Is there a new Ed Miliband coalition?

New polling shows that Labour supporters are more liberal on issues such as immigration than in 2010.

Much of the autopsy on Labour’s 2010 general election performance has focused on the "traditional" supporter and their apparent drift from the identity and values of the party over the last decade or so – especially on immigration. The Gillian Duffy demographic has become the party’s preoccupation.

However, new polling data suggests that Labour has been successful in attracting a rather different voter in the last two years – the liberal centrist.  Should the party now aggressively seek to appeal to working-class conservative support as some advocate, the liberal centrist may be repelled. These liberal centrists are, like their culturally conservative opposites, "values" voters. A populist agenda on immigration, culture and Europe may not be the one-way street that is often supposed. What’s more, an Ed Miliband coalition that doesn’t rely on such populism is one potential route to a majority for Labour.

In 2008, Barack Obama was able to win the presidency by assembling a coalition of support tapping into new sources of political energy ignited by demographic and social change. Unable to reverse the Democrats’ deficit amongst white voters or even significantly improve his vote in that demographic, he relied on Hispanic, young, and professional voters. With the obvious exception of Hispanics, the question is whether such a new coalition could be an option for Labour? A new poll hints that it could be a possibility.

Respondents were asked in the YouGov poll commissioned by Extremis Project whether they were more or less likely to vote for parties pursuing a particular agenda based loosely around populist themes such as concern about political and financial elites, nationhood, immigration and culture. The shift amongst Labour supporters from 2010 was very striking. Conservative support showed no such shift.

In 2010, Labour voters were "more likely" to vote for a party that pledged to stop immigration into the UK by 36% to 31%. That figure has now reversed with 36% to 32% "less likely" to vote for such a party. The poll asked the same question of a party pledging to reduce the "numbers of Muslims/presence of Islam in society". Again, we see a reverse. Thirty four per cent to 25% of Labour voters were "more likely" to vote for a party with such a pledge in 2010. It is now 31%-29% in favour of "less likely."

By comparison, the Conservative figure on the same question is 50%-15% in favour of "more likely", which is almost identical to the figure for its 2010 support. The overall figure is 37% to 23%. The likely explanation would appear to be Labour’s success in wooing Liberal Democrat supporters and young voters since 2010. The poll shows a clear generational divide between younger and older voters.

A new Ed Miliband coalition would combine liberal centrists, young voters, those in the public sector as well as the more traditional working and lower middle-class support who are concerned about whether the Conservatives speak for them.

The values voter Miliband seems to be attracting is more, not less liberal on immigration, more, not less accepting of other cultures, and less prone to muscular articulations of national identity. Would he really want to reverse these gains in a populist race that he would find very difficult, if not impossible, to win?

Again, the echoes of Obama’s strategy are striking. The president has embraced gay rights, the green agenda and pitches at both young and professional, college educated support through improving access to higher education (Liberal Democrats take note) and an emphasis on investment in science. He pitches towards both the Hispanic and more liberal audiences with a commitment to immigration reform: better managed borders combined with pathways to earned citizenship.

A critical aspect of this strategy is the frame. So Obama’s pitch is not open borders instead of closed borders. It’s managed immigration versus inaction. It’s not renewable energy instead of oil and gas. The frame is rather pitched around energy security and economic growth. On gay rights, a choice has been made but the articulation is around committed relationships and a contribution to society.

The issues that Miliband faces in political terms are slightly different, but the strategy of pitting pragmatism against ideology and incompetence is instructive. While the default position on immigration is anxiety and scepticism, a majority of people are pragmatic when it comes to certain migrant groups – a failure of the Conservative immigration cap will help his cause. It is to this pragmatism that Miliband could appeal to.

The same goes for Europe, green issues, and potentially even welfare as long as there is an understanding of the deep concern with the welfare state as it is. Given that the Coalition is heading in a distinctively Thatcherite direction – blue collar populism has taken over from progressive conservatism – on these issues, that leaves the pragmatic centre open to Miliband should he wish to take it.

What’s the catch? Most critically, the economy is not going away and a perceived failure of the coalition to turn things around will not be enough for people to invest their faith in Labour. A credible approach to the economy and the deficit is critical. Just as important is the leadership question. If Miliband is not seen as a convincing and competent alternative to David Cameron he will equally struggle to maintain this new-found support. Obama passed both these tests.

Further research is needed to understand how this coalition works on a seat-by-seat basis – could it be too metropolitan? Moreover, this strategy certainly doesn’t mean that Labour should not concern itself with the very serious under-currents of cultural antagonism that exist in British society as poll after poll – including the Extremis Project/YouGov poll - has demonstrated. This is real and in, many ways, frightening.

More broadly, this strategy involves a very fine balancing act. An authentic emotional engagement with nationhood and a sense of national values is critical. See Michelle Obama’s speech where she emphasised that her husband "knows the American dream because he’s lived it". Equally, it involves clawing back assumptions both within the Labour Party and the wider media establishment that these cultural issues can only be dealt with in a discordant way.

With these caveats in mind, embracing and motivating this new coalition nonetheless seems like a more natural fit for Miliband than something more traditional and conservative. Avoiding over-adjustment in addressing Labour’s electoral weaknesses in 2010 is smart politics too. Labour now needs to look forward. Crafting a workable centre-left pragmatism is sound politics. Constructing a solid policy agenda is very different set of questions. For Labour, though, an Ed Miliband coalition of voters could be available to it – and it is one that could have the potential to see it into office.

Extremis Project  is a new platform for news, analysis, data and research on extremism across the globe co-founded by Dr Matthew Goodwin  and Anthony Painter. Anthony Painter writes in a personal capacity.

Ed Miliband has attracted a more liberal breed of Labour supporters. Photograph: Getty Images.

Anthony Painter is a political writer, commentator and researcher. His new book Left Without A Future? is published by Arcadia Books in November.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation