By Judy Hirst
1 April 2011
Labour says the chancellor's 'Budget for growth' won’t work, and he needs a Plan B. But where are
the Opposition’s own alternatives for the economy and public services? Liam Byrne talks exclusively
to Public Finance about developing policies for
the long haul
It’s been an accident-prone month or two for the coalition. A bungled Big Society launch, a torpedoed economic recovery, NHS reforms under fire from all sides. No wonder David Cameron wants some quick wins on battlefields far from home.
So with April’s spending cuts kicking in – and the chancellor’s ‘growth’ Budget looking less than convincing – why isn’t the Opposition making more headway? It has been mainly special interest groups, like the unions and GPs, that have been giving ministers a run for their money, not Labour’s front bench.
Labour leader Ed Miliband and shadow chancellor Ed Balls keep calling for a fiscal ‘Plan B’, for when the Treasury’s strategy goes belly-up. But where is the Opposition’s alternative vision for the economy and public services – its own Plan B?
Public Finance went in search of answers from shadow work and pensions minister Liam Byrne, the man charged by Miliband with pulling it all together. It was Byrne, you may recall, who achieved some unwanted notoriety when he left that note – the one that said: ‘Sorry, but there’s no money left’ – for his successor as Treasury chief secretary.
Now, though, he is engaged in an altogether more sober exercise; co-ordinating a root-and-branch policy review that will lay the basis for Labour’s next election manifesto. In short, its route-map back to power.
‘This can’t be a minor respray, it has to be a major rethink,’ he assures me. Labour had ‘lost its way’, Miliband told his party when he became leader; Byrne’s job is to help it renew, and win back trust. A nationwide ‘engagement’ exercise is under way, plus a series of expert working groups led by shadow Cabinet ministers. Their findings will go to the party conference this September.
Some of the groups – including Byrne’s own – will feed into a wider report on the economy, led by Balls. Not that the shadow chancellor has been doing much blue-sky thinking. He’s been too busy lobbing policies on bank bonuses, VAT on fuel and anything else he can find at George Osborne.
The policy review is being directed from Byrne’s offices, in the eaves of Westminster’s Portcullis House. It is rather less commodious than the accommodation he was used to at the Treasury. Deceptively spacious is how an estate agent might describe it. And with just two advisers to support him, there’s not much scope for those legendary 11-page memos he used to issue in Whitehall – stipulating when and how he wanted his cappuccinos and lunchtime soup.
‘Yes, these days I’m more likely to get them their lunch,’ he says ruefully. Opposition has clearly come as a bit of a culture shock. In fact, for 40-year-old Byrne, it’s the first time he has ever not been in office. Elected to represent Hodge Hill – a very deprived, ethnically mixed Birmingham constituency – in 2004, he was promoted rapidly through the Labour ranks, holding the posts of immigration and Cabinet Office minister before arriving at the Treasury.
‘Opposition is bad,’ he tells me. ‘You look at what’s happening to your constituents, and you can’t do much to shield them. It’s pretty soul-destroying.’ On the other hand, it makes him hungry to get back into office: ‘My generation of politicians has an urgency about that.’
When Labour was defeated last May, Byrne – who is well-known for his blunt, candid style – didn’t skip a beat before drawing some pretty harsh conclusions. Labour support had ‘fallen off a cliff’, he told colleagues, especially amongst aspirational working-class families and traditional core supporters. ‘They didn’t think we had the right answers,’ he says simply.
Here is the genesis of ‘the squeezed middle’, a concept he had been leading policy work on at the Treasury. Number 10 never really took the conclusions on board though. ‘We were too cautious about renewing ourselves and squaring up to the challenges when in government.’ And that went as much for the last years of Tony Blair’s premiership (he says that as a big fan), as it did for Gordon Brown’s.
