The general election in May 2015 will be a decisive one for the British people, who will decide on whether to elect a government that will continue along the path of austerity or a different administration that offers the possibility of a more forward-looking agenda based on stimulating demand and encouraging fairer growth. Opinion polls have highlighted a possible victory for the Australian Labor Party’s UK counterpart, the British Labour Party, with a September poll suggesting that the party could win a parliamentary majority if the election were held that month. The question that needs to be asked, though, is to what extent would a potential British Labour Government differ in domestic policy from that of the British Coalition Government?
Although Labour has championed such measures as the reintroduction of the bank bonuses tax and the top 50% tax rate, Shadow Chancellor Ed Balls has argued that savings will need to be made and that borrowing is out of the question, while also calling for the 1% increase cap on child benefits to be extended until 2017. In addition, Labour’s support for the introduction of the government’s welfare cap (which imposes a financial straitjacket on how much social security expenditure is carried out) raises questions as to how Labour would be able to fund social justice measures while in office. In its policy review, Labour has not made commitments to introducing new innovations in the field of social security, arguably due to concerns over affordability and making expensive promises. This stands in marked contrast to promises made by Labour in 2010, such as a toddler tax credit for families with small children and universal social care for the elderly.
Earlier this year, Labour donor John Mills expressed doubts that Labour in office would fulfil its pledges of freezing gas prices and breaking up high-street banks, while also arguing that there isn’t much difference in economic policy between the two main parties. In that case, why should voters replace the current governing party with one that will pursue roughly the same economic course? In addition, various pressure groups called on Labour leader Ed Miliband to be “bolder and more radical” in the wake of what critics saw as Labour’s “underwhelming” response to a government budget announcement made earlier in the year.
Does all this mean, however, that Labour lacks vision in terms of what policies it would wish to implement? If its policy proposals are anything to go by, then the answer is no. Amongst its proposals in opposition have included the extension of free childcare from 15 to 25 hours per week, caps on private rent increases, a 200,000 per annum housebuilding programme, and a 33% reduction in the tuition fees paid by university students. Many of its policies are targeted at young people, such as its proposed Compulsory Jobs Plan, which intends to provide work or training to anyone between the ages of 18 and 24 who has been out of work for over a year. Labour’s educational policies are also aimed at ensuring that young people acquire skills needed to succeed in the workplace, which include interesting proposals such as the compulsory teaching of Maths and English up until the age of 18, the provision of vocational learning from the age of 14, and a vocational qualification at age 18.
Nevertheless, while Labour has maintained a steady lead over the governing Conservative Party for most of the past year, the gradual recovery in the economy may encourage swing voters to return the Conservatives to office, particularly if they feel an improvement in their disposable income. If Labour hopes to win the next election, it will need to be more daring in the areas of social and economic policy.
In social policy, Labour could tackle deprivation in local communities by implementing cash transfer schemes conditional on school attendance and the usage of local health services (similar to those introduced by New York City on a pilot basis a number of years ago). Following from the example of the Winter Fuel Payment, Labour could introduce new benefits for pensioners such as telephone and rail fare allowances, together with subsidised holidays like those in Spain. For families, Labour could restore inflation-linked indexation to benefits and tax credits for people of working age, introduce a free school breakfast scheme, and increase the income limit for tax credits as ways of relieving pressure on family budgets.
In economic policy, Labour could encourage consumer spending via measures such as a reduction in VAT, larger increases in the personal tax allowance, and the extension of the Living Wage policy to more businesses. This would be more feasible than debt-fuelled consumption, while increasing the spending power of those on both low and middle incomes and thereby boost demand. Labour could also look into introducing a compulsory form of profit sharing, extending the coverage of this benefit currently enjoyed by around 25% of all employees to the entire workforce. This would not only benefit employees by increasing their incomes, but also provide them with a greater stake in the firms that they work for.
If Labour hopes to win the next election, it needs to present itself as a credible alternative to the current administration, one that will be innovative in both social and economic policy and have a clear, progressive vision for the future. The outcome of the May 2015 election will demonstrate if Labour successfully communicates its message to the electorate or not. There are interesting times ahead.