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This morning (Monday) Labour launched their manifesto. We will of course be poring over the details and sharing our detailed thoughts in due course. At this stage the key development to highlight is a commitment to fiscal responsibility front and centre on the first page. Labour are committing themselves to a “Budget Responsibility Lock” which offers guarantees to:
- ensure no additional borrowing is required to pay for any of the policies contained within the manifesto;
- require all major parties to have their manifesto commitmentsindependently audited by the Office for Budget Responsibility; and
- cut the deficit every year.
This is in some ways either a very clever, or foolhardy move from Labour. Well aware that economic credibility is their biggest vulnerability, the party has chosen to face down that challenge and promise in the strongest possible terms that deficit reduction will be maintained under their watch.
The problem may be however that just as many people who are reassured by this fiscal bullishness may well be reminded of Labour’s patchy record on this matter. Questions on this topic dominated the manifesto launch this morning, with journalists taking it in turn to ask variations on the same question: “How can the public trust that you’ll keep your promises, when there are no specific deadlines for deficit elimination in the manifesto?”
Miliband’s answer to this challenge is at least partly convincing – namely that their commitment to eliminate the deficit by the end of the next parliament, and run a surplus in the next parliament, is both achievable and will allow more flexibility than the more austere approach proposed by the Conservatives. Whether this gamble pays off for Labour may yet be a defining factor of this most closely fought election.