Bill Jamieson: Populist politics and new promises

Populist politics may stir the blood but we are still paying the price for past spending pledges, writes Bill Jamieson

Leader Ed Miliband receives a standing ovation at Labour's conference in Brighton. Picture: AP

IT IS the most enthralling moment of what some hail as social democracy and others its darkest hour. Barely two weeks into the party conference season and we stand under a roaring cataract of election promises. The conference halls deliver standing ovations. But can the voters outside believe half of what they’re being promised?

These gatherings have long ceased to be conferences in the traditional sense. They are set-piece presentations, solo performances by the party leaders carefully rehearsed and choreographed.

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To learn a 75-minute speech off pat was a prodigious feat of memory by Ed Miliband. It came with faux ad libs, hand gestures and walkabouts at key moments.

All the Brighton platform needed was lighting effects from the National Theatre, the BBC Symphony Orchestra under the baton of Rubin Mehta and a corps de ballet swaying at the rear.

From the Liberal Democrats came a pledge that no-one on the minimum wage will pay income tax if the party is in government after the next election. Free school meals for infants are also promised, a commitment valued at £400 for each child.

The Labour leader seized the headlines with a promise that gas and electricity bills would be frozen for all households and businesses for 20 months if he wins power. The freeze, to be rushed in by emergency legislation, would save a typical household £120 and an average business £1,800 over the period, and would cost the energy firms an estimated £4.5 billion.

The previous day brought a promise of 25 hours of free childcare for children aged three and four for “working families”, up from 15 hours at present. The pledge, says shadow chancellor Ed Balls, is worth around £1,500 per child.

The “bedroom tax” will be abolished. Labour would oversee the building of 200,000 houses. Planning regulations would be relaxed. And there will be a tax cut for small firms, paid for out of higher corporation tax for big firms.

All this followed a series of commitments last week from the SNP leader Alex Salmond that on independence the “bedroom tax” would be abolished, the Royal Mail would be re-nationalised in Scotland and there would be a commission to study plans to halt a rise in the retirement age while the state pension itself would be raised.

Bear in mind that there are still more than 18 months to go to the general election. More of the same can surely be expected.

Whatever happed to “austerity” Britain? It’s gone. It was as good as buried this week. The parties are back to their old ways as if the spending and borrowing bubble never happened.

Few dare to mention that there are £2.5bn of spending cuts still to come. Or that spending continues to rise, that the government’s debt total continues to rise, that the annual charge for debt interest continues to rise and that the pension deficit continues to grow.

All that is yesterday’s news. And why should it obscure the brave new dawn? Barely has a recovery got underway than the parties have reverted to type with spending boosts and eye-catching initiatives while promising, sotto voce, that they will be “prudent” with the public finances and honour the deficit reduction commitments.

All this presents a tricky poser for the Conservatives. They cannot readily dismiss this party conference bounty as unaffordable and launch forth on blanket opposition. This would risk a voter turn-off. They, too, must play the great game.

Has not the moment of crisis passed? Can we not now look forward and aspire to more free things, even though we suspect they may never really arrive? Outside of a clear and manifest mood of national crisis, few parties can hope to succeed on a platform of cutback, restraint and austerity. Voters may be savvy enough to know they will not see half of what’s been promised in recent days. But they yearn for a break from Bleak House politics.

First prize should go to the Labour leader. He knows full well that the cupboard is bare for the type of voter bribery that goes by the way of progressive social democrat thought. Instead, he promises a direct hit on the energy giants. This has the double benefit of seizing on the popular mood to stick one on the energy moguls while offering a straight cash boost to millions of households – universal benefit in all but name.

But was it not Ed Miliband as energy secretary who waved through those renewable energy targets and stuck the extra costs on household energy bills? Now he says he says he will dismantle the very price regulatory regime he helped put in place. But that was the day before yesterday. Let’s not complicate things.

Miliband hinted in an interview yesterday that he might not stop here. Other “predatory businesses” may get the same treatment. But when money’s tight and households have to pay down the debt after the splurge of the past decade, every price increase may come to appear predatory. Who is to say what is predatory and what is not?

The reaction of the energy companies may be considered over the top. But there has to be a genuine concern over the effects of this planned attack and the impact on future investment.

But this is the politics to which Labour is driven when the Treasury cupboard is bare. If more borrowing is out of the question and the Labour leader is reluctant to raise personal taxes for his spending programme, then business has to bear the brunt through higher taxes and restraint on pricing.

But the problem with this is that business does not pay tax: people do, through the extra tax costs which businesses pass on in higher prices. And if prices cannot be raised, business won’t invest.

And what has been the single most glaring weakness of our recovery story so far? The markedly low level of new business investment – where there been new investment at all.

And Miliband’s proposals assume a major exercise of state power: not just control over taxes, but control, too, over private sector prices, while the threat to housebuilders is direct and undisguised: if you don’t build, the state will take away the land. This rhetoric may bring a Labour conference to its feet. But it will also bring to their feet an army of lawyers and the serried ranks of environmental and conservation lobbies.

Populist politics may raise the temperature and stir the blood, but there is a legacy from the previous period of spend and borrow, boom and bust. The reckoning is not just far from complete, it has barely started.

It does not pay to ignore it or pretend it does not exist. Those standing ovations at party conference drown out many sounds. Arguably the most worrying of those this week is that of a deadly boomerang, whizzing and scything on its long flight back to the conference platform.