Douglas Alexander: time for Labour to stop losing the economic argument

Published Friday, 23 September 2011
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Tories won the initial exchanges on economy, but the political terms of trade are shifting, says shadow foreign secretary

With Labour at least three years from power and the eyes of the world trained on tumbling global markets, Labour's conference in Liverpool, the first in two decades without the imposing presence of either Gordon Brown or Tony Blair, might seem a moment of political irrelevance.

Douglas Alexander, the shadow foreign secretary, admits that for 18 months the electorate has sought only two qualities from Labour: silence and humility.

But now he sees the political framework for this parliament fracturing, and the conference, as a consequence, as a moment of heavy responsibility. "The economy is more fluid so the politics is more fluid. The terms of trade for British politics are shifting … and it is not yet clear whether [George] Osborne will be able to reframe his argument more effectively than Labour."

Alexander, long admired for his strategic analysis, has travelled from archetypal backroom boy for Brown to increasingly vociferous critic of the style of politics championed by Blair and Brown.

Most recently, a book by Alistair Darling lays bare the extent to which Alexander too saw Brown's failings, and also the case for a coup. But speaking for the first time about whether he shared Darling's regret that they had not moved against Brown, he says not: "My judgment was that even in the most difficult days, you can make a bad situation worse."

The economic crisis, he argues, is making voters revise their assumptions about the causes of the turmoil. Voters may be prepared to rethink some now hardwired assumptions about Labour's responsibility for the crisis, but only if Labour shows it too is rethinking and reflecting, including about what it did wrong.

He explains: "There are moments in politics when the common sense of the time is up for grabs. The deteriorating economic situation here in Britain, in Europe and globally means now is such a moment. To seize that moment this week coming in Liverpool we don't need to shout louder, but explain more. Explain what we got right and wrong before the crash, explain how we would get the economy growing and so deal with the deficit, and explain how we will deal with social justice with less money around."

He is remarkably open that Labour has been losing the argument on the economy for three years. "Frankly, after the crisis in 2008, the Conservatives were more successful than Labour in framing a public language that made more sense of the economic crisis, and that helps explain the election defeat. I think we got the policy response right to recession, but the politics wrong in allowing our opponents to suggest that we were in denial about the consequences of the crisis. Taxpayers and voters were worried that we did not get it."

But now the likelihood of flat growth in the foreseeable future, caused by an international crisis, is gnawing at that three-year Tory supremacy.

"[Osborne's] political strategy is being undone by his economic judgment. He hoped to argue that somehow it is all Labour's fault, that somehow the crash of Lehman's was due to the fact that we built too many schools and hospitals. He then wanted to deliver sustained economic growth, a falling share of GDP taken by the state and then produce tax cuts."

Alexander predicts a change of tack from the Tories: "We got a sign of that last week when for the first time [Osborne] referred to the falling growth by reference to what is happening in the world economy. That is a pretty different account to the one he was offering in 2008, when as shadow chancellor he said growth was falling due to Labour policies. So the political frame for the parliament is fracturing sooner than we thought."

He pauses to stress that the shift in the conversation should not create complacency inside Labour. "We will be making a big error if we believe deteriorating economic numbers for the Conservatives guarantees rising political numbers for Labour."

The party, he says, needs to show it can produce a credible alternative. Nothing is going to fall into its lap. It may still be in thrall to a deep-seated misjudgment.

"After two decades in which the centre-left was beating the right, the centre-right is beating the left because the left made a historic misjudgment. We thought after the crisis that the collapse of confidence in the market was matched by, and leads to, a rising confidence in the state. That has been disproved in voting patterns in country after country. We are not entitled to succeed the Conservatives, we have to earn that right.

"Labour has to offer both a convincing account of where growth will come from and to confirm the seriousness with which we recognise the challenge of deficit reduction. They will be the central, defining arguments about political economy in the year ahead."

Rehearsing arguments he has doubtless made more bluntly in the shadow cabinet, he says: "We have a big responsibility to show we get it – in our understanding of the need for the state to be efficient in the spending of public money; in terms of how we talk about taxation, and the need for fiscal balance; to confirm that we understand the aspirations people have for themselves and for their communities.

"There is not going to be a Treasury overflowing with cash, so we have to reimagine what social democracy looks like in a post-recession state."

Labour, as an advocate of the necessity of the state, has a special duty to prevent waste, he says.

With no model of a progressive government in an age of austerity, he asks: "How do you define a role for a welfare state or an active industrial state, and how do you continue to offer a credible politics of hope when the dominant public sentiment is anxiety and pessimism?"

The conversation turns, as it will all week, to Ed Miliband's leadership. Alexander says Miliband has made a very good start but, pointedly, he says it is important that his most important shadow colleagues do more.

"My feeling is that politics is a team sport and so while people will look to Ed this week, I've got a responsibility, Ed Balls has a responsibility, Yvette Cooper has a responsibility. This is the first conference in 20 years that isn't dominated by Tony Blair and Gordon Brown and we – as a new generation of politicians leading the economy – have shown that we're united."

"In one recent poll 35% of people thought I was Andy Burnham. I was very chuffed about that, but it does reinforce the point that we've all got a part to play."

guardian.co.uk © Guardian News and Media 2011
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