Sunday, April 26, 2009

The End of New Labour

Several days after the budget of debt, as the UK’s 2009-10 budget statement is being characterized, the analysis is in and it is not good.

The budget made clear that by 2013, net government debt in Britain would be 75% of GDP – more would be spent on debt servicing than nursing. In the coming year alone, the UK Government will need to raise £175billion in loans from the market to fund commitments made to provide government services. However, the independent analysis of the budget suggests that even this is probably a low estimate – it is based on a model for recovery from recession which no one seriously believes. Should the growth forecast be wrong (1.5% in 2010 and 3.5% in 2011), then both taxes need to rise for all considerably and significant and substantive cuts will need to be made in public services. The budget itself sees £15billion in “efficiencies” in the pubkic services next year – coming mainly from health and education.

In its analysis, the left-leaning Guardian newspapers, sees the situation in stark terms – rolling back the state and ending state intrusion in many aspects of life. In 2010, government spending will be equivalent to 46% of GDP. By 2018, this will be reduced to 37.5% - lower than when “New Labour” first came to power in 1998. The Financial Times, who derides the economic growth model on which the budget is based, suggests that there will be a pre-election massaging of the situation with all of the “tough” work to be done after June 2010, probably by a Conservative government.

The cynical analysts suggests that the budget was a trap set to devastate an incoming Conservative government who will be faced by a fiscal crisis and the need to dramatically cut spending across the board, which will make them quickly unpopular – returning Labour to power after a short five year period of recuperation and rebuilding. Only by being honest, clear and very direct about what the problem is and how they will tackle it will the Conservatives win the support of the people for the challenging work ahead of remaking the State – the real challenge of the fiscal debacle.

All agree that Gordon Brown is finished. At the height of his international power at the end of the G20 summit at the beginning of April, he ends the month as a failing leader fiscally and the head of a party which is morally bankrupt - surrounded by sleaze and corruption. No one is openly jockeying for position within the Labour Party, but there are few voices loudly supporting either the party or its leader.

All eyes are on David Cameron and the front bench of the Conservative Party, who do not yet appear like a Government in waiting – not like Blair and Brown did a year before the election they won so convincingly in 1998. They have a lot to do – solidifying their approach to the fiscal maelstrom that awaits them, rethinking the role of the State in every aspect of daily life and considering the future of its relationship with Unions, lobby groups (especially the very powerful environmental lobby, which has convinced people that only governments can save them by stopping natural cycles) and the growing army of (rightly) concerned pensioners. There is a lot at stake. Cameron spoke yesterday of a new era of austerity in which every aspect of life which involves government would have to change so that Britain can again be proud, safe and secure – no specifics. He will need to get very explicit for people to trust him.

New Labour has always been about rhetoric – its name alone is an example. What is “new” about Labour is that it is not Labour as we knew it at all – rather than pale pink socialism, it is pragmatism, idolatry and deceit. Its time is at an end, and this budget was its death knell.

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