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Generation Ed: Is Labour winning the battle of ideas?

Rafael Behr on "Milibandism" and the Labour leader’s mission to reshape capitalism in Britain.

A hostile media loves to portray Ed Miliband as a left-wing fanatic. Artwork: David Simmonds

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It was the kind of challenge that made Tony Blair and Gordon Brown wince. “When are you going to bring back socialism?” called the man in the crowd to Ed Miliband at a rally in Brighton on the eve of his party’s annual conference in September. The Labour leader paused before offering a response that his two predecessors would not have dared deliver: “That’s what we’re doing, sir.”

When, later that week, Miliband used his conference speech to call for a freeze in energy bills, Conservatives needed no more evidence to declare that Ed had definitively coloured himself red. He was portrayed by hostile media as a left-wing fanatic, dragging his party back to the 1970s with price controls and assaults on free enterprise. Yet the attack on energy companies was popular. It steered the conversation about Britain’s economy away from Budget discipline – where the Tories feel secure – to the squeeze on household finances. David Cameron found himself in need of a response to what Miliband had branded “the cost of living crisis”.

The Labour leader followed up that success by shuffling his shadow cabinet, promoting young MPs from the 2010 parliamentary intake and sidelining veterans. In Westminster, this was interpreted as a consolidation of power, elevating a cadre of “Milibandites” largely at the expense of “Blairites”. When he was first elected to the leadership, Miliband had promised to “turn the page” on New Labour. Now it seemed the whole book had been burned.

Is Miliband writing the sequel – or has his leadership been an exercise in smudging the line between “Old” and “New” Labour scripts? The purpose of this essay is not to judge whether he has found the formula for winning the next election. No one knows that. I contend simply that, beneath the froth of volatile daily news, a coherent pattern is discernible in the Labour leader’s actions. There is a consistent analysis of what is wrong with Britain and a systematic outline of the remedy. With Labour leading in opinion polls 18 months before an election, it is worth taking seriously the possibility that Britain will one day be governed by a creed called Milibandism.

This is not a view widely held in Westminster. Even many Labour MPs are sceptical. The standard version of Miliband’s story is that he got the job by subterfuge – gaming a faulty election process with the help of trade union bosses – and was promptly exposed as lacking an agenda. He has been forced ever since to rely on disjointed tactical manoeuvres to stay in the game. In this view, his postures have been dictated less by conviction than by the need to manage tensions between factions of left and right, Blairites and the rest.

Miliband’s friends concede that the circumstances of his election put him at a disadvantage. He had no base in the parliamentary party, no political machine. He was pilloried in the media from day one. Compromise was needed to secure his position. That does not preclude the existence of a bigger strategy. The Labour leader’s closest advisers have always insisted that there is a long-term plan and that its outline would be visible in time for a 2015 general election. Are they right?

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The first step in understanding Milibandism is to recognise why a page needed turning after the New Labour era, which had, after all, achieved three successive election victories. The defeat of 2010 marked the end of a journey that began with the trauma of Neil Kinnock’s defeat by John Major in 1992. That result taught a generation of rising Labour stars – Blair, Brown and Peter Mandelson – that society, not just the economy, had been refashioned by Tory rule. The opposition would be locked out of power for as long as it denied that liberated markets had made people prosperous. Labour could not ignore the aspirations of a self-made middle class, nor urge it to pay higher taxes for the sake of equality.

In 2002, at a reception in Hampshire, Margaret Thatcher was asked what she considered her greatest achievement. She replied: “Tony Blair and New Labour. We forced our opponents to change their minds.” She was half-right. Labour’s mind was altered by fear of perpetual defeat but the party’s heart was anguished. The New Labour government exuded anxiety at the thought of being exposed as explicitly left wing. Blair never lacked self-confidence but Labour governed with the jumpiness of an occupying army. Under Gordon Brown, that brittleness, incarnate in the prime minister, became a governing pathology.

In that context, the financial crisis that erupted in 2007 was a moment of both exultation and existential panic for Labour. The cause of the calamity appeared to be turbocharged market capitalism run amok on a global scale. It might have been a moment of vindication for the centre left but Blair’s and Brown’s successes had been predicated on partial surrender to the enemy ideology. So Labour’s demoralisation was more complex than the usual disappointment at having been beaten. The formula that had been devised in the mid-1990s for escaping opposition was felt to be obsolete at best, treasonous at worst.

