Jacqui Smith: a question of courage?

Why do Labour Home Office ministers stumble so badly when they attempt to deal with immigration? Bec

The serialisation of Gordon Brown's latest book, Wartime Courage, has gone largely unnoticed. But in the week running up to Remembrance Sunday, the Daily Telegraph ran extracts of the Prime Minister's latest tribute to individual heroism, which followed two previous volumes on celebrated men and women of courage and everyday heroes. The extracts suggest that the new book, due for publication in April of next year, is a surprisingly good read. Brown is plainly moved by the Second World War bomb disposal experts, secret service operatives and ordinary soldiers whose exploits he describes.

It is said that Gordon Brown became so obsessed with these stories of personal courage that senior members of the defence staff and the intelligence services would bring him new snippets of information, or be asked by Brown to open files to confirm facts on the people concerned. As the extracts show, the stories in Wartime Courage are peppered with references to these military and intelligence documents.

But where lie the roots of this obsession? I am told that Brown became fascinated by how people perform under fire and, in particular, how they kept their head when entering enemy territory.

I kept thinking of the book extracts when I watched Jacqui Smith under persistent Tory fire after her parliamentary statement this week on how much she knew about people working illegally in this country as security guards, and when she knew it. It made me wonder why Labour Home Office ministers fare so badly when entering the enemy territory represented by the immigration debate in this country.

One by one they have been shot down by David Davis, who simply waits for them to move into his sights on the immigration battlefield before picking them off. The first was Beverley Hughes, the immigration minister who resigned in April 2004 after she claimed not to have known about a visa scam involving fraudulent claims from eastern Europe. It later turned out that she had been warned a year previously. Her demise was followed, in December of the same year, by that of her mentor, David Blunkett, after he was linked to the speeding up of a visa for his lover's nanny. The episode also revealed systematic failings at the Immigration and Nationality Directorate at the Home Office.

Blunkett's successor, Charles Clarke, fared no better when, in May 2004, he was forced out after it was revealed that more than 1,000 foreign prisoners had been released without being deported. The final straw came when the New Statesman revealed that one of the offenders concerned went on to become a suspect in a high-profile terrorist case.

We are talking here about new Labour's crack troops, not fresh-faced new recruits, and yet in three-and-a-half long years they have been shown to be woefully ill-equipped and poorly trained to deal with a firmly entrenched enemy, sure of its ground. So why is it that Labour politicians stumble so haplessly when they attempt to deal with this issue?

I believe there are three main reasons. The first is that the department responsible for dealing with immigration at the Home Office remains one of the most dysfunctional in the whole of Whitehall. John Reid knew this when he split the Home Office in two, but the restructuring, while it may have highlighted the problem, has not yet brought the reform necessary to solve it. A second and connected issue is the disloyalty of immigration officials to the government. David Blunkett's troubles began when an ideologically-driven mole began leaking information. Ministers believe a similar process was at work in the recent leaks to the Daily Mail of emails showing how early Jacqui Smith was made aware of the problem over security guards. They are convinced that they went to the Tory party first, and I have certainly heard senior Tories boast that they have had Home Office officials falling over themselves to provide them with information.

Distasteful work

But third and most importantly, Labour ministers still feel deeply uncomfortable with the immigration issue and, in many cases, quite rightly so. No Labour politician goes into parliament because of a burning desire to deport asylum-seekers or kick illegal workers out of their jobs. This is distasteful work, and despite ten years of tough-talking rhetoric I don't believe even David Blunkett, Labour's most authoritarian home secretary, was happy dealing with immigration policy. For this reason alone, Labour will always be outflanked by a party which feels passionately about it.

Jacqui Smith, therefore, has good reason to be concerned. There is a growing frustration within the Labour government that no real progress has been made at the Home Office since Gordon Brown became Prime Minister. Although new initiatives have been launched by Ed Balls at the Department for Children, Schools and Welfare, for example, and by Peter Hain at the Department for Work and Pensions, Smith has been hamstrung by a department that still seems, in the words of her predecessor, "not fit for purpose". At the time of writing, Smith herself is not being held responsible and her stock remains high because of her handling of the failed terrorist attacks in June. Her offence at this point is unclear. She certainly held back information from the public, but it isn't clear whether she did so to stop illegal immigrants going on the run, or to bury bad news. Either way, one more leak of a misjudged email and she could yet find herself in no-man's-land, just another victim of David Davis's sniper fire.

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.