Alan Johnson on Greek Myths, OBR… and industry
Alan Johnson, the Shadow Chancellor, was on feisty form at the RSA this morning. A speech entitled ‘Beyond fiscal fables and Greek myths’ combined a defence of Labour’s overall record, a recognition of some mistakes, some good jokes (I particularly like the description of the Lib Dems as the ‘Stockholm Syndrome Coalition Partners’) and some thoughts on where we go from here.
The one new policy announcement (at least I hadn’t heard this before) was a suggestion that the Office for Budget Responsibility, which will have responsibility for forecasting tax receipts, should have that responsibility extended to cover a regular assessment of the resilience of the tax base. This came as part of an acknowledgement that tax receipts amassed by increases in house prices and Labour’s excessive focus on the City were evidence of a skewed tax base, caused by an unbalanced economy. Both sources of tax revenue were likely to be at risk from an economic downturn, especially since, as Johnson noted, profits in financial services are always pro-cyclical. And so it proved.
More generally, I suspect this morning’s speech was an attempt (successful, in my view) for Alan Johnson to speak with increasing gravitas about economic issues. His famously self-depricating humour led him to suggest, on being appointed Shadow Chancellor, that he would need to buy a book on economic policy for beginners. Such comments mark him out as that rarest of things, a politician from planet Earth, but in tough years to come, he will need to show that he is up to the mark on the economic detail. His discussion of the “Greek myth” centred on the idea that the spike in Greek bond yields in April and the downgrading of Greek debt to junk status was simply borne of a fear that Germany would not endorse a deal to bail out Greece, which once shown not to be true had dealt with the issue. An important point in its own right, but this discussion gave Johnson the opportunity to show his grasp of detail.
As you will know if you’ve read my previous posts, I have a long-standing interest in industrial policy, so the moment I found perhaps most valuable was during question-and-answers, after the speech. Matthew Taylor, the Chair, mentioned the return of industrial policy under Peter Mandelson in the last 18 months of the Labour Government. Was this a fad? Alan Johnson replied that before Peter Mandelson’s intervention, he had launched a Manufacturing Strategy. However, did this get buy-in across government? Johnson said that if the last Government had put as much support into manufacturing as it had into financial services, the economic outcome might have been very different. Given his earlier comments about a more balanced economy, I hope he takes that point forward in the months and years to come. I hope to hear Alan Johnson, along with Shadow Business Secretary John Denham, making a robust case for the ‘real economy’ and its role in promoting economic growth.
Anne McElvoy of the London Evening Standard last week described Alan Johnson as Ed Miliband’s “de facto deputy” and described their relationship as intense as that between George Osborne and David Cameron. For my part, it is excellent to hear senior Shadow Treasury Spokespeople talking not just about debt, markets and finance, but about growth and, especially, industry. Past governments have acted almost as if the two are unrelated when, in fact, they should be inseparable. Keep it up, Alan!