Liberal Conspiracy: Labour should pay attention to what Tom Watson just said on the economy

Tom Watson has given an interview to the Guardian, published today, and it is quite explosive.

The interview mostly focuses on the Falkirk selection controversy, which I won’t comment on other than to say this: when I speculated that the Labour leadership deliberately stoked up Falkirk, some right-wingers laughed at me. Tom Watson’s intervention today proved me right.

The Labour leadership had long wanted to renegotiate their link with the unions (though not break it) and the Falkirk row provided the perfect opportunity. The only problem now is the bad taste left in everyone’s mouth and that this could put the party in grave danger.

But put all aside for a moment.

The more important part is what Watson says about the economy:

“There was huge market failure in the finance and banking sector – everyone knows that – and we’ve not robustly said so. The truth is that in government we didn’t sufficiently map out the contours of the mixed economy and put stakes in the ground about where the market can’t go. We were frightened of dealing with some of those so-called great Thatcherite legacies, like liberalisation of the City, so we let the City grow out of control. And I don’t know why we don’t just say that. Why don’t we just say that?” Might it be to do with protecting Ed Balls’ reputation? “I don’t know,” he says, but doesn’t sound entirely convincing. “I didn’t do the economy, I was the coordinator.”

Watson fears Labour’s unwillingness to admit they let the financial markets get out of control has cost them their economic credibility. “If we don’t explain that properly, how can we argue that it’s the reason the crisis took place in 2008? Our problem is that, in the absence of that explanation, people blame the 2008 crash on our profligate spending.”

Once Labour has admitted the reason for the crash, it could then offer a “distinctive economic programme” of investment to create jobs. “It’s all about jobs. Not taking risks is not an option.” Does Labour’s current economic policy takes too few risks? “Yes, definitely. The country is in a crisis. If Labour’s not going to give the bold solution, then who is?”

I agree with this so much my head hurts from all the nodding.

The idiocy of the ‘In The Black Labour’ narrative is underlined by the fact that they also believe Labour spent too much until 2010. The Labour leadership has become partly captured by this thinking – which means they half-heartedly defend their record but are afraid of saying too much about the future (which will mean spending more than the Tories). And so people remain confused by their stance.

But Labour has to go much further in admitting and communicating it has learnt from the crash. This is the main reason why many people don’t trust Labour with the economy again.

Labour cannot communicate an apology and say it has learnt from the past simply through a few interviews to the press. It needs a big intervention to get this across.

Every sentence of what Tom Watson says above is spot on. I really hope the leadership is listening.

via Sunny Hundal Liberal Conspiracy

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