Two days after the 2010 election, Stewart Wood, an Oxford academic and Downing Street adviser under Brown, was sitting in the front room of Ed Miliband’s home in north London conducting a post-mortem on the defeat. The question the two men grappled with was this: was there an appetite in Britain for a new political offering from the left – one that could find mass appeal with radical determination to fix broken markets; one that would promise to work on behalf of the consumer, not simply strengthen the hand of the state? The conversation ranged from the monopoly-busting crusades of the US presidents William Howard Taft and Teddy Roosevelt to Germany’s postwar reconstruction under Chancellor Konrad Adenauer. Might an optimistic story of what the British left did next be salvaged from its crushing defeat?

Fast-forward to the summer of 2013 and Wood, by then ennobled as a peer, along with Miliband and his chief speech-writer, Marc Stears (another Oxford academic), were dividing their time between the same front room and the nearby Kalendar café in Highgate, channelling the spirit of that conversation into the Labour leader’s game-changing conference address.

The critics are wrong to say that Miliband’s project is erratic or hastily assembled. (If anything, the charge that it is too determinedly intellectual is more fitting.) Milibandism takes a deep perspective, charting long political cycles from the postwar period to the present day. The first phase encompasses a period of consensus about active state management of the economy, Whitehall-led intervention and support for the welfare state. That unravelled in the 1970s – a decade of interregnum marked by economic stagnation and inconclusive elections. The breakthrough was achieved by Margaret Thatcher. Her 1979 victory was narrowly won but – helped by splits on the left and suicidal Labour opposition – it evolved into ideological hegemony. Individual ambition, released from state control, would be the motor of progress. Riches would trickle down the social hierarchy.

This phase lasts up to the collapse of Lehman Brothers bank in September 2008. New Labour, in this view, limited its ambition to compensating the losers from the new consensus with revenues skimmed from the winners. Brown’s Treasury achieved redistribution by stealth – an approach made easy in the short term since the City of London served as a cash cow. That option closed when boom turned to bust.

According to this analysis, the coalition is another interregnum. Miliband sees David Cameron engaged in a futile effort to breathe life into the corpse of an expired doctrine. He ascribes to himself the role that Thatcher once played, appearing at first as an unlikely leader, doggedly pursuing ideas that threaten to disrupt a complacent orthodoxy. Just as the Iron Lady once anticipated the swing of the pendulum away from suffocating statism, Miliband believes it is swinging away from market fetishism. Or, rather, he thinks it has the potential to move in that direction. “Sometimes you have to push the pendulum,” Miliband once told me.

His confidence is fuelled by evidence that the trickle-down mechanism stopped working well before the bubble burst. This point was the central argument in his conference speech this year. “For generations in Britain, when the economy grew, the majority got better off. And then somewhere along the way that vital link between the growing wealth of the country and your family finances was broken,” he said. Average wages began stagnating around 2003, even as the economy looked buoyant in national statistics. For many households, there has been a relative decline in income, which was masked by Treasury tax credits and rising personal debt. Benefits (a substantial portion of which goes to people in work) and credit cards covered up for the systemic failure of our economic model. Those at the top of the income scale were spared the squeeze as the proceeds of growth flowed upwards to a narrow wealthy elite.

According to the Resolution Foundation, a think tank that has heavily influenced Miliband’s thinking, the richest 1 per cent now takes home 10p in every pound of income earned in the UK. The bottom half shares 18p in every pound. Most people’s spending power has been eroded by inflation. Net income for low-to-middle-earning households has fallen by an average of 7.5 per cent in the post-crash period.

This, say the Milibandites, is a structural malfunction in the economy, not just a consequence of recession. It shows little sign of abating even as growth returns. Conservatives’ celebrations of economic recovery risk looking like the triumphal march of a class that was insulated from the privations of the downturn. Whereas Thatcher’s success was achieved by tapping into the aspirations of a rising middle class, Miliband sees the future of politics as belonging to the party that addresses the anxieties of a “squeezed middle” that fears downward mobility. For most of the postwar era, each generation has presumed that it will do better than the last – its children will be better housed and schooled and have better jobs. That expectation has gone.

If that is the diagnosis, what is the remedy? So far, Miliband’s programme is largely emblematic, although he has been more candid about his intentions than previous opposition leaders at equivalent stages in their bids for election. The agenda can be divided into three parts.

Responsible capitalism

A year after winning the leadership, Miliband told the Labour party conference that his mission was to restore morality to business. He drew a distinction between “predators” and “producers”: those who get rich by exploitation and those who add value to society. That rhetoric was abandoned as it became clear that MPs were squirming when asked to flesh out the line with concrete examples. Yet the concept survives in Miliband’s attack on big energy companies, his pledges to crack down on tax avoidance and his plans for more regulation of payday lenders. He believes that people feel powerless before mighty corporations.

This also expresses a structural weakness in the economy. The great liberalisation programme of the 1980s and 1990s transferred public assets to private hands on the presumption that competitive market forces would improve performance. That process, argue the Milibandites, was only half-completed. Shareholders got their dividends but customers did not get better service and regulators were weak.

As a result of the Thatcherite settlement, politicians surrendered control over things that people deem essential in their daily lives – trains, water, heating, phone lines. It put citizens at the mercy of companies that enjoyed near-monopolistic positions or quasicartels in broken markets. Alongside beefier regulation, “responsible capitalism” means changing the way companies are run so that employees are better treated and better paid. It means, for example, favouring small businesses in the tax system and offering incentives for bosses who pay the “living wage”.

Predistribution

The offer to make capitalism more ethical was derided as unworkable. Miliband’s next big idea was ridiculed as unpronounceable. The term “predistribution” was coined by the Yale professor Jacob Hacker, who defines it in its simplest terms as “making markets work for the middle class” (although in the US “middle class” is a broader concept that includes many of what in Britain would be thought of as working-class households).

The conventional left-wing approach to correcting inequality has been the reallocation of resources from rich to poor. This is problematic in various ways. First, at a time of Budget scarcity, the resources to achieve real social change are inadequate. Second, there isn’t much public consent for a system in which the state confiscates money from some people to give it to their neighbours, regardless of how needy they are. Third, it deals with the symptoms, not the causes. Redistribution alone cannot counteract the forces that drive inequality in a liberalised market economy.

The “predistribution” approach puts the emphasis on changing the structures that make it hard for people without privileged backgrounds to get ahead. That could take the form of universal childcare, so more women can take jobs. It means recognising the central role that a housing shortage plays in holding back many people’s life chances.

This, say the Milibandites, is about much more than spending priorities. It requires what Stewart Wood has called “a supplyside revolution from the left”. It is a counterpart to the Conservative assertion that employee protection stifles enterprise and must be stripped away for the good of economic efficiency. The predistributative reply is that productivity is boosted when staff feel secure, rewarded and well trained and have a stake in the company.

One nation

Public disaffection with the coalition has not translated into automatic support for Labour. Much of it has been channelled to Ukip. That is partly because Labour is tarnished as just another face of a discredited political establishment. It was also inevitable that a crisis in liberal globalisation would generate a backlash in favour of insular nationalism. In austere times, people become more jealous in preserving the privileges they have – fearing competition from job-seeking immigrants; resenting sharing public services with outsiders.

In Miliband’s view, the Conservatives are also gaming the politics of fear and division, blaming foreign “benefit tourists” for pressure on the NHS, for example, and pretending that there is a neat division between industrious workers whose taxes fund the welfare state and idle layabouts who milk it. Recognising that he cannot win an arms race in that kind of rhetoric, the Labour leader wants to present himself as the author of a different, inclusive politics.

The “one nation” rhetoric is an attempt to retell Labour’s history of building the NHS and the welfare state as part of a national story. The institutions founded under Clement Attlee, Miliband argues, are cherished fixtures of British identity. He has been influenced in this respect by the young Australian writer Tim Soutphommasane, whose work was brought to the Labour leader’s attention by Jon Cruddas, head of the party’s policy review.

Soutphommasane, born to a refugee family, believes the left must “reclaim patriotism”, resisting liberal squeamishness about even discussing identity politics. Too often, that has surrendered the flag to blimpish reaction on the right.

In policy terms, “one nation” translates as a determination to address those issues of social division on which Labour is least trusted by voters – immigration and welfare – in a manner consistent with the party’s self-image as a champion of fairness, defender of the vulnerable and bastion against prejudice. So, for example, the hostility to welfare spending must be met by asserting that job creation and higher wages reduce the benefits bill more reliably than cruelly ill-targeted cuts. Anger arising from a housing shortage should be neutralised by building homes, not by blaming foreigners for jumping council house queues. To sceptics, that is more evasion than confrontation of the issues. For the Milibandites, it is acknowledging public anxiety without indulging bigotry.

