Chancellor Rishi Sunak’s speech to the virtual Tory party conference yesterday was interesting because of the framing of his argument around public finances.
“We have a sacred responsibility to future generations to leave the public finances strong, and through careful management of our economy, this Conservative Government will always balance the books,” he said.
“If instead we argue there is no limit on what we can spend, that we can simply borrow our way out of any hole, what is the point in us?”
Sunak’s philosophical case for fiscal constraint indicates a political fear among the Tory faithful: that moving onto the ground of high public spending may play into Labour’s hands. Because if the Tories can spend big over the long-term, why can’t Labour? Polls consistently indicate that the UK public trusts Labour more than the Tories to use public spending for good, but trust the Tories more than Labour with sound fiscal management. If the sound fiscal management part goes out the window, then “what is the point” in the Tories?
Of course, none of this has any basis in reality. The Tories are not and have never been a party of sound fiscal management. Austerity doesn’t have anything to do with “balancing the books”, which in any case is a ludicrous idea for a currency-issuing state and cannot and would not happen. But we should pay attention to the narratives, because sadly they are at least as important to politics as the truth, especially when it comes to public finances.
Narratively, the Tories have dominated the politics of public finance ever since the 2008 crash, consistently forcing Labour to operate on its terms. Despite the Tories chucking all those rules out the window even before the pandemic, Labour has never sought to redefine the terms of debate on public finances, and under Keir Starmer and shadow Chancellor Anneliese Dodds they have even sought to out-flank the Tories as the party of fiscal responsibility.
It seems very strange to be talking about two parties set to compete over austerity narratives at a time of ballooning public spending, but that’s where we are. There is another story Labour could tell about public finance, one which would put the Tories on the back-foot. It’s one that talks about a revolving door state, where public money goes on corporate bailouts and contracts are outsourced to Tory donors, with little scrutiny or transparency. Tories’ spending to help out their pals in the boardrooms, who happily take public money with one hand while signing off on redundancies and pay cuts with the other. Spending which paves the way for privatisation, creating a state that becomes dependent on private providers.
Instead, spend to end the client state; bringing services back in-house, ending the sell-off of our data to corporate vultures, and that any public contracts come with heavy strings attached on pay and conditions. At the same time, talk up how every pound the government spends on local services generates more money which stays in that community than if it goes to big corporates, which extract wealth out of the community. Make the issue what kind of spending, in who’s interest, and for what purpose. If there is no serious attempt to re-define the debate, the Tory politics of spending constraint will dominate, and for that we will all suffer.
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