not going to give it up. He has staked all on portraying Britain last year as standing at the precipice, days away from a Greek or Irish style spike in borrowing costs and a collapse in international confidence which only drastic immediate action could stave off. To admit otherwise, to acknowledge that we were not actually in the same position as Greece would be to admit that the pain was not necessary. Unbearable for him and even more unbearable for Vince Cable. They have to talk down our position and talk up the fiscal task in order to justify what they are doing.

Osborne’s plan is to inflict the pain, repeat endlessly that there is no alternative, and offer tax cuts before the next election. Don’t forget that the VAT rise alone raises over £60bn for the government over the course of five years. If he were to take his foot off the gas in terms of deficit reduction it wouldn’t just be an acknowledgment that the pain was not necessary after all – he will also feel it compromises his longer term pre election plan. So anyone expecting a change of course needn’t hold their breath.

The issue in the country is more complex than a debate about how far and how fast we cut the deficit. It is also about what Britain will do for a living in the future, where the jobs will come from.

The Government, having been criticised for having no growth plan, produced one at the Budget. But it had more of a feel of a plan to say they had a growth plan rather than something with their heart and soul behind it. Perhaps this is inevitable. If they believe that a strong Government role in shaping the economy is wrong, it’s not surprising that there were few policies other than the measures on Corporation tax and Enterprise Zones (plus the odd bit left over from Labour like the patent box to aid R&D in the pharma industry).

In other policy areas they have taken actions which run completely opposite to their rhetoric. They have cut support to the regions by two thirds. The regional growth fund is supporting some good projects but it is one third of what Labour was spending through the RDAs.

They have abolished Grants for Business Investment which overwhelmingly went to small and medium sized manufacturing companies.

And they have funded their corporation tax cut by cutting the tax support for manufacturers to invest in new machinery – not exactly in line with speeches about the “march of the makers”. In fact they have made making things more expensive by about £3bn per year.

There is a battle to be fought on this terrain of jobs for the future and it’s not just an economic one. It is also political and social. How does Britain have an economic future that every part of the country can take part in?

New Labour may at times have been too unquestioning about its globalisation boosterism, too cavalier about the impact on the manufacturing parts of the country. But that doesn’t mean we can build a future based on nostalgia. The forces that have meant the death of big record chains, the struggle for bookshops to stay alive and the growth of other ways of buying things and other ways of accessing information are not going to go away.

Labour’s task is not about protection from the future. It is about equipping for the future.

There are opportunities out there to be seized and there is a job to be done.

The transition to low carbon will mean a lot of new equipment, new jobs and new work. Who’s going to do the work, who’s going to make the equipment and who’s going to make it happen?

Our manufacturers have bounced back from recession but we still lack a national vision as a country where making things is a top priority and something we value and want to nurture. Politics has a big role to play in this. How do we get Britain to have more pride in making things and challenge the pessimism that seems to accept decline in this area as a fact of life?

Our creative industries are among the best in the world, with an ability to reinvent brilliance in new generations (go on Adele). How can we do more to support this world leading part of the UK economy which unquestionably gives us a global reach?

Finance is not fixed. The project Merlin targets are already unravelling. The Government likes to say the banks ran rings round Labour. What does that say about what’s been happening since the election? For companies on the ground little has changed. Getting a banking system that better supports the real economy is still a job to be done.

The Government’s planning changes have given business a shiver down its spine. It looks like nimbyism and it smells like nimbyism. But everyone knows Britain’s energy and transport infrastructure need renewing. Either we have a big bold plan for this or we let it get tied up. The Government shows no sign of hunger or determination on this point.

To make these things happen needs a concerted vision from government, support from industry and the commitment of our educational institutions. It’s not all about the deficit. It’s about how we make a living in the future.

This article is also available on the Progress Online website. Posted on 7 June 2011.

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