The economy: how do we adapt?
There is page after page of newspaper analysis and comment of yesterday’s mini budget but the top line critiques of the package may be rather confusing to those without the time or inclination to dig deeper. Darling is criticised simultaneously for doing too little to boost the economy (there is widespread scepticism about the impact of the VAT cut), for borrowing too much and for raising taxes in two years to help pay for that borrowing (in fact, the Government’s main medium term strategy to tackle the deficit is tight restraint on public spending from 2010 onwards).
There is a widespread view in the print media that the Government has somehow cheated in managing to achieve higher popularity ratings while the economic news worsens. Today is payback time. George Osborne is back on form and no one is asking whether, at a time when we should be boosting people’s confidence, it is responsible for him to say everyone earning over £19,000 will soon be worse off. In fact someone on that salary will – according to the Conservatives’ own figures – lose five pence a week!
But Labour can’t complain. Whatever the merits of yesterday’s package we shouldn’t be starting from here. It’s true – as I have said in the past and Larry Elliot said more elegantly than me yesterday – that most of us played our part in fuelling the debt bubble. It is also true that by wanting low taxes and action to tackle inequality and improve public services, public opinion created the political dilemma to which more Government borrowing was the answer. But politics is about leadership. This Government, and those like me who have advised it since 1997, have to take responsibility for not explaining the real choices and stopping the party before it all got out of hand.
Unless the whole of society is willing to follow the Government’s model and go deeper into debt, it is difficult to see how things will improve. Indeed the best bet must be for a very long period of sluggish growth. Even if things do pick up slightly next year, with interests rates already very low and the Government not able to offer any extra fiscal stimulus, it is difficult to see how a crawl back to recovery will become a march.
So we are back to the question of how we adapt. On the one hand, we have to lower our expectations as private and public sector consumers. On the other, and more positively, we must explore and exploit untapped social capacity.
To take one example, there is already a social care funding crisis. Unless we can reduce unnecessary dependency and increase voluntary effort the care gap will grow into a chasm. Public funding won’t help us out, nor can we expect people to suddenly start saving lots more for their old age. If there is an answer it involves some combination of mobilising voluntary effort, increasing the productivity of public investment (especially so it goes into maintaining people in independence rather than paying for dependency), fostering innovation (so, for example, we can create an effective intermediate labour market of people, many of whom may be retired themselves, being paid for a few hours caring work here and there), and much better collaboration between the different agencies and NGOs working in the field.
If things are going to be as tough as many people suspect, social care is only one of the many needs that are only going to be met thought this combination of pro-social behaviour and innovation. As I will be telling an RSA meeting in Leicester tonight, there couldn’t be a more important time for the RSA and particularly its talented and conscientious Fellowship to be turning outwards and asking what difference it can make.
Punch and Judy politics
As Rosie writes last night’s event with Simon Duffy was fantastic. We have breathed new life into the Albert Medal, hopefully we will do the same later in the year with the Benjamin Franklin. Over the years I believe we can build a strong public awareness of the medals and the particular virtues and achievements they celebrate.
Social Care Minister Ivan Lewis presented Simon with his medal and spoke eloquently about how the work of in Control reflected his and his Government’s values. I have heard several ministers speak over the last few days. Despite the many difficult issues facing Government – most obviously economic volatility – the ship of state seems steadier than it was in the periods between the faux election debacle and the end of the year. I wonder if the next batch of polls will show Labour back to parity with the Conservatives. If they do the media will no doubt turn their guns on David Cameron pointing out that when Tony Blair got a ten point plus lead in 2004 he held it in every poll for three years.
Politics continues to be in a strange place. With Conservatives rattling on about social justice and Labour cracking down on public sector pay and emphasising its toughness of security, the connection between ideology and party is opaque to voters. At the same time people are less and less inclined to believe that any politician has the answers to the big threats and changes of the modern world – whether it’s market turbulence, climate change or violence among young people. In these circumstances the national media, themselves suffering from declining public interest, try to extract drama from politics by presenting it as an oscillating boxing match. Thus someone always has to be up against the ropes; last year it was Blair, then it was Cameron, then it was Brown. Today’s cowering punch bag is tomorrow’s come back kid and so it goes on.
Generally political commentary takes place from exactly the wrong distance. It is neither up close enough to policy issues to really understand or explain what is at stake (Simon and Ivan were talking last night about a genuine revolution in social care but don’t expect to read about it on the front pages), nor is it far enough away to put in context increasingly volatile (and thus pretty meaningless) swings in public opinion.
PS Thanks Matthew for more examples of pro-social experiments. Do try to keep them coming – we have a long way to go to reach the 100!
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