The ambition not to fight on terms dictated by the right comes back to Miliband’s critique of New Labour, specifically its habit of taking internal opposition as proof of modernising vigour. Even self-styled Blairites concede that there was a tendency to see the approval of the Tory press and the outrage of the left as badges of honour. Miliband rejected that approach in the 2010 leadership contest when he declared, “As your leader, I will never leave this party behind.”

His determination to honour that pledge is beyond doubt. To his critics, that has led to craven compromise with militant leftists whose instincts drive Labour into the electoral wilderness. His friends point out that a leader who is not suspected of being ashamed of his party ends up with much more room for manoeuvre over time. (The contrast is drawn with Cameron, who in opposition tried to “decontaminate” his party’s toxic brand with postures that outraged the Tory right.) For Miliband, being trusted by the rank and file as an embodiment of traditional Labour values is about more than job security. One part of his agenda that gets little attention but that aides insist is central to the project is the transformation of the party from a rusty bureaucratic apparat to a network of grass-roots activists. That work is led by Arnie Graf, the 69-year-old American pioneer of “community organising”, about which Miliband is evangelical. The principle is to win political support street by street, focusing on hyper-local issues and engaging people who would otherwise never go near a constituency party meeting.

Graf’s approach is intended as a remedy to apathy. Miliband has described voters’ pessimistic surrender to the status quo as a greater threat to his prospects of winning an election than active support for the Conservative Party. Earlier this year, the Labour leader told me: “The right wins when there is fatalism, when no one can see a way out of their problems. We win when we convince people that there is a way and that we can set Britain in the right direction.”

Miliband’s critics can think of many greater obstacles to a Labour victory. Chief among them is an economic revival that might allow the Tories to claim vindication for their austerity programme. If wages begin to recover in real terms along with national GDP, a central plank of the Miliband platform will crumble beneath him. His advisers are confident that won’t happen. Tories in the Treasury predict it will. Ed Balls’s commitment to the intellectual tenets of Milibandism is notoriously doubtful, although his determination to get Labour elected with Miliband as leader is unquestioned. As a pair, the two Eds are trusted less than George Osborne and Cameron as stewards of the economy.

There are still gaps in Miliband’s programme. His account of how Labour would champion hard-pressed consumers against wicked corporate interests is not matched by a determination to reform the public sector. He is more comfortable talking about market failure than failures of the state. His vision of party reform risks being lost in back-room haggling with the trade union leaders who finance the whole Labour show. His personal ratings, while improving, are still below the levels that usually indicate momentum towards Downing Street.

It has always been easy to list the ways in which politicians might fail but it is getting harder to write Miliband off. He has displayed a tenacity that disorientates his enemies. Conservative attacks are contradictory. He is weak yet dangerous; ridiculous yet sinister. The latest Tory line is that he is a con artist, offering flimsy populism in the face of complex problems. So they recognise at least that the left can be popular.

The Conservatives should consider also the possibility that what Miliband says expresses something more substantial than a retreat to the pre-Blair era of Labour politics. Milibandism is not a complete doctrine but it is much more than nostalgia for the kind of high-taxing, spendthrift social democracy that its opponents want it to be. It does not seek to reverse the accommodations that New Labour made with Thatcherism. The times pose a different challenge. Blair was confronting a mismatch between a party that didn’t like the way the economy worked and a public that largely did. Miliband is reaching out to a public that doesn’t like the way the economy works but doubts the capacity of any party to fix it.

If it pays off, the reward is a mandate to reshape British politics on terms chosen by the left in a way more profound than Blair and Brown did. It would refute the idea – the New Labour neurosis – that Britain is innately conservative and that egalitarianism must be smuggled past the electorate.

No one claims that Miliband hides his agenda. No one should have been surprised that he called himself a socialist one afternoon in Brighton. He has said it all along. Days after winning the Labour leadership, he told the BBC of his plan: “It is my form of socialism which is a more fair, more just, more equal society. And that is the path that I will want to take our party on.”

He has been true to his word. He has taken Labour on the journey that he outlined three years ago and brought it within sight of power. Ed Miliband’s toughest challenge now is to turn his ideas into a campaign that persuades enough of the country to abandon its present course and follow him further down that same path.

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Now listen to Rafael discussing this essay with George Eaton and Helen Lewis on the NS Podcast: