• A Shadow of a Shadow Chancellor

    Ed Miliband’s choice of Alan Johnson as his Shadow Chancellor is, for all the obvious reasons, likely to define the opening period of his leadership. It has been welcomed in some quarters as evidence that he is very much his own man and is determined to maintain control of economic policy himself. Not for him, it is said, the establishment of a rival centre of power at the Treasury.
    But there is clearly a downside as well. It was clearly identified by Alan Johnson himself, in a way that drew attention not only to his lack of any knowledge of economics, but also must surely have raised questions about his political acumen. Ministers must have salivated at his admission that he would need to consult “a primer on economics”.
    The appointment raises further issues. The challenge for incoming ministers (and shadow ministers) is always to equip themselves with enough knowledge about their brief to allow them to make a proper assessment of the advice that is proffered by their expert advisers. Too often, ministers come into office armed only with a few simple slogans and find that within a short time they have been persuaded that they are not a satisfactory basis for policy. From then on, they are lost and become the prisoners of their advisers.
    This danger is particularly acute when it comes to the Treasury. Economic policy is not something that can be mastered by “reading up” for a week or two. For one thing, who decides what should be on the reading list? There is no
    widely accepted orthodoxy that need only be understood to be safely adopted, and even if there were, the recent history of such orthodoxy does not engender great confidence. An incoming Treasury minister (or shadow minister) will be entirely at the mercy of official advice unless he or she has enough expertise to be able to evaluate that advice.
    The appointment of Alan Johnson and the sidelining of those Shadow Cabinet members who have some real expertise in economic policy suggest strongly either that he is to be a mere cipher and Labour’s economic policy will be made elsewhere (and possibly by Ed Miliband himself), or that Labour is content to have its economic policy decided by officials. If that is the case, Ed Miliband’s Labour party will have failed to remedy one of New Labour’s central weaknesses. It was New Labour’s failure to question free-market orthodoxy that helped to usher in the recession and that ultimately did for them electorally.
    On surely the most important issue of the day, it is essential that Labour is able to mount an effective assault on the coalition government’s constant assertion that “there is no alternative” to deep and damaging cuts in public spending and to offer a coherent and persuasive alternative view. It will not be enough to rail against the damaging impact of the cuts; that impact will be obvious to everyone, but will be trumped as an argument by the contention that the deficit makes the cuts inevitable.
    What Ed Miliband’s Labour needs to do is not only attack the unfairness, harshness and ideological bias of the cuts. They must also argue that they are the wrong response in economic policy terms to the crisis – that giving priority to the government’s finances and to getting their deficit down in the short-term rather than restoring the health of the economy as a whole in the longer-term is to ensure that the recession is longer and deeper – and the deficit more persistent – than they need be.
    There is of course a perfectly legitimate economic policy argument to this effect. It is supported by a great deal of expert opinion around the world and by the lessons that should be drawn from what we know about what caused the recession.But already, the evidence is that the argument is being conceded. Nothing is more depressing about our economic plight than the success the Tories have had in establishing in the public mind that it was “Labour’s recession” and that they have been left to clear up the mess by imposing unavoidable cuts.
    To fail to engage the coalition government effectively on this issue is to concede a huge amount of political territory for no good reason. Sadly, the appointment of someone who, whatever his other strengths may be, has to be guided towards whatever current orthodoxy demands suggests that Labour will – at best – bide its time in responding to the central political issue it confronts.
    Bryan Gould
    9 October 2010