How the left can be radical without spending money

Balls's speech made way for a new agenda that is profoundly exciting.

Balls's speech made way for a new agenda that is profoundly exciting.{C}

Ever noticed how shutting one door can open another? This week Labour's staunchest champion of growing our way out of the deficit acknowledged that he could well be making cuts in 2015. The left, personified by Owen Jones and Len McCluskey, were up in arms. They think we've lost the possibility of being radical. I say we've opened it up.

The modern left frequently makes one mistake. They assume that the most significant means government has of transforming lives is through taxing and spending, traditionally known as the "demand" side of the economy. They have left the supply side - the rules that govern the price of labour and capital - to the right.

But what if, at a time of pressure to reduce government spending, the left could develop an agenda for the supply side of the economy that delivered meaningful change?

It's not surprising we're sceptical. Because the right have dominated such policy in the past, such an agenda is associated with smashing unions to decrease the cost of labour, deregulating capital to enrich the fortunate or privatising at the expense of quality.

But supply side policy doesn't have to be regressive. It's just a tool that's been used in the wrong way. Most recently, Ed Miliband has been talking about a number of supply side policies that are courageous, imaginative and proudly consistent with the values of the left.

The most high profile example is his attack on certain energy and transport companies. We know that these markets are sown up, so increasing competition and regulation will deliver a fairer result. The living wage is another example. Government contracts that build in apprenticeships and local investment is another. The High Pay Commission's work on wage transparency and shareholder representation on boards is another. Cutting down on corporate tax havens as Miliband just outlined is another. Breaking up the banks takes this one step further.

Although it needs sexier branding, these supply side policies are all part of what Miliband calls "responsible capitalism". It's why Blue Labour is interesting.

These policies have three big advantages. First, they don't cost anything. Second, they make people's lives better. Third, they are much closer to where the public is at. I appreciate the arguments made by Owen Jones, but I don't think he has appreciated the scale of anger there is about a perceived waste of public money by Labour in the good times.

As someone who remembers what it was like to not have enough chairs in their classroom, I'm never going to apologise for investing in schools, and you'll never hear me say that government spending isn't essential and necessary. But waste on IT contracts, PFI and middle managers? I'm happy to apologise for some of that.

And as Ed Balls said this week, a true Keynesian is sometimes a hawk. If you genuinely believe we should be running a programme of increased spending now, then you have to acknowledge that we should have spent less when the economy was booming. The idea that Keynesians believe in high spending throughout the cycle misses the point completely.

So let's not get confused - Labour is still saying that we should cut less fast and less deep now, but with the OBR estimating we'll be 18 per cent poorer as a result of the recession, the state will be smaller once we're out of this mess. And that means a progressive supply side agenda.

If we do that, then Ball's speech wasn't a sign of giving up and following the Tories slowly back to the middle ground. It was a necessary part of gaining credibility with the public to make way for a new agenda that is profoundly exciting. Interestingly, it's one that Miliband is leading, not the shadow chancellor. The left shouldn't abandon ship, it should get on board.

Rowenna Davis is Labour PPC for Southampton Itchen and a councillor for Peckham

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How should Labour's disgruntled moderates behave?

The price for loyalty looks like being long-term opposition. Sometimes exiting can be brave.

When Albert O. Hirschman was writing Exit, Voice, Loyalty: Responses to decline in Firms, Organizations, and States he wasn’t thinking of the British Labour Party.  That doesn’t mean, though, that one of the world’s seminal applications of economics to politics can’t help us clarify the options open to the 80 to 90 per cent of Labour MPs who, after another week of utter chaos, are in total despair at what’s happening under Jeremy Corbyn.

According to Hirschman, people in their situation have essentially three choices – all of which stand some chance, although there are no guarantees, of turning things around sooner or later.

The first option is simply to get the hell out: exit, after all, can send a pretty powerful, market-style signal to those at the top that things are going wrong and that something has to change.

The second option is to speak up and shout out: if the leadership’s not listening then complaining loudly might mean they get the message.

The third option is to sit tight and shut up, believing that if the boat isn’t rocked it will somehow eventually make it safely to port.

Most Labour MPs have so far plumped for the third course of action.  They’ve battened down the hatches and are waiting for the storm to pass.  In some ways, that makes sense.  For one thing, Labour’s rules and Corbyn’s famous ‘mandate’ make him difficult to dislodge, and anyone seen to move against him risks deselection by angry activists.

For another, there will be a reckoning – a general election defeat so bad that it will be difficult even for diehards to deny there’s a problem: maybe Labour has to do ‘déjà vu all over again’ and lose like it did in 1983 in order to come to its senses. The problem, however, is that this scenario could still see it stuck in opposition for at least a decade. And that’s presuming that the left hasn’t so effectively consolidated its grip on the party that it can’t get out from under.

That’s presumably why a handful of Labour MPs have gone for option two – voice.  Michael Dugher, John Woodcock, Kevan Jones, Wes Streeting and, of course, John Mann have made it pretty clear they think the whole thing’s a mess and that something – ideally Jeremy Corbyn and those around him – has to give.  They’re joined by others – most recently Stephen Kinnock, who’s talked about the party having to take ‘remedial action’ if its performance in local elections turns out to be as woeful as some are suggesting.  And then of course there are potential leadership challengers making none-too-coded keynote speeches and public appearances (both virtual and real), as well as a whole host of back and frontbenchers prepared to criticise Corbyn and those around him, but only off the record.

So far, however, we’ve seen no-one prepared to take the exit option – or at least to go the whole hog. Admittedly, some, like Emma Reynolds, Chuka Umunna, Dan Jarvis, Yvette Cooper, and Rachel Reeves, have gone halfway by pointedly refusing to serve in Corbyn’s Shadow Cabinet.  But nobody has so far declared their intention to leave politics altogether or to quit the party, either to become an independent or to try to set up something else.

The latter is easily dismissed as a pipe-dream, especially in the light of what happened when Labour moderates tried to do it with the SDP in the eighties.  But maybe it’s time to think again.  After all, in order to refuse even to contemplate it you have to believe that the pendulum will naturally swing back to Labour at a time when, all over Europe, the centre-left looks like being left behind by the march of time and when, in the UK, there seems precious little chance of a now shrunken, predominantly public-sector union movement urging the party back to the centre ground in the same way that its more powerful predecessors did back in the fifties and the late-eighties and nineties. 

Maybe it’s also worth wondering whether those Labour MPs who left for the SDP could and should have done things differently.  Instead of simply jumping ship in relatively small numbers and then staying in parliament, something much bolder and much more dramatic is needed.  What if over one hundred current Labour MPs simultaneously declared they were setting up ‘Real Labour’?  What if they simultaneously resigned from the Commons and then simultaneously fought scores of by-elections under that banner?

To many, even to ask the question is to answer it. The obstacles – political, procedural, and financial – are formidable and forbidding.  The risks are huge and the pay-off massively uncertain.  Indeed, the whole idea can be swiftly written off as a thought-experiment explicitly designed to demonstrate that nothing like it will ever come to pass.

On the other hand, Labour MPs, whether we use Hirschman’s three-way schema or not, are fast running out of options.  The price for loyalty looks like being long-term opposition.  Voice can only do so much when those you’re complaining about seem – in both senses of the word – immovable.  Exit, of course, can easily be made to seem like the coward’s way out. Sometimes, however, it really is the bravest and the best thing to do.

Tim Bale is professor of politics at QMUL. His latest book, Five Year Mission, chronicles Ed Miliband's leadership of the Labour party.