Labour’s argument on the economy was condemned by the association of ‘the two Eds’ with New Labour’s record
The general election result of last Thursday will rightly be seen as epochal: for the future of the Labour Party and the Liberal Democrats; for the future of the Union in the UK; and, quite possibly, after the now certain referendum in 2017, for the future of the European Union itself.
But in one key sense there is nothing very novel about the outcome. This election was fought and won on a long established issue: economic competence. The overwhelming body of electoral research tells us that, for voters, ‘it’s the economy, stupid’. The way the economy matters is, naturally, complicated, and this was certainly true last week. Setting aside for the moment its Scottish catastrophe, the Labour Party will be puzzled why its economic case had so little traction with voters. After all, many of its particular policies – such as the cap on energy prices – resonated with an electorate which is widely hostile to predatory utility oligopolists. Likewise, much of its criticism of the tax system – such as the attack on ‘non-doms’ – succeeded in wrong-footing its Conservative opponents. And those Conservatives had a difficult economic case to make to voters. They have presided over a historically unprecedented slide in living standards; a jobs ‘recovery’ which only thinly masked profound weaknesses in an employment market characterised by increasing job insecurity; and a productivity crisis which lies at the root of the late and uncertain rise in real incomes.
Yet the Conservatives won the economic argument in the only place where it mattered: at the polling stations. How Labour puzzles out this conundrum will be critical to its future. Two delusionary accounts are starting to appear even this early. One is that the Conservatives were just lucky – in a late set of good economic outturns, in the way the global fracking revolution delivered a wider windfall. But economic ‘good news’ only works with voters if it chimes with a wider, convincing narrative about economic competence. A second self-delusionary account is long familiar on the left: that a hostile ‘Tory’ media successfully traduced Labour and spun a story about Conservative economic success. This account was unconvincing in the past, even at the height of press power: the bulk of systematic evidence told us that the ‘Tory press’ largely followed its customers, or at best strengthened their existing views. Now, with newspaper readership in sharp decline, we have good evidence that people are getting their information from more dispassionate sources – the broadcasters – and their opinions from the chaotic, uncontrolled world of social media.
In truth, voters did not need to be ‘manipulated’ into scepticism about Labour. Each landmark election over the last forty years has been fought – and lost – on the record of economic competence. The Conservative breakthrough of 1979 was possible because the three-day week and all it symbolised destroyed confidence in Labour as an economic manager and, more broadly, in social democracy as a form of economic government. It took eighteen years, and the Conservative cataclysm of ‘Black Wednesday’ in 1992, for Labour once again to win the competence argument. And, in turn, it took the Conservatives until 2010 – and the catastrophe of the banking crisis and, above all, the fact that it occurred on Labour’s watch – to recover their reputation after the 1992 disaster.
In the light of this long experience we can see that last Thursday’s election was not so much a novel event as a kind of re-run of May 2010. On both occasions Labour failed to convince voters of its economic competence, though naturally the failure this time was made peculiarly painful because of the Scottish disaster. It was always going to be difficult for Labour in 2015 to make a case for its competence: we are less than eight years on from the great financial crisis, and we know that earlier reputation-damaging episodes, like ‘Black Wednesday’, took nigh on two decades to fade.
Still, parties do not have to just sit round and wait for memories to fade and voters to die. They can make strategic choices in the wake of disaster, for better or worse. Labour’s strategic choices after 2010 were manifestly for the worse. It opted for a new leadership generation that had made its careers in the Blair years and under Brown’s patronage – and this generation was thus irredeemably tainted by association with the many grave economic problems that in the end overwhelmed New Labour. The problem had nothing to do with Mr Miliband’s inability to eat a bacon sandwich elegantly, nor with the failure to choose his brother as party leader; indeed, the latter, as the former ‘Head Boy of the Blair Academy’, is arguably even more tainted by his association with New Labour’s failures. Labour was doomed from the moment ‘the two Eds’ assumed responsibility for economic policy, not because of what they said, or how they said it, but because of who they were: children of New Labour. This is how it was ‘the economy wot won it’ for the Conservatives – and lost it for Labour.
There is an obvious lesson here as Labour picks up the pieces over the next few months. A necessary, though not a sufficient, condition for recovering its reputation for competence is a decisive break with the Blair-Brown generation. Mr Miliband and Mr Balls must be thanked for their services and told to spend time with their (no doubt lucrative) post-political careers. Any leadership contender associated with the past – Andy Burnham, Yvette Cooper – must be decisively rejected. Skipping a generation obviously entails big risks: Labour cannot be certain that an untried leader, indeed an untried leadership cohort, will cope with the brutalities of democratic political competition. But the alternatives for Labour are even less palatable – either repeating the failed strategies of the ‘Eds’ era or just sitting round in the hope that, in due time, the Conservatives suffer another ‘Black Wednesday’.