'Whatever works': a New Labour mantra worth saving

There are tentative signs that ministers may now be genuinely neutral between public and private

The most important section of James Purnell's piece in today's Guardian concerns the delivery of public services. From its inception onwards, New Labour claimed to be ideologically neutral over the public and private sectors; 'whatever works' was its mantra. But in practice, Tony Blair allowed reform to become synonymous with privatisation. Purnell suggests he's now prepared to reconsider this disastrous approach. He writes:

Once we're clearer about our goals, we will be forced to be bolder about our methods. So, if allowing state schools to be run by profit-making companies encourages equality of capability, we will have to allow it. If educational selection by religion increases inequality, we will have to start a difficult debate about it. If child poverty wrecks any possibility of equality of capability, then we will have to make abolishing it our top priority.

It may seem somewhat counter-intuitive to cite a passage in which Purnell appears to advocate greater use of the private sector in education but it's the pragmatism that counts.

New Labour's fetishisation of the private sector made it no better than those socialists who supported public ownership not on practical grounds, but because they believed each successive nationalisation brought them one step closer to a socialist Valhalla. There are now tentative signs that the humiliation of big finance and the nationalisation of swathes of the banking sector has freed Blairite ministers up to be genuinely neutral between public and private.

In his interview with my colleague James Macintyre earlier this month, Transport Secretary Lord Adonis, who is usually dismissed as a free-market fundamentalist, said he wished Labour could have pulled the plug on rail privatisation in the mid-1990s. He also described the nationalisation of the East Coast Main Line as a "pragmatic" step. And why should it have been anything else? There is now no justification for supporting either the public or the private sector on anything other than pragmatic grounds.

If more ministers can follow Purnell and Adonis, then 'whatever works' will be one piece of New Labour wisdom worth salvaging.

George Eaton is political editor of the New Statesman.

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.