Osborne’s secret desire

The Chancellor is a flawed visionary. Labour can learn from his strengths and his weaknesses.

George Osborne has a secret desire – to turn the UK into Germany. Look back at his speeches and statements before the election, and he makes it clear, with admirable clarity, that he wants to turn the UK into an economic mirror image of itself. His long-term vision is of an economy where exports outstrip imports, where the popular inclination is to save rather than indulge in debt-fuelled spending, where investment in the real economy is flourishing, and where, of course, the public finances are incontrovertibly sound.

The Chancellor has even gone so far as to say that these are the leading benchmarks against which the success of a Conservative government will be judged. Expect Oktoberfest and decent World Cup performances to feature in the next Queen's Speech.

Does Labour have an equivalent vision? The sorry answer must be "no". So focused was the last government, maybe understandably, on the immediate crises of banks and public finances that little time was given to thinking longer term. The one exception was Peter Mandelson, who began tentatively outlining the hope of an economy built around high-growth, low-carbon sectors, but certainly nothing against which one could benchmark progress. The leadership campaign, fuzzy and symbolic as much of it was, was unable to get down to the real nitty-gritty of long-term economic policy despite an early attempt by David Miliband.

Of course, the commitment to reduce inequality, regulate finance and address regional imbalances that Ed Miliband, the new Labour leader, outlined in his conference speech is a long-term economic vision of sorts. But these are core progressive aspirations that are far more about redressing the damaging consequences of decades of neoliberalism than they are about plotting a post-crisis course for economic survival in what is bound to be a hellishly competitive global market.

Politically, maybe this doesn't matter. It could be that the coalition will fall apart under a series of tactical strikes by Labour rather than by posing one strategic vision against another. But this would seem a risky plan. An opposition, much like a government, needs a visionary set of goals to inspire it through the long months and years of political slog. It also needs an overarching narrative that explains the past and shapes the future to give its electoral offer coherence and, most importantly, to make it look like a serious government-in-waiting. And, should one actually get into government, it always pays to have done your most serious thinking beforehand.

But this goes beyond party politics. Few in the policy world, let alone among the wider public, have cottoned on to quite how threatening the economic situation is for the UK. Economic power is shifting eastwards to countries and companies with access to vast resources of finance and labour and, increasingly, know-how. Without a thorough policy debate about what role the UK can play in this new world, we risk sleepwalking into a spiral of economic decline.

This would not be without precedent – poor policymaking and some terrible business decisions in the postwar years left the UK trailing competitors in North America and Europe and set the stage for the crisis of the 1970s. Labour has a heavy obligation to engage in hard thinking and do some tough questioning of long-term Tory plans.

The new leadership could do worse than start with Osborne's own vision. A UK economy built around higher savings, exports, business investment and stable public finances is certainly nothing to be sneezed at. There are difficult questions to be asked about how realistic such goals are, given that they run so much against the grain of the UK economy's characteristics built up over many years.

Transforming this country into one of the world's export economies is a tough call when other countries are already well ahead of the UK in this game and when the risks of protectionism remain high. But as ideals at which to aim, they are a worthy starting point, and mark a clear break with a pre-crisis model that now seems unlikely to re-emerge in its full previous glory, and would not be welcome if it did.

But it is in the route map to achieve these goals that Osborne's vision is so weak, creating the opportunity for Labour to seize political advantage by developing a much stronger map of its own. The Chancellor seems convinced that a retread of the policies of the 1980s is the key to a German-style economy. He in effect said precisely this during his Mais Lecture back in February. Unleash a "supply-side revolution", akin to the one engineered by Howe and Lawson, through lower business tax and higher skills, and watch the investment flood in to new business and drive up exports.

There are many problems with his approach, not least that Osborne seems to be doing as much to terrify investors as attract them. But more fundamentally, it bears little relation to the route that Germany took to build its model. Naturally, the Germans always had a healthy respect for free markets and competition. But one cannot overlook the central role that the publicly owned KFW investment bank plays in maintaining high levels of long-term investment. Nor should we ignore the role that genuinely bold skills policies and works councils play in ensuring competitiveness in export markets. Nor the role that a huge research body such as the Fraunhofer Institute plays in constant business innovation. No policies on an equivalent scale are likely to emerge soon from a government that seems pathologically averse to anything that might be judged interventionist or might carry a cost.

It is here that Labour can begin to fashion a genuine post-crisis, long-term vision – one that might embrace some or all of Osborne's vision, but then plots a course based on a cool assessment of what has worked in the real world of the great exporters, rather than what the Chancellor's rosy reading of the Thatcher era and dogmatic antipathy to the state might suggest.

Adam Lent is head of economic and social affairs at the TUC.

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Tony Blair might be a toxic figure - but his influence endures

Politicians at home and abroad are borrowing from the former prime minister's playbook. 