Now, reconnecting with that squeezed middle has became something of an obsession for the Opposition (and just about everyone else, from Clegg’s ‘alarm-clock Britain’ onwards). Key Labour speeches are peppered with references to this demographic. And Byrne, a keen marathon-runner, seems to have cast himself in the role of political personal trainer, urging on colleagues to have ‘a million conversations’ with ordinary human beings, to find out what they want.
He already has a pretty good idea. Both in and out of office, the straight-talking Byrne, whose parents were both public servants, has always been a populist as well as a pragmatist; emphasising issues such as welfare, immigration and ‘national identity’ as core to winning electoral support. The significance of Gordon Brown’s disastrous Rochdale election encounter was, he argues, not what the ex-PM said to Mrs Duffy, ‘but what Mrs Duffy said about Britain’.
For Byrne, listening and engaging are more than political clichés, notes Dan Corry, a former Number 10 adviser under Brown. Talk to him for any length of time, says Corry, and the conversation will turn to Hodge Hill, where he managed to double his election majority by practising what he preaches. In Byrne’s constituency, they’ve been ‘building new social capital’, based on civic activism and social entrepreneurship. The good – rather than big – society, he calls it; one that does not counterpose society and state. Many of those same activists helped get him re-elected: ‘a hugely important lesson about soft political power that we need to learn’.
A comprehensive-educated Essex boy – he grew up in Harlow, and joined the Labour Party at 15 – Byrne feels keenly the loss of constituencies such as these, full of aspirational voters that New Labour once had the ear of. Listening to them, he argues, is the first step to winning back support, in the May elections and beyond.
But what else? Ed Miliband insists that a ‘new politics’ is needed, but has given little indication what it will be. His brother David gave a lengthy lecture last month about Labour – and the European centre-Left’s – ‘deficit of ideas’. I ask Byrne how far the policy review’s critique of the past should go, particularly when it comes to Labour’s handling of the economy.
There are those, in and around the Labour Party, who argue that it doesn’t have a chance of getting re-elected in 2014/15 unless it restores fiscal credibility with the voters. Some, like the Institute for Public Policy Research, have called for an economic Plan B that sets a date for eliminating – not just halving – the deficit. The most hawkish wing of the Labour Party goes further and says it must own up to the cuts it would have to be making.
It remains to be seen where Balls goes with his economic review (he has already shifted ground on the speed of fiscal consolidation). But for now Byrne staunchly defends the deficit-reduction plans that he helped draw up at the Treasury. Their slower pace would, he insists, have led to much more orderly cutbacks, avoided the need for front-loading and helped sustain growth. Instead, public servants are ‘retreating into their bunkers’ as they try desperately to cope, instead of knitting together resources in the way they envisaged with Total Place.
He rejects outright the chancellor’s claim that Labour’s deficit cuts timetable would, in practice, have made little difference to the pain on the ground. George Osborne ‘makes up all kinds of sums’, he says dismissively. ‘He is an extremely conservative, neo-liberal, small-state politician who, unfortunately for those who think differently, is controlling the purse strings.’
However, Byrne does concede that in one key area – the Treasury’s over-reliance on revenue from financial services and housing – Labour changed course too late. Even friendly critics point out that Labour did too little to control the City, which was at the heart of the bubble that precipitated the 2008 crash. ‘We got there in the end,’ he claims. But rebalancing the UK economy to meet the new global challenges remains ‘absolutely fundamental’, he agrees.
For now though, what are shadow ministers doing about the issues that concern people: such as GP commissioning, Sure Start and library closures, benefit cuts and accelerating public sector job losses? Byrne, a Harvard alumnus, with a pre-parliamentary career in IT, banking and business consultancy, almost takes as a personal affront the levels of legislative and policy chaos he is witnessing.
Of Health Secretary Andrew Lansley’s reforms, he says: ‘It’s an extraordinary idea to just give a cheque to doctors, saying here you go, please spend it wisely.’ And wasting £2bn on NHS reorganisation at this point in time is ‘unfathomable’. The ill-fortuned Public Bodies Bill is another ‘appalling example of ministerial incompetence’ that shows ‘a tendency for this government to dismantle accountability’. Labour too had plans to abolish quangos, but the Audit Commission and primary care trusts, however imperfect, would have survived ‘because they make sure government is accountable to the taxpayers’.
