Eastleigh was never going to be a Labour win, but it would have done a good deal better if people knew what Labour really stood for compared to the other parties, particularly on the economy. The one central issue on which all others turn is how to handle the deficit, yet here Labour continues to represent merely a pale shadow of Tory policy. There are still far too many senior figures from the discredited New Labour network (such as Patrick Diamond, former adviser to Blair-Brown, in the Guardian today) who continue to repeat the mantra of ‘financial discipline’ – as if we hadn’t had a bellyfull of this already from Osborne (and with 70% of cuts still to come) – yet with nothing but an imminent triple dip recession to show for it. They show lip service to a growth strategy without giving any idea how it might seriously be achieved, since merely tweaking the Osborne cuts agenda – cutting less far, less fast – is just a recipe for economic decline, but a bit more slowly than the Tories.
The problem is not, as they seem to think, simply changing the definition of inflation (including assets as well as consumer prices), or enhancing productivity (when the economy’s contracting and joblessness sky-high), or re-defining ‘property-owning democracy’ (when poverty is fast rising) or funding a capital endowment for citizens at 18 (when they can’t get jobs). It’s about something much more fundamental than that – whether their obsession with balanced budgeting is really sensible when it leads straight to stagnation, and whether their tolerance of sky-high unemployment as a semi-permanent part of the landscape isn’t a ‘price worth paying’ but rather an economic abomination to be avoided at all costs.
What Labour needs now to make clear beyond any doubt is that the Osborne massacre of the innocent isn’t inevitable and that killing a few less and doing it in a slower and more kindly fashion is no answer either. The only way to deal with the deficit in the pit of a deepening recession is through a huge programme of public investment where it is sorely needed – social housing, improved infrastructure, low-carbon economy – funded by quantitative easing (instead of throwing the money at the banks), taxation of the ultra-rich (who caused the recession and have contributed nothing to remedying it), instructing RBS and Lloyds (after all, we own them) to prioritise lending to to major agreed manufacturing projects, or borrowing at rock-bottom interest rates to generate a million jobs within 2 years. Take your pick – more Osborne, more New Labour, or something the voters of Eastleigh might well have gone for rather than UKIP.