On 24 May at Methodist Central Hall, Westminster, a short distance from where he once governed, Tony Blair resurfaced for a public discussion. Having arrived on an overnight flight, he looked drawn and puffy-eyed but soon warmed to his theme: a robust defence of liberal globalisation. He admitted, however, to bafflement at recent events in the world. "I thought I was pretty good at politics. But I look at politics today and I’m not sure I understand it."

Blair lost power in the summer of 2007. In the ensuing nine years, he lost reputation. His business ventures and alliances with autocrats have made him a pariah among both the public and his party. A YouGov poll published last year found that 61 per cent of voters regarded Blair as an electoral liability, while just 14 per cent viewed him as an asset. In contrast, John Major, whom he defeated by a landslide in 1997, had a neutral net rating of zero. It is ever harder to recall that Blair won not one general election (he is the only living Labour leader to have done so) but three.

His standing is likely to diminish further when the Iraq inquiry report is published on 6 July. Advance leaks to the Sunday Times suggest that he will be censured for allegedly guaranteeing British military support to the US a year before the invasion. Few minds on either side will be changed by the 2.6 million-word document. Yet its publication will help enshrine Iraq as the defining feature of a legacy that also includes the minimum wage, tax credits, Sure Start, devolution and civil partnerships.

Former leaders can ordinarily rely on their parties to act as a last line of defence. In Blair’s case, however, much of the greatest opprobrium comes from his own side. Jeremy Corbyn inclines to the view that Iraq was not merely a blunder but a crime. In last year’s Labour leadership election, Liz Kendall, the most Blair-esque candidate, was rewarded with 4.5 per cent of the vote. The former prime minister’s imprimatur has become the political equivalent of the black spot.

Yet outside of the Labour leadership, Blairism endures in notable and often surprising forms. Sadiq Khan won the party’s London mayoral selection by running to the left of Tessa Jowell, one of Tony Blair’s closest allies. But his successful campaign against Zac Goldsmith drew lessons from Blair’s election triumphs. Khan relentlessly presented himself as “pro-business” and reached out beyond Labour’s core vote. After his victory, he was liberated to use the B-word, contrasting what “Tony Blair did [in opposition]” with Corbyn’s approach.

In their defence of the UK’s EU membership, David Cameron and George Osborne have deployed arguments once advanced by New Labour. The strategically minded Chancellor has forged an unlikely friendship with his former nemesis Peter Mandelson. In the domestic sphere, through equal marriage, the National Living Wage and the 0.7 per cent overseas aid target, the Conservatives have built on, rather than dismantled, significant Labour achievements."They just swallowed the entire manual," Mandelson declared at a recent King’s College seminar. "They didn’t just read the executive summary, they are following the whole thing to the letter."

Among SNP supporters, "Blairite" is the pejorative of choice. But the parallels between their party and New Labour are more suggestive than they would wish. Like Blair, Alex Salmond and Nicola Sturgeon have avoided income tax rises in order to retain the support of middle-class Scottish conservatives. In a speech last August on education, Sturgeon echoed the Blairite mantra that "what matters is what works".

Beyond British shores, political leaders are similarly inspired by Blair – and less reticent about acknowledging as much. Matteo Renzi, the 41-year-old centre-left Italian prime minister, is a long-standing admirer. "I adore one of his sayings,” he remarked in 2013. “I love all the traditions of my party, except one: that of losing elections."

In France, the reform-minded prime minister, Manuel Valls, and the minister of economy, Emmanuel Macron, are also self-described Blairites. Macron, who in April launched his own political movement, En Marche!, will shortly decide whether to challenge for the presidency next year. When he was compared to Blair by the TV presenter Andrew Marr, his response reflected the former prime minister’s diminished domestic reputation: “I don’t know if, in your mouth, that is a promise or a threat.”

The continuing attraction of Blair’s “third way” to European politicians reflects the failure of the project’s social-democratic critics to construct an alternative. Those who have sought to do so have struggled both in office (François Hollande) and out of it (Ed Miliband). The left is increasingly polarised between reformers and radicals (Corbyn, Syriza, Podemos), with those in between straining for relevance.

Despite his long absences from Britain, Blair’s friends say that he remains immersed in the intricacies of Labour politics. He has privately warned MPs that any attempt to keep Corbyn off the ballot in the event of a leadership challenge would be overruled by the National Executive Committee. At Methodist Central Hall, he said of Corbyn’s supporters: “It’s clear they can take over a political party. What’s not clear to me is whether they can take over a country.”

It was Blair’s insufficient devotion to the former task that enabled the revival of the left. As Alastair Campbell recently acknowledged: “We failed to develop talent, failed to cement organisational and cultural change in the party and failed to secure our legacy.” Rather than effecting a permanent realignment, as the right of the party hoped and the left feared, New Labour failed to outlive its creators.

It instead endures in a fragmented form as politicians at home and abroad co-opt its defining features: its pro-business pragmatism, its big-tent electoralism, its presentational nous. Some of Corbyn’s ­allies privately fear that Labour will one day re-embrace Blairism. But its new adherents would never dare to use that name.

George Eaton is political editor of the New Statesman.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad