Cruddas: Labour needs a credible economic alternative

Our guest writer is Alexandra Kemp, chief executive of the West Norfolk Women and Carers’ Pensions Network

Labour MP Jon Cruddas has warned that the £18 billion of welfare cuts in this week’s Comprehensive Spending Review, if implemented, would lead to nothing less than a cultural dispossession of the poor, the residualisation of welfare, and a dystopian future.

The coalition’s relentless recent demonisation of welfare claimants has softened up the public for the withdrawal of the social safety net at the very time when ordinary people, facing the insecurity and reality of unemployment accelerated by the ill-advised speed of coalition cuts, most need the helping hand of the state, and that the real Tory agenda is to decimate public services and shrink the state at a rate unimagined even by Thatcher, he said.

The higher rents and cuts in housing benefit that the coalition will impose on the unemployed and low-paid will result in a massive cleansing exercise, moving the poor out to the most deprived areas of London in a deliberate policy already being dubbed the “Highland Clearances” of the modern age in Conservative circles.

Mr Cruddas called for a new politics of hope over despair and said Labour needs a new political narrative that should mainstream a credible economic alternative against the right’s intellectual powerhouse of ideas. The party should espouse an active interventionist industrial policy and a strategy for deficit-reduction through growth and full employment.

It should do this with with socialised banking, mutuality, fairer wages, green jobs and investment in research and development, strong local government and local democracy, more housebuilding and the avoidance of future property asset-bubbles with a land-value tax and private-rented sector regulation to curb taxpayer-funded soaring rents and tenant exploitation.

He said Labour also needs immediate redefinition as the champion of the working class or there is a real risk that the floodgates will open to extreme right-wing anti-democratic ideologues like the EDF, mirroring the European crisis in social democracy.

The government has returned the UK to pre-Keynsian Orthodoxy, added TUC deputy general secretary Frances O’Grady, via its successful shift of the terms of debate from a private sector crisis caused by underegulated global banks to the imposition of blame and the pain onto public sector workers, the low-paid and the unemployed who did not cause it. People were joining demonstrations with the TUC to voice their opposition.

The coalition’s disabling cuts will lead to a growth in inequality and child poverty and to worse health outcomes. Public sector job cuts and cuts in child benefit, Surestart and the working tax credit will disproportionately affect the incomes and independence of women, she explained, while The Guardian’s economics editor Larry Elliott spoke of the reduction in tax take caused by unemployment and by the banking bailout after a global recession caused by the banks.

He called for the framing of the debate against the “deficit inheritance myth” which favours fast cuts to prevent future generations paying off the interest – yet house-buyers pay off a mortgage over a term of years to procure ownership of their home; and Labour heavily invested in long-terms assets like schools and hospitals, which will benefit the next generation.

His optimism lay in the fact that people are ready to join movements now to oppose the depth and speed of the coalition cuts which the majority did not vote for in the general election.