IF NOT PUBLIC SPENDING, WHAT?

The latest pamphlet from the Labour moderniser pressure group Policy Network, Cameron’s Trap, got the front page lead in the Guardian today and a piece on the comment page by its authors, the historians Ben Jackson and Gregg McClymont (the latter now not only an MP but a frontbencher, which I'd not registered), so I decided to download the whole thing and read it (here).

In some ways, it’s an interesting piece of work. The core of their argument is that the Tory prime minister that David Cameron most resembles is Stanley Baldwin, who held the office in 1923-24, 1924-29 and 1935-37 and was the real power in Ramsay MacDonald’s Tory-dominated National Government of 1931-35. Baldwin, they say, was an astute political player who used the ideology of austerity and the practice of coalition as a trump card to beat Labour – and unless Labour is smart, Cameron could do the same in 2015.

On all this I’d agree, at least up to a point. Baldwin didn’t look such a brilliant tactician in the 1920s, when he contrived to lose the 1923 and 1929 general elections and let in Labour minority governments – and his success from 1931 was as much down to the extraordinary implosion of MacDonald’s Labour government as it was to his own political savvy.

All the same, Jackson and McClymont are right that a mix of austerity and coalition might just prove a winning Tory formula in 2015: I thought that just after the 2010 election. What I’m least sure about is their prescription for Labour now to counter this, the two key points of which are:

• Refuse to be driven into a simple defence of the public sector and public spending and instead mount a patriotic appeal to the nation to improve growth and living standards.

• Put forward a more convincing strategy for private sector growth than the Conservatives. A key element of a credible growth strategy would need to be a widely-supported active industrial policy. In this way “Labour can evade the trap of the ‘tax and spend’ argument of 1992, by making the key measure of governing competence the creation of new and sustainable jobs that improve living standards. Labour is more comfortable than the Conservatives with the idea of an activist state: the Conservatives have reason to fear a political contest organised around which party can best promote growth rather than which party can best reduce spending.”

Surely “defence of the public sector and public spending” are essential components of any serious strategy for private sector growth, for the simple reason that, in the absence of private demand, public spending has to take up the slack to ensure private sector growth? And if the public sector doesn’t take up the slack, what does? Can you get an "activist state" without paying for it? I think we should be told.