Ah! Ed Miliband “forgot” to talk about the UK’s still gargantuan budget deficit at last week’s Labour party conference. That explains it – he forgot! Phew! For a moment, I was worried.
There was I thinking the Leader of Her Majesty’s Opposition doesn’t care about putting the UK’s public finances back on the straight and narrow. I was concerned he was deliberately ignoring our budgetary predicament, kicking the acute fiscal problems we face even further into the long grass.
I even suspected that Miliband minor – who by electoral happenstance, namely the rise of UKIP, a split in the right and the collapse of Liberal Democrat support, could win the May 2015 general election on just a third of the vote – had failed to learn the lessons of the Gordon Brown era.
I’d got it into my head the man who could be Prime Minister in just seven months’ time, was planning to be just as irresponsible in office as his former boss, the laughably named “Iron Chancellor”, plunging our national accounts ever further into the red behind a façade of obfuscation, bluster and spin. A ridiculous thought, I know. Silly me!
We’ve been asked to believe that Ed Miliband “forgot” to mention the budget deficit in front of his party faithful gathered in Manchester last week. I’m sorry but I just don’t buy it. Sure, he stood up and spoke without notes for just over an hour. Any self-respecting member of a local amateur dramatics society can do that. Pretty much anyone who cares deeply about a significant subject – the future of your country, for instance, and why you’re the person to run it – should be able to talk without notes for an hour. And, even without a script, you don’t “forget” to include the most important part of your speech.
What you might do, if you’re a cynical image-manager, someone who has spent your entire life at the apex of politics and thinks “ordinary people” are gullible fools, is deliberately leave a tricky passage out of your speech, given concerns about the reaction in the conference hall, then release the contentious omitted words later so they’re still reported in the press.
“In the last four years, since we lost the last election, we’ve learnt hard, important lessons,” Miliband was supposed to have told his party conference, according to the draft of the original speech sent to journalists after the event. “These lessons start with government having to live within its means”.
How would that have gone down in front of an audience full of trade unionists and public sector workers? Not well, to say the least. Given his dire personal ratings, the Labour party rank-and-file aren’t too impressed with Miliband. Had he said that governments should live within their means, he might even have been heckled.
Most hard-core Labour party members, after all, certainly the conference go-ers, are hopelessly soggy Keynesians. Fully signed-up to endless government spending, whatever the state of the public finances, they’re the kind of activists who, back in the day, cheered wildly when spendaholic Gordon Brown, advised by Ed Miliband, shouted “we’re putting the money back in as it’s the right thing to do” and other such inane excuses for proper economic analysis.
Denis Healy was heckled remorselessly in 1976 when, as Chancellor, he told the Labour party conference the UK was in for “painful cuts”. Labour Leader Neil Kinnock was similarly savaged from the conference floor in 1985, as he attacked the loony-left Militant Tendency splinter group within his party.
Both these speeches saw leading politicians advocating passionately, taking risks, telling self-interested people what they didn’t want to hear. Both, in other words, displayed leadership – and, in doing so, changed the political weather. Healy’s words, shot from the hip, helped Labour start the long journey away from absurd neo-Marxist nostrums towards relative modernity. And Kinnock’s Bournemouth barn-stormer was, thankfully, the beginning of the end for Militant.
Miliband, in contrast, isn’t a leader. “There won’t be money to spend after the election,” he failed to tell his party conference. “So Labour’s plan is based on a tough new approach,” he almost said. “Eliminating the deficit as soon as possible in the next Parliament,” was a pledge he didn’t quite make to fellow delegates, not least as many of them would have booed. “Getting the national debt falling and no proposals for additional borrowing,” were also words that weren’t heard from the conference lectern, lest they cause offence, but confined instead to the sterile safety of the post-speech press release.
The UK’s public finances are in a shocking state. Between April and August, the underlying fiscal deficit was almost £2.6bn greater than the same period in 2013/14. That’s right, even though the economy is growing quite fast, we’re on course to borrow more during this fiscal year than last.
Back in March, the independent Office of Budget Responsibility forecast real GDP growth of 2.7pc this year. A stoked-up housing market and rising consumer debt, as well as encouraging signs of higher private sector investment, generated a 3.2pc expansion of national income during the second quarter, with unemployment falling more than the OBR (and the Bank of England) expected.
Ordinarily, faster growth means more tax revenues and less benefit spending, strengthening the national accounts – as lately seen in the United States. The UK’s public finances, though, are getting worse – in part because lower wages mean less income tax.
As a result, Britain is on course to chalk up another £100bn+ annual deficit in 2014/15, the sixth in a row. Even now, with interest rates at rock-bottom, and the market for sovereign debt effectively rigged by virtually money-printing, the British government is spending far more on debt-interest than on defence and almost the same as on education. The stock of debt we must service (the sum of the annual deficits) is meanwhile ever growing. And interest rates can only go up.
A real political leader would outline such ghastly realities to his party, preparing the ground for what will be some very tough years ahead. David Cameron should keep that in mind, as his party faithful gather in Birmingham today. For his leadership on the fiscal front has also been far from stellar. The UK’s national debt, now over £1,400bn, has more than doubled since the Tories took office in 2010. For all the talk of austerity, Chancellor George Osborne has borrowed more in five years than Brown did in ten.
The global economy hasn’t yet properly recovered from the disastrous 2008 credit crunch. The World Trade Organization has just predicted total international commerce will grow by just 3.1pc this year, less that the 4.7pc previously expected and well below the 20-year average of 5.2pc. Across the world, geo-political risks abound – from the ebola crisis to Russia-Ukraine and, increasingly, the Middle East. Stalling global growth, of course, undermines national public finances – particularly those of a trading nation like Britain.
The UK is heading for a budget deficit approaching a whopping 6pc of GDP – roughly where it was when Denis Healy was forced to go “cap in hand” to the International Monetary Fund in the mid-1970s. Voters know in their hearts that the UK has yet to really tackle its budgetary woes. The vast majority aren’t stupid – which is why Miliband wanted his deficit words out there, even if he lacked the guts to put them to fellow Labour delegates.
The Tory leadership, in contrast, has a willing party but lacks the courage to act. It is any wonder the public is losing faith in mainstream politicians?