Back when I was at university, the only people who ever used the word ‘narrative’ were literature students with an interest in critical theory. Everyone else made do with ‘story’ and ‘plot’. Since then, the n-word has been on a long journey towards the spotlight – especially the political spotlight. Everybody in politics now seems to talk about narratives all the time; even political spin-doctors describe their job as being ‘to craft narratives’. We no longer have debates, we have conflicting narratives. It’s hard to know whether this represents an increase in PR sophistication and self-awareness, or a decrease in the general level of discourse.
It’s at the level of narrative that the UK’s economic figures for the last quarter of 2010 are likely to prove most consequential. According to the Office for National Statistics, the economy contracted by 0.5 per cent. The number seemed all the worse for being surprising; there’s an entire industry of analysts and economists reading the runes, so unexpected lurches ought to be rare. Despite that, no one saw this coming. The ONS attributed a big part of the decline to the coldest December weather since records began in 1910. Fair enough, for the sectors of the economy which are directly affected by the snow, like transport and construction and retail. Other areas, though, such as services, also saw a sharp decline, and those are harder to blame on the weather. So this might be the first piece of evidence that the Tory cuts – sorry, the Coalition cuts – are damaging the economic recovery. The sets of quarterly figures since the ConDems came to power are 1 per cent, 0.7 per cent, -0.5 per cent. That looks like an emerging narrative right there. And there’s another number. The index of consumer confidence is -29.That’s the sharpest drop since the last Tory recession in 1992, and it would usually be a leading indicator for the rest of the economy, since when people are unconfident they spend less, and everybody simultaneously spending less is one way of defining what a recession is. The confidence index in a sense measures the narrative that people are telling themselves, and on the strength of the current story is less like Paradise Regained and more like Hard Times.
The figures aren’t bad news for everybody, though; certainly not for the Labour Party and its new shadow chancellor, Ed Balls. It was always going to be (as I argued in these pages) a good election for Labour to lose. If they had won it, the first thing they would have had to do was to offer some red meat to the bond markets. At the moment, for every £4 the government spends, £1 is borrowed. In that position, the borrower has to keep the lenders sweet. The ConDems haven’t found that hard, because they are manifestly so keen to shrink the size of the state and cut as hard and as deep as they can. I don’t think many people voted for them on that basis, but the economic hard right in the Tory Party has taken the opportunity it feels has been provided by the size of the annual deficit and the accumulated debt. The markets believe in the Coalition’s will to cut, and the cost of borrowing for the government has remained steady as a result. Those same markets would have been less likely to believe in Labour’s appetite to rein in government spending, and a sharp increase in the price of borrowing would almost certainly have been the result – not an increase on the Greek or Irish scale, not overnight, but an early warning of trouble ahead. That would have forced Labour into immediate cuts to placate the bond markets. The position we would now be in, with an incumbent government set to execute unprecedented cuts to its expenditure, would probably be almost identical. For the reputation of Labour to recover from that might well have taken decades.
Labour’s collective luck is one thing, but Ed Balls’s personal good fortune is on another level. Ed Miliband was evidently unwilling to give him the shadow chancellorship, and expressed his reluctance the traditional way, by not giving him the job. Then Alan Johnson resigned and Miliband had no choice. Balls now has the job he always wanted, and he is going to make hay with the economic difficulties ahead, even though he has had to backtrack on his previously expressed view that Labour’s ambition to halve the deficit in four years was going too far. Balls has argued that growing the economy is more important than cutting the deficit. He is, in my view, right. It should have been possible to have a strategy for growth which also offered the markets sufficient cuts, or the right mood-music, to keep our borrowing affordable.
Having backtracked on that as the price of his new job, Balls is now set to go for George Osborne’s throat. That will play well in the House of Commons, and also in the soundbite wars. But it will have risks too. We’re back to the question of narrative. Balls has three salient qualities: he is right on the main issue; he scares the Tories; but he scares the electorate more. He is a tribal politician, a not especially likeable figure who provides a mirror image to the equally tribal, equally offputting Osborne. The many forthcoming clashes between them promise to be an unlikeabilityfest of Olympic magnitude. Another aspect to this is that Balls, like all the other senior politicians of this generation, is a product of the inside track in his party’s apparat, with next to no knowledge of life outside politics. He is also yet another humanities graduate from Oxford in his forties. That means that out of the prime minister, the deputy prime minister, the chancellor of the exchequer, the leader of the opposition and the shadow chancellor, the only one of them who is not a white man in his forties with a humanities degree from Oxford is George Osborne. That’s not because he is secretly black, or transgender, or went to a provincial university, or studied chemistry: it’s because he doesn’t turn forty until May. Speaking for myself, I find the homogeneity grotesque – and I say that as a white man in his forties with an Oxford degree in the humanities. God only knows what the rest of the electorate thinks.
The battle of competing narratives will largely come down to whether Balls or Osborne can make his version stick with the public. It’s here that Balls could be a real liability. He was at the heart of Labour’s economic policy-making, and as such is one of the principal culprits for the failures over banking regulation and the housing boom, as well as the destruction of what used to be the best-funded pension scheme in Europe, as well as the decline in manufacturing. (Less well known than it might be: Mrs Thatcher, who as we all know was an axe-wielding maniac bent on destroying the UK’s manufacturing base, presided over a decline in manufacturing from 25.8 to 22.5 per cent of the economy. Labour, in the years from 1997, oversaw a fall in manufacturing from over 20 per cent to 11 per cent. For all that Mrs Thatcher was the Hammer of the Factories, manufacturing contracted by more under Labour than it did under the Tories.)
The central thrust of what Labour says about the Tories is true: their leaders are the oblivious, entitled rich, who have no idea what the cuts they are proposing actually mean. The central part of what the Tories say about Labour is also true: that Brown and Balls dug the hole into which the economy fell. (What isn’t true is that they would have done any different.) Which of those stories will stick? Having published a book about the credit crunch a year ago, I’ve noticed a shift in the public mood: a year ago people were interested in the story of the credit crunch because they wanted to understand what had happened; now, increasingly, they’re interested because they want to know who to blame. It’s sometimes as if they are seeking permission to feel as angry as they do with bankers and politicians. As the cuts begin to bite and the economy continues to struggle, that contest over the attribution of blame will, I think, dominate the political narrative. It will be like eavesdropping on a bad marriage.