The Politics Behind The Spending Review

Backbencher June 27, 2013 0
The Politics Behind The Spending Review

An overtly political spending review puts the ball firmly in Labour’s court

This week the Chancellor delivered a spending review for government expenditure 2015/2016. The plans raise the immediate question why now? Given the composition of the Coalition is likely to be different after May 2015 (it may even be a Labour/Conservative majority) it has certainly raised questions about the timing of the plans. Of course the answer to that is this is essentially a political budget.  It is designed to ‘wrong foot’ the Labour Party by presenting a clear outline of Conservative/Liberal Democrat spending plans, which carries with it the implicit ‘your turn’ message. This wrong foots Labour because their electoral strategy relies on painting themselves as different to the governing parties, however it is broadly anticipated the Labour Party would stick to the Coalition’s plans. Politically, this does not play well on the doorstep potentially leading to Labour activists having to convince they are different by being the same.

Moreover, it helps to take economic strategy off the electoral agenda. By wrong footing Labour Ed Balls and Ed Miliband will be unable to challenge the governing parties on economic performance at the election. Although Osborne’s plans have clearly not produced the results he intended back in 2010, the Labour Party would be unable to make electoral capital out of this without highlighting the similarities between their plans and those of the governing parties. The spending plans also enable Osborne to remind the electorate that, despite the top-down reorganisation of the NHS, that spending is protected on health. This is significant as it shifts the debate from the divisive reforms and towards growing spending, despite the real-term cuts. Plus the Chancellor can also remind the electorate that spending on foreign aid has been protected, maintaining our internationally ethical obligations. Yet that is certainly one to watch given foreign aid could be re-defined to include military spending in the future.  So, electorally what does this enable the Tories to do? Well it shifts the debate away from the economy and health and towards issues the Tories want to talk to the electorate about. The European Union and curbing immigration (which has cut the number of students coming to Britain) are issues that they feel more comfortable about.

This spending review should be viewed as a political rather than economic strategy. It is political because it will frame the debate heading towards the election on issues the Tories want to talk about, whilst nullifying those they don’t. Of course this means the economy is not benefitting from a fiscally sound strategy that will generate growth. There is broad agreement that the deficit needs to be cut, however it has to be cut coming from a position of strength, not weakness. The strength can only be achieved by growing the economy first. To grow the economy Osborne and Balls need to invest first and cut later. To use an example if one wants to build a business it is sometimes necessary to get a loan to buy the resources needed before making a profit. It is not possible to make an immediate profit. In terms of economic strategy, it is necessary to spend on growing in order to make it strong before it can become self-sufficient, whereby cuts in spending are made.

As such the British economic recovery can only be achieved by following a Keynesian growth model. The austerity model is cutting the economy before it can become strong enough to be self-sufficient. Sadly, only an ideological commitment to the failed ideas of economic neoliberalism are preventing the recovery from emerging.

 

Dr Andrew S Crines is a political scientist at the University of Huddersfield, researching political communication

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