Generally, argues Byrne, the government is going hell for leather with its reforms and cuts, and lashing out at public servants on the way. Cameron’s ‘enemies of enterprise’ attack on civil servants is ‘really disappointing’, he says. So is the communities secretary’s attempt to localise blame for the cuts. ‘It’s much more convenient for Eric Pickles if council leaders take the blame for thousands of people being put out of work.’
And on ministers’ drive for ‘any willing provider’ to take over public services, Byrne says he is worried about ‘a race to the bottom’. ‘I’m a pluralist, but if the government forgets to talk about quality and standards, there are great risks.’ The same goes for public service reform. They’ve got it half right, on the power shift out of Whitehall, he tells me; but they’ve missed out the crucial bit; rights and guarantees. ‘It’s a free-for-all. You pay your taxes, but have no idea what you get back in return.’
Closer to home though, on his own welfare patch, Byrne is more circumspect. The Welfare Reform Bill is ‘ramshackle’, one of the most ‘half-baked’ pieces of legislation he’s ever seen. So why didn’t he urge Labour MPs to oppose its second reading, rather than abstain? ‘Well, we’re approaching this in a spirit of national consensus. We’ve got to be on the side of welfare reform.’ And many of the differences are just ‘managerial’, rather than fundamental, according to a member of his welfare policy group.
But there’s something more at stake too. Byrne’s political antennae tell him that, for the squeezed middle, welfare payments are a big concern. ‘We’ve all had hundreds of conversations on the doorstep about whether too much is given out too freely.’ However misguided some of these views, he’s a great believer in the British public’s ‘sixth sense’ about fairness.
This tension, between challenging the most damaging aspects of the government’s programme – while retaining credibility with target voters – risks resulting in a kind of ‘stunned torpor’, according to local government expert Tony Travers. He thinks it might be a bit soon for a policy review, particularly with the electoral landscape so uncertain. ‘Oppositions don’t win elections, after all, governments lose them. The challenge is to come up with just enough to have something to say, but not too many concrete policies,’ he says. An exercise in ‘studied vagueness’ is how one former Labour policy wonk puts it.
Byrne does seem reluctant to talk about the dreary detail of what, for example, Labour would have done about protecting NHS budgets beyond 2012/13, and its impact on non-protected departments. Or whether he would be making the same level of staff cuts at the Department for Work and Pensions as secretary of state Iain Duncan Smith.
He is much keener on the big picture stuff: Labour’s ‘non-negotiable’ values; his deep belief in community; the heroism of many public servants. Asked what advice he has for finance managers having to implement coalition cuts, he pauses before saying: ‘Keep your faith in public services.’ He recalls his dad, general manager of Harlow District Council in the 1980s, having acid thrown over his car for making people redundant during Thatcher-era budget cuts. ‘He didn’t come into public service to do that,’ he says sadly.
Byrne knows that, barring any accidents, the Opposition has got to play a long game. And he’s personally in it for the long haul. Not just on the running track, where he’s training for the Stratford half-marathon in May, and Birmingham’s in the autumn. Being out of office does have its compensations, like playing more football with his three kids, and not having his family weekends ruined by endless studio rounds. But he’s also got to knock his party into shape, and that’s going to take a while.
And regrets? Well, he has a few. Mainly about Labour’s failure to reconnect. And be openly prouder of its record. Oh and yes, he definitely shouldn’t have sent that note. ‘I should have been more cynical about my successors, and realised they’d be the first to break with tradition and reveal its contents,’ he says.
Anyway, it could have been worse. He could have left a note saying: sorry, for the time being, we’ve run out of ideas. But that, even for Byrne, would have been a candid message too far.
