Why Labour’s economic policy needs independent research

1:58 pm - November 22nd 2012

by Don Paskini    

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LabourList’s Mark Ferguson notes that “Adopting a Tory-lite line on the economy may pay polling dividends for Labour.

But then again, it might not. And that – in electoral terms at least – is Labour’s big dilemma. It also shows why it’s foolish to make policy calls on the basis of polling (not least because of the law of unintended consequences).”

I agree that this is a dilemma, but I don’t see why it follows that it is foolish to make policy calls on the basis of polling. Instead, this seems like a case where further research would be particularly valuable.

There are some people in the Labour Party who believe passionately that Labour needs to adopt a more fiscally conservative approach. Others believe that Labour needs to develop a fiscally realistic approach while avoiding being locked into Conservative spending limits. Still others think that Labour needs to be stronger in resisting the cuts and spelling out a more radical alternative.

So Progress are spending money on roadshows about ‘what would we give up to get universal childcare’, while the Fabians hold a Commission on Future Spending Choices, and the trade unions fund the new Class think tank. Substantial amounts of time and money are poured into this in order to influence the Labour leadership.

This is not an effective use of resources. No pressure group will pay for research which asks the toughest questions of its own proposals, or which doesn’t find support for their cherished causes.

In the Unfinished Revolution, the late Philip Gould wrote about how voters in the focus groups in the mid 90s talked about their willingness to pay more tax. This didn’t fit with what Labour modernisers wanted to hear, so they simply ignored it and assumed that people were lying.

Instead, if these different groups decided to pool their resources and work together, then the results could be much more interesting. Each could come up with their best messages, and then these could be tested against each other both quantitatively and qualitatively to see which ones connected with the public.

They could develop the toughest attack messages against each other’s proposals, and see whether these moved the focus groups and polls. We could really start to find out whether spelling out plans to cut services for pensioners would be applauded as Labour ‘getting it’ about the need to reduce spending, whether working class people would rally behind a strong no cuts message, whether Labour could win greater support by pledging to cut less and tax more, and all the other assertions which are regularly made.

No piece of research will ever prove what a political party should do. There are all sorts of reasons why it can be right to do something which seems or is unpopular with a majority.

But rather than wasting money on preaching to the converted, wouldn’t it be refreshing if different groups which passionately believed that their approach will help Labour win the next election were prepared to work together and put their ideas to an independent test?

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About the author
Don Paskini is deputy-editor of LC. He also blogs at donpaskini. He is on twitter as @donpaskini
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Reader comments

” Why Labour’s economic policy needs independent research ”

What, by people who understand economics and stuff?

The issue here is an ongoing one. Three different groups within the Labour establishment are talking to themselves and eachother – not the wider public.

But good research is out there and Labour doesn’t actually need a lot of new research done. It just needs to look at what is there and form an industrial policy based on existing results. I appreciate that “industrial policy” is a term not much in fashion in the UK. We like to imagine that the economy does its thing without guidance from above. But it still needs a framework and Labour should draw that up.

I suspect that whether this framework means more borrowing or less in the mean time will matter less than actually presenting a prospective future that the public would appreciate.

So here’s a start. Howabout a state infrastructure bank to invest up to £100billion in building economic infrastructure (ports, roads, railways, etc) to raise our global standing in this from 24th to top ten? (WEF ranks us 24th).

So ‘research’ doesn’t mean ‘research into what economic policy would be best for the nation’, but ‘research into what economic policy would pull in the votes’.

Of course unless Labour gets power it doesn’t matter a toss what economic policy it has. But ‘putting economic ideas to the test’ must mean more than finding out whether voters like them or not. Or have you completely lost touch with the real world?

You’re so cynical you don’t even realise how cynical you are any more.

“So ‘research’ doesn’t mean ‘research into what economic policy would be best for the nation’, but ‘research into what economic policy would pull in the votes’.”

There is lots of research going on about what economic policy would be good for the nation, but very little about how to persuade people to back good ideas, rather than bad ones. I think we need both, because as you say, it doesn’t matter what Labour’s economic policy is if they don’t get elected.

“But ‘putting economic ideas to the test’ must mean more than finding out whether voters like them or not.”

Sure, but I’m not suggesting that we abandon any work to develop new economic ideas, merely that we also find out what people are thinking and what the best ways are to persuade them to support good ideas.

5. gastro george

“How about a state infrastructure bank to invest up to £100billion in building economic infrastructure (ports, roads, railways, etc.)”

Or fast broadband? Or green power? This is all low hanging fruit.

The less Labour listen to the Blairite rump in Progress, the better. People will always ultimately prefer real Tories to Labour lite-Tories and, hey, their economics policy is demonstratively a living pile of poo, so will end in disaster in any case.

On that attractive low hanging fruit idea, IMO the voting public have become a tad sceptical by now about gargantuan public investment projects.

More of those splendid PPI projects for the NHS anyone?

What of Patricia Hewitt’s inspired idea to create a vast national database of personal medical records costing a mere £12.7bn.

The claimed benefit was that “authorised” personnel could look up a personal medical record from anywhere, all very handy for treating someone incapacitated by a heart attack while on a visit far away from home territory. Of course, there were downsides, like compromising patient confidentiality bringing blackmail risks but there are downsides to practically everything good.

