Labour must take up the baton of Lords reform

Miliband should announce a convention – and invite Nick Clegg to join him in backing it.

Labour MPs can this morning bask in the glory of a fine tactical victory. The party's refusal to smooth the parliamentary path for Lords reforms  was one important ingredient in the implosion of the Conservatives' cherished plan for boundary reform. The Tories will now need a huge lead in the popular vote to win an overall majority in 2015 and Labour’s chances of returning to power look brighter.

Labour politics, however, must never simply be about power.  The overwhelming majority of the party's MPs want to see not just victory in 2015 but a democratic House of Lords and an end to the hereditary principle. So the party must take heed of the mauling the coalition's proposals suffered even before their withdrawal. The forces of conservatism and the forces of short-termism combined again and who is to say it won’t happen if Labour returns to power. These proposals didn’t even reach the House of Lords after all.

There were two central arguments which the opponents of reform used to justify the overturning of three parties’ manifestos. First, the "primacy" of the House of Commons and second, the independence and expertise of elected members of the new chamber. The former argument is an issue that matters a lot to MPs but perhaps less to the rest of us.  The latter really does matter for the health of our democracy, although solutions lie less in the minutiae of future electoral systems and more in how we shape our political culture and the parties’ own internal selection processes.

The detail of the objections matter less than this hard truth: Lords reform will be stymied again unless Labour sweeps away the naysayers’ arguments well in advance, without appearing to be motivated by partisan advantage. All the answers must be readied while Labour is in opposition but in a way that cannot be dismissed as political game-playing.  We need something along the lines of the Scottish Constitutional Convention, which laid the foundations for devolution before 1997. A similar process could encompass a broad sweep of parties committed to reform and bring in non-party interests too, including cross-bench peers. It would take the process of designing a new second chamber out of Westminster, where too many vested interests lie, but not out of politics altogether.  The process should be commissioned by party leaders and include senior politicians, not just worthies who can be written off.

Today, Ed Miliband should take up the baton of Lords reform and announce a convention – and he should invite Nick Clegg to join him in backing it.

"Labour’s chances of returning to power look brighter." Photograph: Getty Images.

Andrew Harrop is general secretary of the Fabian Society.

Show Hide image

The Autumn Statement proved it – we need a real alternative to austerity, now

Theresa May’s Tories have missed their chance to rescue the British economy.

After six wasted years of failed Conservative austerity measures, Philip Hammond had the opportunity last month in the Autumn Statement to change course and put in place the economic policies that would deliver greater prosperity, and make sure it was fairly shared.

Instead, he chose to continue with cuts to public services and in-work benefits while failing to deliver the scale of investment needed to secure future prosperity. The sense of betrayal is palpable.

The headline figures are grim. An analysis by the Institute for Fiscal Studies shows that real wages will not recover their 2008 levels even after 2020. The Tories are overseeing a lost decade in earnings that is, in the words Paul Johnson, the director of the IFS, “dreadful” and unprecedented in modern British history.

Meanwhile, the Treasury’s own analysis shows the cuts falling hardest on the poorest 30 per cent of the population. The Office for Budget Responsibility has reported that it expects a £122bn worsening in the public finances over the next five years. Of this, less than half – £59bn – is due to the Tories’ shambolic handling of Brexit. Most of the rest is thanks to their mishandling of the domestic economy.

 

Time to invest

The Tories may think that those people who are “just about managing” are an electoral demographic, but for Labour they are our friends, neighbours and the people we represent. People in all walks of life needed something better from this government, but the Autumn Statement was a betrayal of the hopes that they tried to raise beforehand.

Because the Tories cut when they should have invested, we now have a fundamentally weak economy that is unprepared for the challenges of Brexit. Low investment has meant that instead of installing new machinery, or building the new infrastructure that would support productive high-wage jobs, we have an economy that is more and more dependent on low-productivity, low-paid work. Every hour worked in the US, Germany or France produces on average a third more than an hour of work here.

Labour has different priorities. We will deliver the necessary investment in infrastructure and research funding, and back it up with an industrial strategy that can sustain well-paid, secure jobs in the industries of the future such as renewables. We will fight for Britain’s continued tariff-free access to the single market. We will reverse the tax giveaways to the mega-rich and the giant companies, instead using the money to make sure the NHS and our education system are properly funded. In 2020 we will introduce a real living wage, expected to be £10 an hour, to make sure every job pays a wage you can actually live on. And we will rebuild and transform our economy so no one and no community is left behind.

 

May’s missing alternative

This week, the Bank of England governor, Mark Carney, gave an important speech in which he hit the proverbial nail on the head. He was completely right to point out that societies need to redistribute the gains from trade and technology, and to educate and empower their citizens. We are going through a lost decade of earnings growth, as Carney highlights, and the crisis of productivity will not be solved without major government investment, backed up by an industrial strategy that can deliver growth.

Labour in government is committed to tackling the challenges of rising inequality, low wage growth, and driving up Britain’s productivity growth. But it is becoming clearer each day since Theresa May became Prime Minister that she, like her predecessor, has no credible solutions to the challenges our economy faces.

 

Crisis in Italy

The Italian people have decisively rejected the changes to their constitution proposed by Prime Minister Matteo Renzi, with nearly 60 per cent voting No. The Italian economy has not grown for close to two decades. A succession of governments has attempted to introduce free-market policies, including slashing pensions and undermining rights at work, but these have had little impact.

Renzi wanted extra powers to push through more free-market reforms, but he has now resigned after encountering opposition from across the Italian political spectrum. The absence of growth has left Italian banks with €360bn of loans that are not being repaid. Usually, these debts would be written off, but Italian banks lack the reserves to be able to absorb the losses. They need outside assistance to survive.

 

Bail in or bail out

The oldest bank in the world, Monte dei Paschi di Siena, needs €5bn before the end of the year if it is to avoid collapse. Renzi had arranged a financing deal but this is now under threat. Under new EU rules, governments are not allowed to bail out banks, like in the 2008 crisis. This is intended to protect taxpayers. Instead, bank investors are supposed to take a loss through a “bail-in”.

Unusually, however, Italian bank investors are not only big financial institutions such as insurance companies, but ordinary households. One-third of all Italian bank bonds are held by households, so a bail-in would hit them hard. And should Italy’s banks fail, the danger is that investors will pull money out of banks across Europe, causing further failures. British banks have been reducing their investments in Italy, but concerned UK regulators have asked recently for details of their exposure.

John McDonnell is the shadow chancellor


John McDonnell is Labour MP for Hayes and Harlington and has been shadow chancellor since September 2015. 

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump