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The Pro-State Case for Fiscal Responsibility

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Watching the Labour leadership contest has made me, and many others of my political generation feel like old-fogies. After all we had the importance of fiscal responsibility etched into our souls in the run up to the 1997 election. No unfunded spending commitments. Have a long term plan for fiscal responsibility. Work constructively with the private sector towards common goals. Deal with the money question first to give you permission to start talking about public services.

But now, it feels, this is all terribly unfashionable. The sensible voices urging moderation have been portrayed as the forces of small-c conservatism in the face of the popular uprising that, regardless of the result of the leadership contest, has been unleashed by Corbynomics. The purity of the anger of the oppositionalist mindset is such that when someone starts saying something sensible they are portrayed as a traitor or a Tory or both.

My argument, however, is that the more radical position on government spending is not necessarily to tax more to spend more, but to build an entire state machine to focus on the endowment of power and resources to those who have the greatest needs. Fiscal responsibility, not in a dishonest attempt to sellotape a face of electability onto something more dubious, but better to serve the people who depend upon us.

Some facts. First, the government spent £736 billion pounds in the last financial year. That's a lot. Bland statement alert, but who can prove each penny of this is spent in the most intelligent way?

Second, by 2020 we will be spending £55bn annually on debt interest payments. That's taxpayers money we're talking about. And its money that is going to the holders of government debt, not into public services and regeneration. If we focus on paying some of this off faster, we will have more to spend on our priorities for many more years to come.

Third: If the economy grows then there is more cash to play without needing to make any tough decisions. For example, in the four months from March to July 2015 alone, changes to the economic forecasts have increased the expected cash to the government from PAYE receipts by £1.3bn in this year without any changes to policy. That's a lot of teachers and nurses. So let's focus on growth.

Finally, and most importantly, for every person who doesn't turn to crime, isn't obese, doesn't spend their last weeks of life having a miserable time in hospital, isn't overlooked for a promotion because they work part-time, and gets outcome-focussed support when they need it, the government saves money. Imagine if the entire government machine started to focus on prevention rather than the costs of failure.

Until recently, the debate about fiscal responsibility and Labour was ultimately one about tactics. It is because Labour has in the past been perceived as not being very good at the money stuff, that extra special care needs to be taken to ensure we have a sensible economic policy. We should introduce tough rules and triple locks to to reassure people, and then stick to our commitments so that once trust is restored there will be space to get on with the real work.

This is all true, but it isn't enough. It is too technocratic. Instead the challenge for the generation of current leaders in the Labour party is to rediscover the anger for change, and with it the hope that change might actually be achieved. But unlike the SNP in Scotland, and Syrzia in Greece, where anti-austerity populists rise to power and achieve the opposite to what they promised, the Labour movement has the ability to do so in a way that exposes a far deeper vision of the type of Britain it is possible to create.

It's time for Labour to be angry that the finger of blame is being pointed at us for a recession that was made elsewhere. Angry that all too often the individual potential of people is not being realised, which is not only a missed opportunity for them, but bad for our economy and the public finances as well, so hampering our ability to do more in future.

Anger at the massive debt interest payments that should be going to the NHS. Anger that a new division has emerged in Britain depending on whether or not you have access to the London property market. Anger that it is practically impossible to get a pay rise if you want to work part time even if you want less hours for all the best reasons in life. Anger at the lack of protection available to the self-employed. Anger to be called a sell-out if you want taxpayers money to be targeted as effectively as possible or for Britain to be less indebted.

Labour, unlike the Conservatives, are pro-state, which gives them an opportunity to build a government machine designed to empower the vulnerable, not just until the money runs out, but in a way that creates more resources to do so more effectively for more people for longer, while at the same time building a reserve to intervene aggressively when times are tough.

I firmly believe that it is possible to build a government that routinely runs a surplus to save for the nation's future, with at the same time, strong well-resourced and responsive public services and a vibrant, exciting private sector. £736bn this year, remember.

Writing this, an old image floats through my mind. It is of the wall of the parliamentary office where some of the staffers to the then Leader of the Opposition worked in about 1995. On the wall was pinned a magazine cover and on that cover was a headline that said, in large letters "TAX AND SPEND".

It was pinned there as a self-referential ironic statement, to remind whichever other opposition Labour researcher had stuck it up there of the importance of doing the opposite. It confused me at first, and then over time it taught me that the true radical is the one who builds an entire state machine to achieve what is needed, not one that campaigns to tax a bit more here, to spend a bit more there.

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