Billions were wasted on the project before it was shut down.

Stuart Holland was an early advocate of another state investment bank: “However it was with the idea of a state planning agency that [Stuart] Holland (*) hoped to show the new possibilities open to a more just economy. He looked to the Italian example of the IRI (the Industrial Reconstruction Institute), set up by Mussolini and used by subsequent Italian governments to develop the economy. This had, of course, already been tried through the IRC (the Industrial Reorganization Corporation) set up as part of the National Plan [in Britain] in 1966, but the IRC had been too small to have much effect on the British economy. A revamped IRC in the form of a National Enterprise Board would, however, have a major effect in stimulating the private sector through an active policy of state intervention and direction.”
Source: Geoffrey Foote: The Labour Party’s Political Thought: A History (Palgrave, 1997) p.311.

(*) Stuart Holland: Labour MP for Lambeth, Vauxhall 1979-89, political assistant in Downing St to the PM 1967/8, and shadow Financial Secretary to the Treasury 1987-9

Try comparing what happened with Credit Lyonnais in France, the largest bank there and state owned.

“By July 1997, French finance minister Dominique Strauss-Kahn could admit that the bank had probably lost around Ffr100 billion, or around $17 billion, in its colossal spending spree. Independent commentators have suggested that the debacle will end up costing the French taxpayer between $20 and $30 billion.”

7. gastro george

Well PPI is hardly public investment, more a dog’s breakfast, and bound to end in tears.

It’s a bit too easy to pick a few examples of failure. What we generally have in the UK is a failure of management (and badly advised politicians) to deliver effective strategic policy. You’re not telling me that the Germans, the French, etc., think that long term strategic investment is a waste of time, and doesn’t benefit the country, are you? OK, mistakes will be made, but to refuse to plan and invest is a recipe for long term decline – which is exactly what we have.

Using PFI schools and hospitals as an example of failed infrastructure investment is surreal. The quality of infrastructure in the UK in both areas is vastly higher than it was in 1997. The programmes worked.


“Using PFI schools and hospitals as an example of failed infrastructure investment is surreal. The quality of infrastructure in the UK in both areas is vastly higher than it was in 1997. The programmes worked.”

But at what a cost to taxpayers. Try this report in the Guardian on the public projects funded by the Private Finance Initiative:

The cost of Britain’s controversial private finance initiative will continue to soar for another five years and end up costing taxpayers more than £300bn . .

The 717 PFI contracts currently under way across the UK are funding new schools, hospitals and other public facilities with a total capital value of £54.7bn, but the overall ultimate cost will reach £301bn by the time they have been paid off over the coming decades.

Don, I’ve re-read your piece and it’s not about how to persuade people to support good economic ideas – you don’t even mention that – it’s about how to identify what economic ideas people are willing to support, so that we can present these ideas back to them and (hopefully) win the election. So politics is like football: you adopt whatever tactics will win the game. Unfortunately, the real game is not the election but the real economy out there which we our children and grandchildren are going to have to live in, and it’s in a lot of trouble right now. Focus groups may tell us how to win an election (very necessary), but they won’t tell us how to fix the economy once we get there. I’m somewhat reassured, though, that most of the comments here have ignored what you said and preferred to discuss how to fix the economy.

Actually, I think Blah got it right in the very first comment.

11. margin4error


Actually a good report in May found the Department for Education (in its various guises) actually managed a really good return on PFI projects between 1996 and 2010. They averaged a cost over the lifetime of the contract of less than £3.50 for every £1 of upfront private investment.

That’s pretty impressive because a mortgage of 30 years during that time would tend to require a home owner to pay back between £2 and £3 on every quid borrowed from the bank to buy the house – and a bank offering a mortgage doesn’t have any of the risk attached to building the house, or have to maintain the house over the lifetime of the mortgage.

The MoJ on the other hand tended to see costs of £11 for every £1 of private investment. Which is insane.


Bravo for the Deprtment for EDucation. OTOH:

A political row has erupted over the legacy of PFI for the health service as one hospital trust faces insolvency.

South London Healthcare, a merger of three hospital trusts, is spending 14% of its income on repayments to a private finance initiative (PFI).

How PFI is crippling the NHS – We can still afford to pay for universal healthcare – but only if we stop using NHS funds to prop up banks and equity investors [Guardian website June 2012]

We need to know how the NHS got into this alarming situation. Who approved those PFI deals?

You should decide your economic policy based on what you think is best for the nation. I couldn’t vote for a party which just picks whatever policy they think is most likely to get/keep them in power. I made that mistake with the Lib Dems last time.

Having principles is a nice idea.

Reactions: Twitter, blogs
  1. Jason Brickley

    Why Labour’s economic policy needs independent research http://t.co/AY0q4R5K

  2. leftlinks

    Liberal Conspiracy – Why Labour’s economic policy needs independent research http://t.co/k4qtXgf4

  3. Don Paskini

    @markferguson I responded to your piece about Ashcroft's polling here http://t.co/E7SUM3Js

  4. Sunny Hundal

    Instead of funding different research to push their agenda, why don't Labour groups pool resources? asks @donpaskini – http://t.co/rJNRfnwc

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