Goodbye to a marvellous racket

Stephen Bates welcomes the end of duty-free and sees in it a rare victory for social justice over th

This Easter, as you idly stroll the marble halls of some duty-free emporium while waiting for your holiday flight, pondering your last chance to choose between a bottle of that strange-coloured local liqueur or Old MacSporran's oak-cask-matured 25-year-old malt whisky, pause just a moment for quiet reflection. Even if it means you will no longer be able to weigh yourself down with a bottle of something you would never otherwise have thought of buying, you may still be able to derive limited satisfaction from the abolition of duty-free sales, for it reflects an increasingly rare victory for the European Union over the power of corporate lobbying.

That it has come about with no thanks to our government, which backed the corporate case, should produce a sobriety that not even MacSporran could dispel.

Duty-free - that long-established wheeze by which airports and ferry operators, airlines and terminal owners tempt passengers into buying at least partially tax-free goods such as drink, cigarettes and electrical goods supposedly cheaper than they can buy them in local shops - will end on 30 June this year for travel in the European Union. (It will remain for transcontinental travellers.)

It was a deal done and dusted eight years ago by the governments of the EU. To have reopened the issue would have required not just majority consent but unanimity from all 15 member states. Now there is no chance of that happening, though the duty-free lobby was still clinging to that hope this week.

Far from being a time-hallowed perk of sailors and air crew, duty-free is a commercial lure to part passengers from their money. It dates all the way back to 1947 when Shannon airport, desperate to win a piece of the transatlantic trade, introduced cheap sales. It has become big business. It is now worth £12 billion a year worldwide, nearly £5 billion of that in Europe, £1 billion in Britain alone. Those figures have doubled since the EU decided to phase out duty-free in 1991. The industry itself estimates that 140,000 people depend on such sales for their jobs and that over 80 per cent of all duty-free goods sold across the world are made in Europe.

The arguments for getting rid of duty-free are largely practical. The practice currently amounts to a subsidy of about £1.4 billion a year to duty-free companies; that is the amount they do not have to pay in excise and tax on their sales. The European Commission wanted to end it because it is an anomaly in the EU's supposedly single market, which is meant to preclude unfair competitive advantages between member states and companies. It is also a form of commerce that benefits only those who travel and disadvantages those who do not, who have to pay higher prices for the same products in their local shops because of it. The more you travel abroad, the more you're subsidised: business travellers most of all. Furthermore, it does not benefit all travellers equally - you can buy duty-free if you catch a plane to Paris but not if you go by bus or train.

As travellers know, not all duty-free sales are the bargains they seem and, because tax rates and discounts vary, that cheap bottle of ouzo you bought while waiting for the ferry may actually be cheaper in the shops when you get to your destination. And, if you want to be really po-faced about it, duty-free encourages people to buy more alcohol and cigarettes than is good for them, or at least than they otherwise would.

The European Union originally wanted to end duty-free in 1993, but it was postponed until 1999 to give the industry a chance to adjust gradually. Instead it has used the past eight years to build ever larger duty-free shops and shopping malls in the airports and terminals of Europe, to expand sales - and to lobby remorselessly and expensively to stave off the change. This week it was complaining about a "sudden" decision.

It has been a powerful campaign, costing millions (why stint when there is so much potential gain?), spearheaded by the owners and assisted by trade unions representing workers in the travel industry. In Brussels the lobbying has been masterminded on behalf of the International Duty Free Confederation by John Hume, son of the saintly Northern Ireland peace campaigner.

The industry has a case in saying that, as the European single market is still far from completion and there is no agreement on what duty should be levied on goods bought in transit, abolition is likely to leave an unsatisfactory vacuum. As you travel from Britain to France you will pay British rates of VAT; in the opposite direction, French rates. In mid-Channel, excise rates will change, which means you had better make your purchases on the French side of the line. If you sense a Commission ambition to harmonise excise duties and VAT you would not be mistaken.

More tendentious has been the argument that the end of duty-free means fares will rise and airports will lose investment. It beggars the question why these companies have been investing in their airport shopping malls these past few years. Are they really expecting to have to close them down? Or will they find another way of enticing passengers in?

The industry has naturally based its arguments largely on the effect the end of duty-free will have on employment rather than profits. It has claimed that more than a third of jobs may have to go, that half the airports of Europe will have to close and that ferry services will be decimated. It has been sad to see disconsolate ferry seamen and air cabin crews bussed to Brussels to complain that they are likely to be thrown out of work, with the connivance of the very employers who are about to sack them. As the driving rain drips remorselessly off their placards, they look like troops being prodded over the top by staff safe in their nice dry billets behind the lines at corporate headquarters. The Commission's study this week found claims of job losses were much exaggerated.

This time last year there wasn't a prayer for a postponement of the end of duty-free, no chance of the unanimity among the 15 member states required to reprieve it. When Ireland's finance minister Charlie McCreevy fought for the issue to be re-opened last May, he looked to be on his own. Britain's Gordon Brown dismissed the suggestion brusquely as something that had been already decided.

Slowly, however, duty-free seeped back onto the agenda. It started with Gerhard Schroder's election campaign in Germany where, to garner votes along the Baltic coast, he came out in favour of a review of the effect of the ban - there is a profitable trade in Baltic shopping cruises. Then the French premier Lionel Jospin commissioned an MP, fortuitously from Calais, to conduct a survey on likely job losses.

With France and Germany on board for a review, the British government also jumped ship. In December, at a meeting in Brussels, Brown suddenly discovered that he had always been in favour of a review, too. So unexpected was his discovery that, the evening before, officials in Whitehall had been briefing journalists that the government saw no reason to reopen a long-decided issue. Now suddenly the original decision was all the fault of previous Tory ministers. Brown even had the nerve to chide journalists for getting the government's position wrong.

The source of this Damascene miracle was not hard to find. It was the week the Sun dubbed Oskar Lafontaine, the German finance minister, the most dangerous man in Europe for his ideas on tax harmonisation. The tabloids were also beginning to make menacing noises about the loss of "our" duty-free. A couple of weeks later at the EU summit in Vienna, Tony Blair, who might otherwise have been under the newspapers' cosh over Britain's budgetary rebate or the tax harmonisation wrangle, was suddenly also claiming to be battling for duty-free. Heads of government spent an hour discussing the issue instead of the anticipated two minutes. Other member states reluctantly agreed to ask an even more reluctant European Commission to carry out a review of job losses. Blair told the Commission president, Jacques Santer, that he wanted a significant postponement because abolition would lead to "higher fares and much popular unhappiness". Note the emphasis.

Duty-free now looks likely to be abolished this June, but there has been an almighty behind-the-scenes row in the Commission over whether a delay might not after all be expedient. Last week I caught up with a very senior bureaucrat in a Brussels restaurant. He mused: "With all our other problems is this something we really want to go to the wall over? People want it, don't they?"

This week, the duty-free lobby was complaining, of all things, about a lack of democracy in the decision. For once, a limit to the power of corporate lobbying, more like.

Stephen Bates is European affairs editor of the "Guardian"

This article first appeared in the 19 February 1999 issue of the New Statesman, We are richer than you think

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Why Jeremy Corbyn is a new leader for the New Times

In an inspired election campaign, he confounded his detractors and showed that he was – more than any other leader – in tune with the times.

There have been two great political turning points in postwar Britain. The first was in 1945 with the election of the Attlee government. Driven by a popular wave of determination that peacetime Britain would look very different from the mass unemployment of the 1930s, and built on the foundations of the solidaristic spirit of the war, the Labour government ushered in full employment, the welfare state (including the NHS) and nationalisation of the basic industries, notably coal and the railways. It was a reforming government the like of which Britain had not previously experienced in the first half of the 20th century. The popular support enjoyed by the reforms was such that the ensuing social-democratic consensus was to last until the end of the 1970s, with Tory as well as Labour governments broadly operating within its framework.

During the 1970s, however, opposition to the social-democratic consensus grew steadily, led by the rise of the radical right, which culminated in 1979 in the election of Margaret Thatcher’s first government. In the process, the Thatcherites redefined the political debate, broadening it beyond the rather institutionalised and truncated forms that it had previously taken: they conducted a highly populist campaign that was for individualism and against collectivism; for the market and against the state; for liberty and against trade unionism; for law and order and against crime.

These ideas were dismissed by the left as just an extreme version of the same old Toryism, entirely failing to recognise their novelty and therefore the kind of threat they posed. The 1979 election, followed by Ronald Reagan’s US victory in 1980, began the neoliberal era, which remained hegemonic in Britain, and more widely in the West, for three decades. Tory and Labour governments alike operated within the terms and by the logic of neoliberalism. The only thing new about New Labour was its acquiescence in neoliberalism; even in this sense, it was not new but derivative of Thatcherism.

The financial crisis of 2007-2008 marked the beginning of the end of neoliberalism. Unlike the social-democratic consensus, which was undermined by the ideological challenge posed by Thatcherism, neoliberalism was brought to its knees not by any ideological alternative – such was the hegemonic sway of neoliberalism – but by the biggest financial crisis since 1931. This was the consequence of the fragility of a financial sector left to its own devices as a result of sweeping deregulation, and the corrupt and extreme practices that this encouraged.

The origin of the crisis lay not in the Labour government – complicit though it was in the neoliberal indulgence of the financial sector – but in the deregulation of the banking sector on both sides of the Atlantic in the 1980s. Neoliberalism limped on in the period after 2007-2008 but as real wages stagnated, recovery proved a mirage, and, with the behaviour of the bankers exposed, a deep disillusionment spread across society. During 2015-16, a populist wave of opposition to the establishment engulfed much of Europe and the United States.

Except at the extremes – Greece perhaps being the most notable example – the left was not a beneficiary: on the contrary it, too, was punished by the people in the same manner as the parties of the mainstream right were. The reason was straightforward enough. The left was tarnished with the same brush as the right: almost everywhere social-democratic parties, albeit to varying degrees, had pursued neoliberal policies. Bill Clinton and Tony Blair became – and presented themselves as – leaders of neoliberalism and as enthusiastic advocates of a strategy of hyper-globalisation, which resulted in growing inequality. In this fundamental respect these parties were more or less ­indistinguishable from the right.

***

The first signs of open revolt against New Labour – the representatives and evangelists of neoliberal ideas in the Labour Party – came in the aftermath of the 2015 ­election and the entirely unpredicted and overwhelming victory of Jeremy Corbyn in the leadership election. Something was happening. Yet much of the left, along with the media, summarily dismissed it as a revival of far-left entryism; that these were for the most part no more than a bunch of Trots. There is a powerful, often overwhelming, tendency to see new phenomena in terms of the past. The new and unfamiliar is much more difficult to understand than the old and familiar: it requires serious intellectual effort and an open and inquiring mind. The left is not alone in this syndrome. The right condemned the 2017 Labour Party manifesto as a replica of Labour’s 1983 manifesto. They couldn’t have been more wrong.

That Corbyn had been a veteran of the far left for so long lent credence to the idea that he was merely a retread of a failed past: there was nothing new about him. In a brilliant election campaign, Corbyn not only gave the lie to this but also demonstrated that he, far more than any of the other party leaders, was in tune with the times, the candidate of modernity.

Crises, great turning points, new conjunctures, new forms of consciousness are by definition incubators of the new. That is one of the great sources of their fascination. We can now see the line of linkage between the thousands of young people who gave Corbyn his overwhelming victory in the leadership election in 2015 and the millions of young people who were enthused by his general election campaign in 2017. It is no accident that it was the young rather than the middle-aged or the seniors who were in the vanguard: the young are the bearers and products of the new, they are the lightning conductors of change. Their elders, by contrast, are steeped in old ways of thinking and doing, having lived through and internalised the values and norms of neoliberalism for more than 30 years.

Yet there is another, rather more important aspect to how we identify the new, namely the way we see politics and how politics is conceived. Electoral politics is a highly institutionalised and tribal activity. There have been, as I argued earlier, two great turning points in postwar politics: the social-democratic era ushered in by the 1945 Labour government and the neoliberal era launched by the Tory government in 1979.

The average Tory MP or activist, no doubt, would interpret history primarily in terms of Tory and Labour governments; Labour MPs and activists would do similarly. But this is a superficial reading of politics based on party labels which ignores the deeper forces that shape different eras, generate crises and result in new paradigms.

Alas, most political journalists and columnists are afflicted with the same inability to distinguish the wood (an understanding of the deeper historical forces at work) from the trees (the day-to-day manoeuvring of parties and politicians). In normal times, this may not be so important, because life continues for the most part as before, but at moments of great paradigmatic change it is absolutely critical.

If the political journalists, and indeed the PLP, had understood the deeper forces and profound changes now at work, they would never have failed en masse to rise above the banal and predictable in their assessment of Corbyn. Something deep, indeed, is happening. A historical era – namely, that of neoliberalism – is in its death throes. All the old assumptions can no longer be assumed. We are in new territory: we haven’t been here before. The smart suits long preferred by New Labour wannabes are no longer a symbol of success and ambition but of alienation from, and rejection of, those who have been left behind; who, from being ignored and dismissed, are in the process of moving to the centre of the political stage.

Corbyn, you may recall, was instantly rejected and ridiculed for his sartorial style, and yet we can now see that, with a little smartening, it conveys an authenticity and affinity with the times that made his style of dress more or less immune from criticism during the general election campaign. Yet fashion is only a way to illustrate a much deeper point.

The end of neoliberalism, once so hegemonic, so commanding, is turning Britain on its head. That is why – extraordinary when you think about it – all the attempts by the right to dismiss Corbyn as a far-left extremist failed miserably, even proved counterproductive, because that was not how people saw him, not how they heard him. He was speaking a language and voicing concerns that a broad cross-section of the public could understand and identify with.

***

The reason a large majority of the PLP was opposed to Corbyn, desperate to be rid of him, was because they were still living in the neoliberal era, still slaves to its ideology, still in thrall to its logic. They knew no other way of thinking or political being. They accused Corbyn of being out of time when in fact it was most of the PLP – not to mention the likes of Mandelson and Blair – who were still imprisoned in an earlier historical era. The end of neoliberalism marks the death of New Labour. In contrast, Corbyn is aligned with the world as it is rather than as it was. What a wonderful irony.

Corbyn’s success in the general election requires us to revisit some of the assumptions that have underpinned much political commentary over the past several years. The turmoil in Labour ranks and the ridiculing of Corbyn persuaded many, including on the left, that Labour stood on the edge of the abyss and that the Tories would continue to dominate for long into the future. With Corbyn having seized the political initiative, the Tories are now cast in a new light. With Labour in the process of burying its New Labour legacy and addressing a very new conjuncture, then the end of neoliberalism poses a much more serious challenge to the Tories than it does the Labour Party.

The Cameron/Osborne leadership was still very much of a neoliberal frame of mind, not least in their emphasis on austerity. It would appear that, in the light of the new popular mood, the government will now be forced to abandon austerity. Theresa May, on taking office, talked about a return to One Nation Toryism and the need to help the worst-off, but that has never moved beyond rhetoric: now she is dead in the water.

Meanwhile, the Tories are in fast retreat over Brexit. They held a referendum over the EU for narrowly party reasons which, from a national point of view, was entirely unnecessary. As a result of the Brexit vote, the Cameron leadership was forced to resign and the Brexiteers took de facto command. But now, after the election, the Tories are in headlong retreat from anything like a “hard Brexit”. In short, they have utterly lost control of the political agenda and are being driven by events. Above all, they are frightened of another election from which Corbyn is likely to emerge as leader with a political agenda that will owe nothing to neoliberalism.

Apart from Corbyn’s extraordinary emergence as a leader who understands – and is entirely comfortable with – the imperatives of the new conjuncture and the need for a new political paradigm, the key to Labour’s transformed position in the eyes of the public was its 2017 manifesto, arguably its best and most important since 1945. You may recall that for three decades the dominant themes were marketisation, privatisation, trickle-down economics, the wastefulness and inefficiencies of the state, the incontrovertible case for hyper-globalisation, and bankers and financiers as the New Gods.

Labour’s manifesto offered a very different vision: a fairer society, bearing down on inequality, a more redistributive tax system, the centrality of the social, proper funding of public services, nationalisation of the railways and water industry, and people as the priority rather than business and the City. The title captured the spirit – For the Many Not the Few. Or, to put in another way, After Neoliberalism. The vision is not yet the answer to the latter question, but it represents the beginnings of an answer.

Ever since the late 1970s, Labour has been on the defensive, struggling to deal with a world where the right has been hegemonic. We can now begin to glimpse a different possibility, one in which the left can begin to take ownership – at least in some degree – of a new, post-neoliberal political settlement. But we should not underestimate the enormous problems that lie in wait. The relative economic prospects for the country are far worse than they have been at any time since 1945. As we saw in the Brexit vote, the forces of conservatism, nativism, racism and imperial nostalgia remain hugely powerful. Not only has the country rejected continued membership of the European Union, but, along with the rest of the West, it is far from reconciled with the new world that is in the process of being created before our very eyes, in which the developing world will be paramount and in which China will be the global leader.

Nonetheless, to be able to entertain a sense of optimism about our own country is a novel experience after 30 years of being out in the cold. No wonder so many are feeling energised again.

This article first appeared in the 15 June 2017 issue of the New Statesman, Corbyn: revenge of the rebel

Martin Jacques is the former editor of Marxism Today. 

This article first appeared in the 15 June 2017 issue of the New Statesman, Corbyn: revenge of the rebel

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