Two reason the Tory ‘growth strategy’ is likely to hurt


9:02 am - May 12th 2011

by Left Outside    


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Sunny’s initial reaction to the Bank of England May Inflation Report is logical, the Tories ‘growth strategy’ isn’t working because:

…there isn’t much demand or household confidence in our economy. And why might that be? Thanks to Osborne’s massive spending cuts.

I’m cool enough to have just watched a recording of press conference.

Over the medium term, the Bank predict lower growth, higher inflation, depressed house-hold consumption and identify the Tories’ big punt on investment and net exports acting as handmaidens of growth.

I agree with Sunny, it is a good idea for Balls to return to his “growth denier” tactic in the short-term.

But in the long-term, Labour’s strategy needs to be able to confront an election in 2015 faced with a growing economy. Assuming the Tories’ growth strategy bears fruit, and that’s a big if, there remain at least two key chinks in the coalitions growth strategy.

1. Consumption contributed none of the growth in 2010, it all came from investment, stock building and net exports. This trend is expected to continue. This means, as Larry Elliot said at the conference, even if we get a recovery in output, a lot of people won’t notice.

This would produce a sizeable constituency who have been hurting without much reward come 2015′s election.

2. An interesting graph is on page 28 of the inflation report. There’s been a large change in the ratio of full to part-time work, with part timers leaping from about 25% to about 27% of the employed. That is good, in as far as keeping people in some sort of employment is a very good thing. But it would become very bad were that to become a permanent fixture rather than a cyclical buffer for the economy.

Here is another constituency who will not be convinced by talk of a recovery, as they are stuck in a no prospect part-time job.

The challenges for the Tories over the next 4 years (but especially in 2015) will be productivity growth below trend, frustrated part-time workers, and anaemic house-hold consumption. If Labour are going to present an alternative strategy they need to outline why the Tory plan is bad.

Duncan has begun to illustrate an alternative based on wage led growth and I would argue that these are the two constituencies which need to be targeted.

Attacking the Tories is good politics, but it has to lead to good policy aimed at the right people, else Labour will remain in the wilderness.

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About the author
Left Outside is a regular contributor to LC. He blogs here and tweets here. From October 2010 to September 2012 he is reading for an MSc in Global History at the London School of Economics and will be one of those metropolitan elite you read so much about.
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Reader comments


1. Margin4error

Should also keep in mind that Osborne sounded out a new agenda for growth last night.

That agenda is to attack the unions for styfling growth – and to crack down on workers rights because that styfles growth. So lower redundancy rights, reduced rights to tackle discrimination, lower pensions – and so on.

This will attempt to frame the debate along the lines of Labour supporting its vested interests in the unions – by defending workers rights – at the expense of growth.

This sort of spiteful attack on workers is what we always get from tories when the pressure is on them – given it does nothing to resolve poor management or the banking crisis it should be attackable.

2. David Patterson

So I have no prospects because I have a part-time job?
You are wrong, unlike pretty much any other period in history I can and have chosen to only work part-time in order to have a better career/family life balance.
Please put your patronising generalisations back into the prejudiced world view box they cam from.

So I have no prospects because I have a part-time job?
You are wrong, unlike pretty much any other period in history I can and have chosen to only work part-time in order to have a better career/family life balance.
Please put your patronising generalisations back into the prejudiced world view box they cam from.

Sorry, I didn’t mean to cause any offence. I have written elsewhere about the advantages that part time-work/casual work can bring. But a lot of people don’t want to work part time, but are doing so because it is better than not working at all.

Part-time work does have less prospects than full time work. Conditions are worse, the roles are often more temporary, it is less easy to build up job specific human capital etc. I don’t think you should avoid the truth of the general assertion because it is not relevant for you.

Most importantly, the two percent jump in a year does not represent a million people suddenly deciding to change their work life balance. It is people being forced into a second or third best option due to the largest recession in 70 years.

David Patterson

You are wrong, unlike pretty much any other period in history I can and have chosen to only work part-time in order to have a better career/family life balance.
Please put your patronising generalisations back into the prejudiced world view box they cam from.

Yeah, because the world revolves around you and you alone and and so you must have been the first person the author thought of when writing this piece.

Yeah, because the world revolves around you and you alone and and so you must have been the first person the author thought of when writing this piece.

BenM It is interesting that the author of the piece graciously apologises for any possible offence, while you are a bit of a tosser about the matter, as if the world revolves around you and you alone. Hmmmm.

6. Richard W

Left Outside,

I don’t think you should worry too much about the fluctuating share of part-time to full-time employment. Maybe pointing out those who are suffering from underemployment in that they are working less hours than they would like would be more relevant. Moreover, during the recession unemployment did not rise as much as one would expect considering the fall in output. Therefore, there must be considerable underemployment in the economy. For this reason, employment growth may disappoint as the underemployed increase their hours before firms take on new workers.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    Two reason the Tory 'growth strategy' is likely to hurt http://bit.ly/jdTFSF

  2. Clint David Samuel

    RT @libcon: Two reason the Tory 'growth strategy' is likely to hurt http://bit.ly/jdTFSF

  3. Don Harrison

    Two reason the Tory ‘growth strategy’ is likely to hurt | Liberal Conspiracy http://t.co/XRnV8kU via @libcon

  4. Daniel Pitt

    Two reason the Tory 'growth strategy' is likely to hurt http://bit.ly/jdTFSF #ConDemNation





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