Industry | 2010.03.25
Alistair Darling's budget could point the way for Britain's renewal | Martin Kettle
No party has created a vision for post-banking-crisis capitalism. Next week the chancellor, now his own master, can do so
In less than two months, Labour may no longer be in government. Even if, by some turn of events, Labour succeeds in remaining in office, Alistair Darling may no longer be chancellor. So it is entirely rational to see his budget next week as at best a stopgap event and at worst an almost irrelevant one, likely to be eclipsed by the almost inevitable emergency package the next government will seek to bring in.
And yet. No budget is ever wholly insignificant, least of all in troubled economic times. Budget day remains one of the few moments in the year when the public pays attention to politics. Moreover, any budget delivered on the eve of an election is still, to put it as neutrally as possible, an unrivalled opportunity to shape the forthcoming campaign.
But what kind of shaping? That is the real question. In 1987, when Nigel Lawson cut income tax by 2p just before the election, and in 1992, when Norman Lamont took 5p off the basic rate, the shaping took the form of the time-honoured tax giveaway. Gordon Brown\'s last pre-election budget in 2005 – the one in which he boasted hubristically of presiding over the longest period of growth since 1701 – was full of electoral goodies too, like free bus travel for the over-60s and a hike in the stamp duty threshold for first-time house buyers.
Bank bail-outs and borrowing mean that Darling has much less room next week for largesse of that sort. Nevertheless, yesterday\'s downward revision in the government borrowing figures provides a slightly bigger platform for the targeted help to industry and to those in work that the Treasury is said to be planning. With receipts up, unemployment down, and borrowing scaled back, it begins to look as if Darling\'s budget may be a larger fiscal opportunity than seemed likely in December. One should never rule out the possibility of a rabbit being produced out of the hat next Wednesday, especially something aimed at the rich that requires David Cameron to give an instant commitment to either back it or scrap it.
Yet the word is that this will not be an earth-shaking budget. These are not propitious economic times, and this is not by temperament the chancellor for anything that smacks of vulgar electioneering. This week\'s Ipsos-Mori survey for the Royal Society of Arts revealed that the public may not yet be ready for tough choices on cuts. Yet ministers fear that the public reaction to next Wednesday\'s speech may be that Darling is not facing up to the issues.
Perhaps surprisingly there are also no signs at present that Brown is pressing Darling to deliver giveaways. After the cabinet storms of the past year, the chancellor has won the political space to be his own master. His public reputation has risen unspectacularly but inexorably. Darling is now a trusted figure, a rare Labour asset at a time when trust in politicians is generally thin on the ground. The televised election debate that was announced this week between Darling, George Osborne and Vince Cable will have the Tories, not Labour, on the defensive.
Events have played to Labour\'s argument that cuts should not be made until the recovery is more secure. This week\'s unemployment numbers and yesterday\'s borrowing figures were a reminder that economic statistics can be unexpectedly good. April\'s first quarter growth figures, however, could be unexpectedly bad. Amid such volatility, Darling\'s caution inevitably goes down better than the more overtly politicised style adopted by Osborne.
The signs are that the general election will resolve into a Gold Cup-style contest between Time for a Change in the blue colours and Better the Devil You Know in the red. Yet if there is to be any point to a fourth term, Labour has to aim higher. Next week\'s budget may prove to be New Labour\'s, as well as Darling\'s, final opportunity to command the public debate for a long time. For that reason, Darling should seize this chance to say something brave and true that his party and his voters will remember for years to come. He can\'t neglect the more immediate practical and electoral demands of the occasion, of course. But next week it could be the larger message that matters as much as the measures.
All parties, Labour included, are struggling to give themselves and the voters a clearer vision of the kind of capitalist society they wish Britain to become in the next generation. This is, in spite of the difficulty, the question of the hour, the question that should be at the top of the agenda in the first general election after the worst economic crisis for 80 years. Labour cannot go back to the nationalising, public sector dominated vision of the 1970s, much though many in the trade union leadership would like that. It will not embrace the doctrinaire privatising and individualist vision of the 1980s, which it rejected. But it should not any longer sustain the Thatcherism-with-a-human-face vision that felt like the limit of the possible in the 1990s, though there are still positive lessons to be learned from it. No party has yet made the 2010\'s, post-banking-crisis, capitalist vision its own. Darling has the chance to do this on Wednesday.
Ever since the credit crunch and the bank collapse, Labour has been inching unevenly towards this new vision of capitalism. Darling himself has played a part, in his Callaghan lecture last year, as has Peter Mandelson. But the "what kind of capitalism" question goes well beyond the narrower issue of the proper role of government that Darling has so far addressed. It extends to questions such as ensuring the place of science, the environment and manufacturing in a balanced economy, the structure of the banks, the principles of a good business, the nature of corporate governance, mutualism and workplace consultation, the principles governing salary levels – and much else besides. It\'s about doing things differently. Labour has a very long way to go here.
It would help if Labour rid itself of its addiction to often irrelevant American thinking and looked more consistently to European models. Next to the sign above their desks that always says "It\'s the economy, stupid", Labour\'s manifesto writers could have one saying "like Germany, stupid". But if Labour wants Britain to be more like Sweden, Canada or Germany, rather than Greece, Italy or the US – and it should – then it needs to say so much more clearly, and to say how we get from here to there over the next quarter-century. If Labour is serious about offering a manifesto of genuine national renewal in May, as it claims, then there is no better place to start than when all eyes and ears are on Alistair Darling next week.
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