There is, of course, plenty in Norman Lamont's public
spending plans, announced in his autumn statement last Thursday, with which
Labour can make hay. It will give little in the way of a boost to the economy,
as Mr Lamont's own growth projections testify. He decided not to increase taxes
or borrowing but to stick to the public spending target set months ago by the
Treasury. As a result, every pound of extra spending on one scheme is paid for
by cutting spending elsewhere.
Spending will decline in real terms in several crucial
areas: local government, the National Health Service, defence, education and
training, transport, legal aid and overseas aid. Because of inflation, the public
sector wage freeze of 1.5 per cent next year is a programme of vicious pay cuts
for some of Britain's worst-off workers. Millions will feel the pinch of Mr Lamont's
measures.
In line with the general modesty of the statement, most of
the positive elements of the package are not as positive as they might have
been. The relaxation of the constraints on use of money from council-house
sales should have covered past receipts - all £5,000 million worth - as well
as those for the period between now and the end of next year.
Similarly, Mr Lamont could easily have relaxed the Treasury
rules on capital spending much more than he did and given British Rail freedom
to lease-buy trains where it needed them rather than arbitrarily limiting the
concession. Mere generally, the measures in the autumn statement relating to
transport favour read over rail, which is a ludicrous policy, both on
environmental grounds and because the railways have been starved of investment
for so long.
Add the small scale of the tax-breaks for investment, of the
export guarantee cover and of the direct intervention in the housing market,
and it might seem that Labour should have no problem in savaging the
Government's plans.
But it is not quite as simple as that. Whatever the many faults
in Mr Lamont's approach, there is also no doubt that he has stolen many of
Labour's best economic policy ideas: interest-rate cuts, tax breaks for
industrial investment, an end to car tax, lease-buying of trains, direct
intervention in the housing market, freeing of right-to-buy receipts.
That puts Labour in a difficult position. In economic
policy, big differences in de-gree are differences in kind, and Labour's
recovery package, announced last week by Gordon Brown, is significantly larger
than Mr Lamont's exercise in trying to have it both ways.
But it will do Labour's credibility on the economy no good
if it appears that all the party can say about most of the Government's
economic policy is that it would do the same only more so (or less bo in the
case of spending cuts and constraint).
It was Labour's failure to convince many working-class
voters that its alternative economic policy really would make any difference
to their lot that lost the party the last general election. After Mr Lamont's big
steal, Labour has an even bigger problem than it had in April in
differentiating its approach from that of the Tories. More than ever before,
Labour desperately needs an injection of radical new ideas.
